First fines in practice
It was announced earlier this year that as from September 1, 2021, fines will be issued to the directors of (international) non-profit associations and foundations (hereafter collectively referred to as: “non-profit entities”, abbreviated: “NPEs”). Further down the line, directors of approximately three thousand four hundred (3,400) NPEs (mostly non-profit associations) have been fined by the Belgian Ministry of Finances for an amount of 500 euros as they did not yet register their ultimate beneficial owners (hereafter: “UBOs”) in the UBO-register.
As the concerned NPEs did receive three warnings after all, the current Belgian Minister of Finances (Vincent Van Peteghem) finds this situation “very unfortunate” as he explained to the Belgian Chamber of Representatives on December 9, 2021. In a last attempt at leniency, the Belgian Ministry of Finances granted a postponement of payment of these fines until January 1, 2022.
Should you as a director of an NPE be lucky enough for now to have escaped receiving a fine despite lacking behind your administrative obligations, this article will remind you of (i) these obligations, (ii) how to fulfil them, and (iii) the current consequences for not complying.
Obligation to correctly identify, register and confirm UBOs
To implement anti-money laundering regulations enacted at an EU-level, the Belgian legislator imposed on all Belgian legal entities, such as NPEs, to register their UBOs in an “UBO-register”.
This entails the following obligations for all Belgian legal entities:
i To determine who are their UBOs and provide sufficient, accurate and up-to-date information on their UBOs (i.e. names, dates of birth, nationalities, addresses of residency, dates on which they became UBOs and national/company numbers or any similar numbers from their home country);
ii To reflect any change or modification that has an impact on their UBO registration within one (1) month as from the date of the change; and
iii To confirm the UBO registration within twelve (12) months following the last modification.
Updating your UBO registration in practice
The first step is to identify the UBOs of your legal entity. The UBOs for NPEs are classified in six categories:
1.Directors (in case of a legal entity, its permanent representative);
2.Persons entitled to represent the NPE;
3.Persons in charge of the daily management of the NPE;
4.The foundation’s founders;
5.The natural persons or, when those persons have yet to be determined, the class of persons in whose main interest the NPE is set up or operates; and
6.Any other natural person exercising ultimate control over the NPE
Categories 1 and 3 are the most prominently registered UBOs for NPEs. When it comes to these categories 1 and 3, the UBO-register is directly linked to the more commonly known Belgian Crossroads Bank for Enterprises (hereafter: “CBE”) which in turn is the reflection of what is published in the Annexes to the Belgian Official Gazette. The other categories are not reflected in the CBE and must therefore, if applicable, be indicated manually when updating the UBO-register.
Complying with UBO registration formalities therefore means complying with your administrative and publication formalities. In practice, several NPEs will have to undergo this second intermediary step of regularising their data in the CBE by making accurate and correct publications in the Annexes to the Belgian Official Gazette.
Only afterwards, the final step of updating the UBO registration can be performed. Please note that it is still necessary to perform an annual confirmation of the UBO registration even if no regularisation is needed.
Fines, director’s liability and blocked bank accounts
In case of missing, outdated or incorrect UBO registrations the directors of NPEs risk to: (i) receive administrative fines ranging from EUR 250 to EUR 50,000, and (ii) be subjected to general director’s liability should the interests of any third parties be harmed.
Additionally, many banks have launched a full-scale campaign on non-compliant NPEs by blocking their bank accounts until their UBO registration is in order. In this exercise, certain banks may send additional declaration forms to be completed in case they discover that an NPE is not compliant with its administrative obligations.
Bearing these potential consequences in mind, it becomes more apparent that performing your UBO registration formalities can no longer be neglected.
Should you require our assistance with performing your UBO registration formalities or wish for our assistance in regards to taking care of your publications please do not hesitate to contact us.