Following the enactment of Presidential Regulation no. 13 year 2018 concerning Implementation of the Principle of Knowing Beneficial Owner of Corporations related to the Prevention and Eradication of Money Laundering and Terrorism Financing Crimes (“PR 13/2018“) on 5 March 2018, the Minister of Law and Human Rights (“MOLHR“) recently issued Regulation no. 15 year 2019 regarding Implementing Procedures for the Application of the Know-Your-Beneficial-Owner Principle by Corporations (“MOLHR Regulation 15/2019”). The MOLHR Regulation 15/2019 came into effect on 27 June 2019 and acts as the implementing regulation to lay out the technical details.
The Beneficial Owner identification and verification obligation applies to Corporations i.e. limited liability companies, foundations, associations, cooperatives, limited liability partnerships, and firms.
The MOLHR Regulation 15/2019 essentially elaborates further about the following procedures, i.e., the (A) identification criteria, (B) obligation to report information, and (C) right to exchange information on Beneficial Owners of a Corporation.
A. Identification criteria of Beneficial Owner
Corporations are required to (i) identify and verify Beneficial Owners, who are individuals who (ii) meet the criteria set out below:
i. Identification and verification of Beneficial Owner
Regulation 15/2019 echoes the requirements contained in PR 13/2018 regarding the sources of information from which the Beneficial Owner of a Corporation may be established, but further expounds the requirements.
The above-mentioned documents are then to be verified by the Corporation.
ii. Criteria of Beneficial Owner
The MOLHR Regulation 15/2019 reiterates the criteria that qualify a Beneficial Owner as stipulated in PR 13/2018 for limited liability companies. It defines a Beneficial Owner as an individual who:
B. Obligation to report
The most significant addition contained in MOLHR Regulation 15/2019 would be the provisions regarding reporting obligation, which is based on the establishment or during the conduct of business, as follows:
Report of Beneficial Owners information at establishment, registration, or legalisation
Report of Beneficial Owners information during the conduct of business
Please note that since 2017 the Notary is obligated to apply Know-Your-Customer Principle under the MOLHR Regulation no. 9 year 2017 concerning the Implementation of the Know-Your’s-Customer Principle by Notaries, which they are required:
C. Obligation to exchange information
The MOLHR Regulation 15/2019 further stipulates that the information on Beneficial Owners can be shared by the MOLHR with requesting institutions including (i) law enforcement bodies, (ii) government bodies, (iii) authorised bodies of other countries/jurisdictions, and (iv) the Financial Transaction Reporting and Analysis Center (PPATK). It also provides that further regulation regarding request of information on Beneficial Owners will be stipulated by the MOLHR.
D. Request of information of Beneficial Owner
The MOLHR Regulation 15/2019 states that anyone can request information of beneficial ownership of a certain Corporation to the MOLHR. This request will be regulated further by the MOLHR.
This alert is for general information only and is not a substitute for legal advice.