The Republic of Serbia has in an urgent procedure adopted the Law on Central Register of Beneficial Owners following the recommendations of the Moneyval Committee of the Council of Europe, in accordance with the Directive EU 2015/849. This law entered into force on 08 June 2018.
The primary goal of this Law is to facilitate the conduct of activities and measures to prevent and detect money laundering and terrorist funding.
The Law introduces the obligation for legal entities and other registered subjects in the Republic of Serbia (hereinafter “Registered subjects”) to identify the beneficial owners and to ensure the relevant documentation, and after establishing the Central Register of Beneficial Owners with the Serbian Registers Agency - authorised/responsible persons in the Registered Subjects shall be obliged to file and record these data and documents in the Central Register. Definition of Beneficial Owner
Who is considered to be a Beneficial Owner?
1) A natural person, who, directly or indirectly, holds 25% or more shares, voting rights or other rights, by virtue of which it participates in the management or the capital of the Registered Subject with 25% or more shares;
2) A natural person who directly or indirectly has a predominant influence on the conduct of business and decision-making;
3) A natural person who directly provides or secures funds to the Registered Subject and therefore has a significant influence on the decision-making of the Registered Subject's management bodies when deciding on financing and business operations;
4) A natural person who is a founder, a trustee, a protector, a beneficiary - if as such determined, and a person who has a dominant position in the trust management or in other entity of foreign law;
5) A natural person registered to represent cooperatives, associations, foundations, endowments and institutions if the authorised person for representation has not registered another natural person as the Beneficial Owner.
Whenever it is not possible to determine/identify a natural person as the Beneficial Owner, the Beneficial Owner of the Registered Subject is the natural person registered for representation, or the person who is registered as a member of that body.Obligations of existing Registered Subjects
The Law prescribes the obligation of the existing Registered Subjects to identify, no later than July 8, 2018, the Beneficial Owners of the Registered Subject (which includes collection and safekeeping of the relevant documentation), as well as to make these data and documents available to the competent state authority and the National Bank of Serbia, upon their request.
Central Register at the Serbian Registers Agency
The Central Register of the Beneficial Owners will be within the competence of the Serbian Registers Agency and will be operational in electronic form no later than December 31, 2018.
Accordingly, authorised persons of the Registered Subjects are obliged to provide and electronically file all data on the Beneficial Owners as well as the ground on acquiring of such capacity in the Central Register no later than January 31, 2019.Penalties for non-compliance with the Law
The Law introduces a new criminal offence punishable by imprisonment for a term of three months to five years for persons who deliberately conceal the Beneficial Owner by (i) failing to file data on the Beneficial Owner of the Registered Subject, (ii) filing incorrect data on the Beneficial Owner, (iii) changing or deleting correct data about the Beneficial Owner.
Furthermore, a misdemeanour liability is foreseen for Registered Subjects, with monetary fines ranging from RSD 500.000 to 2.000.000 (i.e. in the range of RSD 50.000 to RSD 150.000 for responsible persons) in the event of failure to record or update the data of the Beneficial Owners in the Central Register or failure to safekeep adequate, accurate and up-to-date documentation of the Beneficial Owners.Author: Ana Marovic, The Law Office TSG TOMIC SINDJELIC GROZA