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The fact that the German Federal Office of Administration (Bundesverwaltungsamt) is increasingly conducting administrative procedures against companies that have failed to fulfil their initial notification obligations with respect to the Transparency Register should be common knowledge by now.
A fine of up to EUR 150,000 can be imposed for simple violations, while up to one million euro or twice the amount of the economic benefit of the infringement may be levied for serious, repeat or systematic infringements, even where information provided to the Transparency Register is not updated when changes later occur. These fines may be imposed on companies, but (depending on the facts) also against their executive directors or economic beneficiaries.
A modification could be a change of a beneficial owner of a company, but it could be as simple as a change of their place of residence (e.g. following a move) or a change of name due to marriage. In this respect, the information recorded in official identity documents will be decisive.
As notaries, lawyers and tax advisors, among others, have been obliged since 1 January 2020, under the threat of a fine pursuant to § 23a of the German Money Laundering Act, to notify the Transparency Register of any discrepancies the have identified between the entry in the Transparency Register and the documents provided by the company about its beneficial owner, the discovery of no longer up to date Transparency Register entries can be expected to increase.
However, this obligation to notify discrepancies is not the only way that outdated entries in the Transparency Register will be uncovered. When providing information about a beneficial owner, the Transparency Register compares the information provided with other information already in its database and notes any discrepancies. Fines apply if up-to-date information is not provided without delay.
The above explanations show that a one-time report to the Transparency Register is not enough.
In order to avoid discrepancy reports and any fines that may be imposed as a result, companies must also ensure that all information provided to the Transparency Register is checked regularly and kept up to date. Companies should therefore establish a compliance system (effective internal monitoring and reporting system) to regularly check and document – at least once a year - whether there are any changes concerning the reported beneficial owners.
