Concept and Function of the Transparency Register
The transparency register is a central register in Germany that serves to record and disclose the beneficial owners of legal entities and registered partnerships. It was introduced to combat money laundering, terrorist financing, and other forms of organized crime. The legal framework is primarily based on the Money Laundering Act (GwG), which is regularly adapted in line with the implementation of European anti-money laundering directives.
Legal Bases of the Transparency Register
European Requirements
The introduction of the transparency register is based on European law requirements, in particular the Fourth and Fifth Anti-Money Laundering Directives of the European Union (Directive (EU) 2015/849 and Directive (EU) 2018/843). The aim is to increase transparency regarding the ownership structures of companies and to ensure traceability of assets.
National Implementation and Legislation
In Germany, the transparency register was established by the Act Implementing the Fourth EU Anti-Money Laundering Directive (GwG n.F.) with effect from June 26, 2017. Pursuant to § 18 GwG, it is electronically managed by Bundesanzeiger Verlag. The legal requirements regarding the type and scope of the information to be entered were considerably expanded by the Transparency Register and Financial Information Act of June 25, 2021 (TraFinG Gw).
Registration Requirement and Beneficial Owners
Entities Required to Register
The following are required to register in the transparency register:
- Legal entities under private law (e.g., GmbH, AG, foundation)
- Registered partnerships (e.g., oHG, KG, partnership company)
- Trustees as well as certain foundations and trusts with registered office or management in Germany
Definition of Beneficial Owner
According to § 3 GwG, the beneficial owner is the natural person who ultimately owns or controls the respective entity. Control can be exercised directly or indirectly, for example through a capital participation of more than 25% or corresponding voting rights. If no beneficial owner can be identified, the legal representative, the managing director, or partner of the entity is deemed the beneficial owner.
Content and Scope of Information to be Registered
The following data must be entered in the transparency register for each beneficial owner:
- First and last name
- Date of birth
- Place of residence
- Nature and scope of the economic interest
- Nationality
The extent of notification requirements depends on the respective ownership and control structure.
Inspection and Usage Rights
Access Authorization
The transparency register is, in principle, publicly accessible (§ 23 GwG). However, access entails different rights for:
- Obliged persons under the GwG (e.g., banks, notaries)
- Authorities within the scope of their statutory duties
- Any person, unless there are overriding legitimate interests to the contrary
Private access is limited to the core data of the beneficial owners. Authorities and obliged persons receive more extensive information, provided this is required for verification as part of their due diligence obligations.
Exceptions and Protection of Personal Data
The legislator has established special protective regulations for beneficial owners if their legitimate interests would be impaired by access. In such cases, a full or partial exclusion of access may be requested.
Reporting Obligations, Deadlines, and Fines
Reporting Procedures and Deadlines
The registration obligations must be fulfilled by the respective authorized representatives or partners of the affected entities. Notification is done electronically, immediately after becoming aware of the relevant data or, in case of changes, no later than within four weeks. With the TraFinG, the so-called notification fiction was abolished, meaning that all entities are now obliged to actively notify.
Sanctions for Violations
Violations of reporting obligations under the GwG can be penalized with severe fines (§ 56 GwG). The amount is determined by the significance of the breach, company size, and individual circumstances. Particularly serious, repeated, or untimely notifications are published on a public internet platform (“sanctions list”).
Practical Significance of the Transparency Register
The transparency register is a key instrument in the fight against money laundering and terrorist financing. It assists authorities, obliged persons, and the general public in identifying the actual ownership structure of companies and other entities. By increasing transparency, the legislator aims to reveal unlawful structures and strengthen the integrity of the financial and economic sector.
Ongoing Developments
The legal requirements for the transparency register are subject to ongoing development. Planned or already implemented adjustments to Union law as well as national legislative initiatives—such as for improved cooperation and interfaces with other registers—will shape the future structure and significance of the register.
Note: The above article provides a comprehensive overview of the legal framework and importance of the transparency register in Germany. For specific individual questions, it is advisable to consult the applicable legal provisions and official announcements.
Frequently Asked Questions
What legal obligations do companies have regarding registration in the transparency register?
Under the Money Laundering Act (GwG), companies are required to promptly and independently register their beneficial owners in the transparency register. This generally applies to legal entities under private law, registered partnerships, and certain foundations and trusts, provided they have their registered office in Germany or are managed from Germany. The reporting obligation covers collection and transmission of all relevant information about the beneficial owners, such as first and last name, date of birth, place of residence, nature and scope of the economic interest, and nationality. Even if there are no beneficial owners, this must be explicitly recorded. Violations of the reporting obligations constitute administrative offenses and may result in severe fines. Since August 1, 2021, the so-called notification fiction no longer applies; regardless of whether data is already stored in the commercial register or other registers, an entry must also be made in the transparency register.
Who is considered a beneficial owner under the law in connection with the transparency register?
A beneficial owner, pursuant to § 3 GwG, is a natural person who ultimately owns or controls a company or legal entity. This is defined by direct or indirect participation of more than 25% of the capital shares, voting rights, or control in a comparable manner, such as through the right to appoint or remove management. In the case of foundations or similar structures, this primarily includes beneficiaries and persons who can exercise a controlling influence. If, despite all reasonable efforts, no beneficial owner can be identified, the legal representative, managing shareholder, or partner must be registered instead (notional beneficial owner).
What sanctions and fines are imposed for violations of registry obligations?
The Money Laundering Act stipulates, in §§ 56 ff., severe fine regulations for violations of transparency obligations. Failure to comply with the reporting obligation, incomplete or late information, and providing incorrect data can constitute administrative offenses punishable by fines of up to EUR 150,000 (for a simple, first-time violation) or—in cases of serious, repeated, or systematic misconduct—even up to EUR 1 million or 2% of annual turnover. The fines are published in the transparency register (so-called naming & shaming). In particularly serious cases or repeated violations, there is also the risk of further supervisory measures by the competent authorities.
What deadlines must be observed for entering and updating information in the transparency register?
Information about the beneficial owner must be entered into the transparency register “without undue delay,” i.e., without culpable hesitation, after becoming aware or after the reporting obligation arises. Changes to the information, such as a change in the beneficial owner, must also be reported without delay. For the initial entry, staggered transitional periods were granted to various types of companies in the context of legislative amendments: until December 31, 2022 (public limited companies, SE, KGaA), March 31, 2023 (GmbH, cooperatives, European cooperatives, and partnerships), and June 30, 2023 (in particular for registered partnerships). After these deadlines, any omission is subject to sanctions.
Who has inspection rights to the transparency register and how is data protection regulated?
The transparency register is essentially an electronic register that can be viewed by anyone, provided a legitimate interest exists serving the purpose of combating money laundering or terrorist financing. Certain bodies such as supervisory, prosecution, and tax authorities as well as obliged persons under the GwG receive full access. The general public has restricted access, with particularly sensitive personal data, such as place of residence or date of birth, usually not displayed. Affected persons can, under certain conditions, apply for restriction of access, especially if publication would affect legitimate interests or create increased risk situations (§ 23 para. 2 GwG).
Are there exceptions to the registration requirement in the transparency register?
There are only very limited exceptions. The obligation to register may be waived if all required information about beneficial owners is already electronically accessible through another public register (e.g., commercial register)—the so-called notification fiction. This option, which was often used in the past, was abolished by the Transparency Register and Financial Information Act 2021. Since then, the transparency register has been established as a full register, meaning that, in principle, all notifiable companies are required to actively register. Only in the case of unregistered GbRs or informal associations may an exemption be possible in exceptional cases; in such situations, individual legal advice is required.
What documentation and retention obligations exist in relation to the transparency register?
Companies are not only obliged to register the beneficial owners. Rather, they must document the information collected and reported for this purpose and retain it for a period of at least five years from the date of notification as well as from the end of the business relationship with the beneficial owner (§ 8 GwG). In addition, management bodies must ensure that the data is always up to date and can withstand any inspections by supervisory authorities. The evidence requirement specifically relates to the accuracy, completeness, and currency of the information, including evidence of the identity and ownership relationships of the registered persons.
