UBO registration for mutual funds (trust-like) becomes public

This article was last updated on 26 October 2022.

If you have an interest in a trust or a mutual fund, you qualify as a beneficial owner (UBO) and you will soon need to be registered in the public Trust Register. Other involvement, such as being the settlor, protector or trustee of a trust(like), may also qualify you as a UBO. Only for mutual funds of a certain size can - under certain conditions - a description of a group of natural persons in the Trust Register suffice instead of an individual UBO registration.

On November 23, 2021, the bill for a register in which trusts and similar legal arrangements will be registered together with their UBOs was adopted by the Dutch Senate. The mandatory UBO registration of a trust or similar legal arrangement will take effect from 1 November 2022. From that date, trustees must register pre-existing trusts and similar legal arrangements and their UBOs within three months. For newly established trusts and similar legal arrangements, the one-week registration deadline will apply. Changes must be notified within one week of the initial registration.

The purpose of this register is to prevent the misuse of the European Union financial system for money laundering or terrorist financing purposes. This bill states that open and closed-end mutual funds (as being trusts) will also be included in the register. A note of amendment has also regulated legal protection.

The actual entry into force of the Trust Register will take place by 1 November 2022 All EU and EEA countries must implement a Trust Register, based on the EU Anti-Money Laundering Directive. This should have been done by March 10, 2020, so the Netherlands is too late.

Internet consultation

The bill has previously been in consultation. Although very critical reactions were sent in, the bill was hardly changed. The reactions were particularly critical about the public nature of the register and the friction with the right to privacy. One important aspect where criticism has been met concerns a trust with many beneficiaries or a fund with many participants. Because mutual funds may have many (changing) UBOs, each with a very small shareholding in that fund, and change in the UBO registration can lead to unnecessarily high administrative burdens, there is a relaxation for certain mutual funds. It concerns funds with at least 150 unit-holders where the manager has a so-called Wft licence. In that case, the Trust Register will only contain a description of the group of natural persons for whom the fund is mainly established or employed. Then a description of this group, such as: "participants investment fund". This has been detailed in the Implementation Decree on registration of beneficial owners of trusts and similar legal arrangements, which was published on 2 May 2022. During the internet consultation on this implementation decree, it was proposed earlier, as a relaxation, to apply a lower limit of a 3 per cent interest before participants in a mutual fund qualify as UBOs. This lower limit of 3 per cent interest has therefore been replaced.

What does this mean for you?

Because the Netherlands has designated open and closed-end mutual funds as 'similar legal arrangements', you may, for example, as a participant with an interest in a mutual fund, be affected by the UBO registration for trusts and similar legal arrangements. This is different if it concerns a mutual fund with 150 or more participants and the manager of the fund has a Wft licence. In that case, instead of individual details of the participants, the register will only contain a description of the group of natural persons for whom the mutual fund was mainly established or is active.

With an individual UBO registration, some of the information about you as a UBO will become publicly available. A UBO of a trust or similar legal arrangement may, in certain cases, apply to the Chamber of Commerce to have his or her public data shielded.

If you set up a new trust or trust-like after this Bill comes into force on 1 November 2022, the trustee must register the trust(s) and its UBOs in the Trust Register within a week. For trusts or trust-likes already in existence on that date, trustees have three months from that time, i.e. until 1 February 2023, to register the trust or trust-like and their UBOs.

Below we list the main points of the bill for you.

General arrangement Trust Register

The Dutch Chamber of Commerce (CoC) will be the administrator of this register. The trustee will be responsible for the quality of the information in the register regarding the UBOs of trusts and similar legal arrangements. Unlike the UBO Register for corporations and other legal entities, the UBO Register for trusts is not part of the Dutch Trade Register and constitutes a separate (Trust) Register. As with the UBO register for corporations and other legal entities, certain data are public but other (additional) data are only accessible to the Financial Intelligence Unit (FIU) and the competent authorities.

Scope of registration obligation

The obligation to register rests with the trustee. For this purpose, the trustee must identify himself or herself to the administrator of the register. The trustee must comply with this obligation within one week after the occurrence of the fact that triggered the obligation to register. That fact can be, for example, the settlement of the trustee in the Netherlands or the establishment of the trust or a similar legal arrangement.

If the trustee resides or is established in the Netherlands, the registration obligation applies to the trust(s) he or she administers. Also, if the trustee, although not resident or established in the European Union, enters into a business relationship or acquires real estate in the Netherlands on behalf of the trust, the trust(s) must be registered.

In order to prevent trustees from having to register in multiple Member States, registration requirements do not apply to trusts that are already registered in the register of another EU Member State. If the trustee of a trust or similar legal arrangement registered in another Member State wishes to obtain services from a Dutch business service provider such as a bank, accountant, notary etc., this service provider must request proof of registration.

What is a trust?

A trust is a legal arrangement created by a person (the settlor) whereby assets are entrusted to a trustee who, in accordance with a (trust) deed, uses these assets for the benefit of one or more beneficiaries or for a specific purpose. The trust has many different manifestations and is used for various purposes in the business sphere, in the family sphere as well as in cultural and charitable spheres.

What is a similar legal arrangement?

A similar legal arrangement is treated the same as a trust. Each Member State has determined which legal arrangements governed by its law have a structure or function similar to a trust. The European Commission has published a consolidated list of these arrangements.

Who is the trustee?

The trustee disposes of the assets from the trust but these assets are not part of the trustee's assets. Those persons who, in a similar legal arrangement, have a similar position to a trustee in a trust, are treated the same as trustees.

In the Netherlands, 'similar legal arrangements' refers to funds without legal personality in which the participants pool assets that are invested at their joint expense or otherwise used for the benefit of the UBOs of that fund. These funds are established by agreement. They are explicitly not companies as referred to in the Trade Register Act 2007.

The definition in any case includes open and closed-end mutual funds. It is possible that similar legal arrangements from other EU Member States also need to be registered in the Dutch register. These therefore also fall under the definition of 'similar legal arrangements' and are included in the consolidated list of the European Commission.

Who is the UBO of a trust?

In any event, the following persons are considered to be UBO(s) of a trust:

The founder(s) of the trust;
The trustee(s) of the trust;
The protector(s) of the trust, as applicable;
The beneficiaries of the trust, or to the extent that the individual persons who are the beneficiaries of the trust cannot be determined, the group of persons in whose interest the trust is primarily established or operates; and
Any other natural person who exercises ultimate control over the trust by direct or indirect ownership or by other means.

Natural persons who do not fall into these categories may also qualify as the UBOs of a trust or similar legal arrangement.

What information goes into the registry?

Information about the trust

If the trust or similar legal arrangement has a name, the name must be recorded. In addition, the register must clarify whether it is a trust or similar legal arrangement, and what kind of trust or similar legal arrangement it is.

The date, place and purpose of a trust or similar legal arrangement must also be recorded, with documents supporting that information. This will often be a trust deed or agreement. The copies are only accessible to FIU-the Netherlands and the competent authorities.

Information about the UBO

The information which must be registered about the UBO consists of:

Identity and nationality: the name, month and year of birth, state of residence and nationality. Copy(s) of document(s) on the basis of which the data have been verified must also be included. This will usually involve an identity document or an extract from the municipal personal records database;

Further personal data: the UBO's date of birth, place of birth, country of birth and residential address, as well as the copy(s) of document(s) based on which these data have been verified. As with the previous bullet, this is usually an identity document or an extract from the municipal personal records database;
The email address of the UBO;
The nature and extent of the beneficial interest held by the UBO and copies of documents supporting this information. Regarding the size of the beneficial interest, a separate decree will establish various classes of beneficial interest, so that the register will show within which classes the beneficial interest of the relevant UBO falls;
The BSN (if assigned to the UBO) and the copies of documents on the basis of which the BSN has been verified; and
The Tax Identification Number (TIN) (if assigned to the UBO) with copy(s) of document(s) based on which the TIN was verified.

Public data

Due to the public nature of the registry, the following data are accessible to all:

The name and type of trust or similar legal arrangement;
The date, place and purpose of the creation of the trust or similar legal arrangement;
The name, month, year of birth, state of residence and nationality of each UBO of the trust or similar legal arrangement; and
The nature and extent of the beneficial interest held by each UBO.

Copies of the documents from which these data appear or have been verified are accessible only to FIU-the Netherlands and the competent authorities.

Non-public data

The following (additional) data and copies are only accessible to FIU-the Netherlands and the competent authorities:

The BSN as well as copies of documents on the basis of which this has been verified;
The TIN as well as copies of documents on the basis of which this has been verified;
The day, place and country of birth and residential address and copies of documents on the basis of which this has been verified;
Copies of documents showing the date, place and purpose of the creation of the trust or similar legal arrangement;
Copies of documents verifying the name, month, year of birth, state of residence and nationality;
The email address of the UBO; and
Copies of documents showing the nature and extent of the economic interest held by the UBOs.

Competent authorities

A separate decree designates the 'competent authorities', i.e. a defined group. At present, these include the Dutch Central Bank, the Netherlands Authority for the Financial Markets, the Tax and Customs Administration, the Fiscal Intelligence and Investigation Service and the Public Prosecution Service.

Retention period of UBO data

The information included in the register shall remain publicly accessible for 5 years after the grounds for registering that information have ceased to exist. For the FIU and the competent authorities a maximum period of ten years applies.

Registration of those consulting UBO information

Those who wish to access information from the register must register in advance and pay a fee. Their personal data will be stored.

Request by UBO for overview consultations of UBO information

UBOs of trusts and similar legal arrangements can gain insight at the Chamber of Commerce into the number of times that others than FIU-the Netherlands and the competent authorities request information about them from the register.

Shielding of UBO data

If the UBOs of trusts and similar legal arrangements run a disproportionate risk as a result of access to the public information (e.g. risk of fraud, abduction, blackmail), they may submit a request to the Chamber of Commerce to have all or part of that information shielded. In that case, the UBO has to be on a list of persons protected by the government. Shielding is also possible if the UBO is a minor or otherwise incapacitated (under guardianship or administration). Shielding does not apply to FIU-the Netherlands, the competent authorities, financial enterprises and civil-law notaries.

Legal protection

The bill regulates the legal procedure for UBO cases as follows. The Trade and Industry Appeals Tribunal (CBb) will be the competent court in first and only instance in UBO cases. In certain cases this is different. In cases concerning enforcement decisions that may be taken by the Bureau of Economic Enforcement (BEH) (cases subject to a penalty and administrative fine), penalty decisions concerning the obligation to register and enforcement of the obligation to register, a court procedure in two instances applies: in the first instance the Rotterdam District Court and in the second instance (appeal) the CBb.