In brief
The EU Anti-Money Laundering Regulation (EU) 2024/1624 ("AMLR") will establish a fully harmonized framework for the identification and disclosure of ultimate beneficial owners (UBOs) across the EU from 10 July 2027.
The new regime significantly expands existing transparency register obligations, introduces a more rigorous UBO identification framework, and imposes enhanced reporting and compliance requirements.
Companies operating in or with the EU – including foreign entities – should begin preparing without delay by reassessing their ownership and control structures, documentation processes, and reporting systems to ensure timely compliance with the AMLR.
Key changes
Harmonized EU-wide framework
The AMLR will replace key elements of national regimes, including the German Anti-Money Laundering Act (Geldwäschegesetz, GwG). It establishes a uniform transparency standard across the EU, significantly curtailing national discretion and aiming to eliminate fragmentation in UBO identification and reporting. A central feature of the new regime is the interconnection of national transparency registers via a European platform, enabling authorities to access consistent ownership information across EU Member States.
Expanded definition and identification of UBOs
The AMLR revises the concept of beneficial ownership and introduces a mandatory dual assessment approach:
Ownership test:
- A shareholding or controlling interest of 25% or more triggers UBO status (a stake of exactly 25% is sufficient to meet the threshold)
- In high-risk sectors, thresholds may be reduced to as low as 15%
Control test:
- Applies in parallel with the ownership test, not just as a fallback mechanism
- Captures contractual, voting, and de facto control arrangements
Only where the dual assessment yields no identifiable UBO may senior managing officials be reported as a fallback – without qualifying as UBO.
Enhanced reporting obligations for UBOs
The scope and granularity of the data to be reported will be significantly expanded:
Personal data will include (among others):
- Place and full date of birth
- Full residential address
- Personal identification numbers
- Citizenship(s)
Structural data requirements include:
- Full ownership chains/organizational charts
- Ownership percentages at every level of the structure
Entities will also be required to document the complete identification process, including the reasoning applied when including or excluding individuals as UBOs.
Stricter timelines and continuous compliance
The AMLR introduces a shift towards stricter timelines and continuous compliance obligations:
- Initial reporting must take place immediately after incorporation, in any event within 28 days
- Any relevant changes to be filed immediately and no later than within 28 days
- A mandatory annual review of UBO data will be required
Broader scope – including non-EU entities
The new rules extend transparency register obligations beyond EU-incorporated companies. Non-EU entities may be required to register UBOs, in particular where they are:
- Acquiring real estate within the EU
- Entering into business relationships with EU companies (subject to a risk-based assessment)
- Engaging in public procurement or high-value transactions
Nominee arrangements must be disclosed, including the identity of the nominator and its beneficial owners. Trusts and similar legal arrangements will be required to disclose all relevant identifying information, including details of settlors, trustees and beneficiaries.
Strengthened enforcement and sanctions
The AMLR requires EU Member States to introduce effective and dissuasive sanctions, including:
- Administrative fines
- Deregistration of non-compliant entities
- Restrictions on voting rights
- Bans on dividend distributions
The local sanctions frameworks are expected to be published in the coming days.
Outlook
While the AMLR is expected to facilitate UBO assessments in cross-border structures in the long term, the new rules will initially result in increased complexity and administrative burden. In particular, the broadened definition of UBO, enhanced data requirements, and the introduction of continuous compliance obligations will require companies to reassess and adapt their current processes.
Companies should begin preparing now by reviewing existing transparency register entries, aligning internal processes with the new requirements, and mapping complex ownership structures early.
Further guidance from the European Commission is expected and will be critical in clarifying outstanding interpretation questions.
Authors:
Stefanie Tesch, Counsel at Baker McKenzie (Munich)
Tobias Beck LL.M., Associate at Baker McKenzie (Munich)
Jan Neumann LL.M., Associate at Baker McKenzie (Munich)
