Reflecting on President Trump’s first 100 days in office
Insights and Analysis
Changes in Beneficial Ownership rules under the new EU Anti-Money Laundering Regulation (EU) 2024/1624
11 April 2025
The adoption of the EU Anti Money Laundering Regulation (EU) 2024/1624 (the “AML Regulation") marks a significant advancement in the European Union's efforts to combat money laundering and terrorist financing. Effective from July 10, 2027, this regulation introduces comprehensive changes to the verification of beneficial ownership data. By harmonizing anti-money laundering regulations across the EU in a directly applicable Regulation, it aims to enhance transparency, consistency, and effectiveness in identifying beneficial owners. This article outlines the key changes, including enhanced verification requirements, detailed guidelines for complex ownership structures, and the role of the new EU Anti-Money Laundering Authority (“AMLA”). Whether you are a compliance professional or a business owner, this overview provides essential insights into the significant improvements, broadening of scope and challenges posed by the new regulation.
With the adoption of the EU legislative package to combat money laundering and terrorist financing, which will come into force on July 10, 2027, central anti-money laundering regulations within the EU will be fully harmonized. A significant part of this package is the redesign of the provisions for identifying beneficial owners, a concept that was introduced in the 5th money laundering directive but left to member states to implement at the national level. This resulted in significant fragmentation with different formulae being used in the different member states to calculate who should be treated as the beneficial owner of a company. These changes move this definition to the directly applicable AML Regulation with the aim of increasing transparency and consistency in the identification of beneficial owners, thereby strengthening the effectiveness of the EU's anti-money laundering measures.
The new AML package also introduces more robust offences for breach of AML provisions, including pecuniary sanctions.
The term "beneficial owner" is defined in the AML Regulation as any natural person who ultimately owns or controls a legal entity, an express trust, or a similar legal arrangement. This definition is further detailed in Chapter IV of the regulation, which includes 18 articles on the transparency of beneficial ownership. These articles govern the identification of beneficial owners for legal entities, legal entities similar to express trusts, and express trusts and similar legal arrangements. These definitions need to be read together with the detailed technical standards on customer due diligence (see EBA Consultation paper EBA/CP/2025/04).
Chapter 1
1Legal entities and partnerships
For legal entities and partnerships, beneficial owners are those natural persons who directly or indirectly hold a 25% or greater ownership interest in the entity or control it. Indirect ownership is determined by multiplying the ownership interests or voting rights. This method of calculation represents a significant change and ensures that beneficial owners in multi-tiered ownership structures are identified differently than before.
An example illustrates this: If Person 1, through various chains of ownership, holds 15% of the capital shares in a contracting party through Company 1 and Company 3, and another 15% through Company 2 and Company 4, these shares must be added together. Thus, Person 1 ultimately holds 30% of the capital shares in the contracting party and is therefore a beneficial owner. This detailed calculation method ensures that all relevant ownership interests are captured.
Control through ownership is defined as direct or indirect control through ownership of more than 50% of the shares or voting rights. Additionally, other forms of control are considered, including the right to appoint or remove the majority of the board members, exercise veto rights, or make decisions about profit distributions. This comprehensive view of control ensures that all relevant influence over an entity is captured.
Chapter 2
2Trusts and foundations
Special harmonized rules will apply to trusts and foundations. Beneficial owners of trusts and similar arrangements include the settlor, trustee, protector, and beneficiaries. For foundations, the founders, members of the foundation's governing body, and other controlling persons are considered beneficial owners. These specific provisions aim to increase transparency and a consistent approach to these complex legal arrangements in order to reduce opportunities for abuse.
Chapter 3
3Verification Requirements
The AML Regulation introduces stricter identification requirements to ensure a more thorough and consistent approach across the EU. Obliged entities must now collect additional information about beneficial owners, including their place and full date of birth, residential address, country of residence, and nationality or nationalities, in addition to their names.
A significant change under the AML Regulation is that obliged entities must verify beneficial ownership information using multiple sources and ensure consistency with the information obtained during the verification process. While central registers remain important, they should be used to cross-check information rather than serve as the primary source for verification. Therefore, obliged entities must verify data about beneficial owners using identification documents, electronic identification under the eIDAS Regulation, or "reasonable measures" to gather necessary data from customers or reliable sources. Verification from the Transparency Register alone is insufficient and must be supplemented.
The European Banking Authority (EBA) has recently suggested what "reasonable measures" might be in its consultation (EBA CP/2025/04) that includes draft technical standards relating to customer due diligence (the “EBA Consultation”). These measures include:
- Consulting public registers (excluding central registers) and other reliable national systems, such as residence, tax, passport, and land registers.
- Collecting information from third-party sources, such as utility bills, up-to-date information from credit or financial institutions, and documents from legal entities where the beneficial owner is named and certified by an independent professional.
This multi-source verification approach aims to increase the accuracy and reliability of beneficial ownership data.
The new rules for identifying beneficial owners significantly expand the pool of potential beneficial owners. Companies are required to obtain and maintain accurate, up-to-date information about their beneficial owners. These extensive requirements pose a significant implementation challenge, as they affect virtually every legal form and thus the entire economy in the EU.
Chapter 4
4Conclusion
In summary, the new provisions for identifying beneficial owners represent a significant step towards harmonizing and strengthening anti-money laundering measures in the EU. They increase transparency and uniformity in the identification of beneficial owners and are designed to help eliminate the different implementations and practices of anti-money laundering regulations in the member states.
However, they could pose significant burdens for companies, especially where there are complex group structures, who now have to identify and document who are their ultimate owners and controllers. Companies will need to start to undertake analysis early on in order ensure that they are able to meet the demands from July 10, 2027. Companies may also wish to submit responses to the EBA consultation on technical standards relating to customer due diligence, which contain further detailed specifications on how to assess who is a beneficial owner.
If you have any questions about beneficial ownership or the new AML regime please do get in touch with your usual Hogan Lovells lawyer or any of the lawyers listed below.
Authored by Michael Bowien, Richard Reimer, and Sarah Wrage.
Contacts
Frankfurt
Articles you may be interested in
Search
