International Law

THE DUTCH SUPERVISION ON TRUST COMPANIES (IV)

By Karel.Frielink

Identity of ultimate beneficiary must be known

According to the Order on Sound Operational Management (the Order)(?Regeling integere bedrijfsvoering Wet toezicht trustkantoren?) pursuant to the ASTO, a trust office shall know the identity of the ultimate beneficial owner (?UBO?) of an object company and keep the evidence used to determine who qualifies as the ultimate beneficial owner and from which the identity of the ultimate beneficial owner has been established, available (Article 12 (1) of the Order).

The trust office shall keep a client acceptance file for every object company, for every sale of a legal entity, and for each trust for which the trust office acts as trustee. A client acceptance file shall contain at least the following documents: (a) the written contracts between the trust office and the object company and other contracts that the trust office has concluded on the services provided by the trust office covered by the client acceptance file, and (b) a list of the services provided by the trust office covered by the client acceptance file and the information listed in, a.o., Article 12 of the Order. The trust office shall keep the client acceptance files available for the Dutch Central Bank (Article 18 of the Order).

Effective 1 August 2008, the Dutch Identification (Financial Services) Act (?Wet identificatie bij financiële dienstverlening?: WID) and the Disclosure of Unusual Transactions (Financial Services) Act (?Wet melding ongebruikelijke transacties?: MOT) have been replaced by one single act: the Money Laundering and Terrorist Financing Prevention Act.

The Dutch Money Laundering and Terrorist Financing Prevention Act (MTPA) (?Wet ter voorkoming van witwassen en financieren van terrorisme?) requires not only the client (referred to as the ultimate beneficial owner) but also their representatives to be identified before any service is provided. The MPTA not only applies to trust offices, but to other financial services providers as well, including civil law notaries, attorneys and tax advisers.

With respect to trust offices, this means that anyone who acts on behalf of a client must be identified, including so-called ?outside directors? (directors of the object company who are not linked to the trust office). Representatives are usually identified on the strength of a copy of their passport or other valid proof of identity. Identification under the MPTA must be recorded by the trust office.

Karel Frielink
Attorney (Lawyer) / Partner

Full post as published by Karel's Legal Blog on September 06, 2008 (boomark / email).