Luxembourg: new requirements to trusts
Luxembourg has tightened the requirements to trusts in relation to disclosure of information in accordance with the latest rules of the European Union (AMLD5 Directive) and in anticipation of the new round of evaluation by FATF.
In 2018 the EU adopted stricter rules for trusts – fiduciary arrangements in which assets are held by a trustee in favor of beneficial owners.
Trusts will now have to show all persons involved, including the person who established the trust, the trustee and the beneficiaries who ultimately own the assets. Failure to comply with the new requirements can result in penalties of up to 1.25 million euros.
At the same time, unlike the register of beneficiaries of companies, the register of trusts will not be freely accessible. The information can only be obtained by filing a request with the Luxembourg tax authority.
If there are risks of fraud, blackmail or other persecution in relation to the beneficiaries, or the beneficiary is a minor or legally incapable, the trust may apply to “close” their data to third parties.
The Luxembourg register of trusts must be integrated with the European Central Platform for exchange of information between EU countries until March 2021.
Caribbean states temporarily lower prices for second passports
The dramatic drop of the tourism industry due to the pandemic has prompted some countries of the Caribbean to consider temporarily lowering prices for citizenship by investment programs. Such programs allow wealthy foreigners to obtain a second passport in exchange for investing in the local economy.
The Federation of Saint Kitts and Nevis announced that by the end of this year, the cost of investing in the national Sustainable Growth Fund (as a condition for obtaining citizenship) will be only USD 150,000 for a family of four. This is 23% below the standard investment for such a family, which is USD 195,000.
Dominica, due to the COVID-19 crisis, decided not to increase the cost of citizenship by investment until at least 2021.Previously Dominica planned to increase the minimum cost of its passport by 75% – up to USD 175,000. Currently it remains at the level of USD 100,000 which is one of the lowest in the world.
Saint Lucia introduced a new citizenship option in May 2020. A Saint Lucia passport can be obtained by purchasing special non-interest-bearing bonds for a period of 5 years and worth USD 250,000 for an individual applicant or 300,000 for a family of four people. This option will be valid until the end of this year.
It is important to note that the current special offers are temporary and are caused by the need to restore local economies after the COVID-19 crisis.
Mauritius strengthens anti-money laundering laws
The Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous Provisions) Act has been enacted in Mauritius. It amends 19 existing laws in accordance with the requirements of FATF (Financial Action Task Force).
In May 2020, the European Union included Mauritius in the draft list of high-risk countries with strategic deficiencies in prevention of money laundering. In order to address these shortcomings, Mauritius promptly adopted the following changes:
- new companies, partnerships and foundations will have to file the information on their beneficial owners with the Registrar of Companies upon incorporation and later renew this information;
- existing companies will be required to provide the information on their beneficiaries at the request of the competent authority;
- regulated entities upon detection of a suspicious transaction or the emergence of a reasonable belief that such a transaction has been carried out, will have to report a suspicious transaction to the financial intelligence unit within 5 days;
- the regulators, in particular the Bank of Mauritius, have been vested in greater powers to supervise and review transactions made by the licensed entities. The Registrar of Companies and the Financial Services Commission will carry out more frequent checks of the documentation of regulated entities;
- the maximum penalty for non-compliance with the AML requirements has been increased up to MUR 10 million (around EUR 212,000) with the maximum term of imprisonment for 5 years.
Hong Kong: Limited Partnership Funds
The Limited Partnership Fund Ordinance has been adopted in Hong Kong. The Ordinance enters into force on 31 August 2020.
The Law is intended to strengthen Hong Kong’s position as a leading international center for asset management by attracting to the jurisdiction investment funds (including private equity and venture capital funds), specifically in the innovation and technology fields.
Limited Partnership Fund (LPF) is a collective investment scheme organized in the form of a limited partnership to manage investments for the benefit of its investors. Pursuant to the direct provision of the Law (section 15), LPF does not have a legal personality.
Being a partnership, LPF must have one general partner who exercises management and bears unlimited liability for obligations of the LPF, and at least one limited partner who contributes capital and does not participate in management (except for a number of permissible actions, the list of which is determined by the Law). The general partner must appoint an investment manager for the day-to-day management of the fund’s investments, as well as an auditor.
Partners are given wide discretion in defining relations between themselves within the LPF, and the activities of the fund. The Partnership Agreement may determine procedures of admission and withdrawal of partners of the LPF; the transfer of interests in the fund by the limited partners; management and decision-making procedures; investment scope and strategy; powers, rights and obligations of the partners; capital contributions and distribution of proceeds etc.
Seychelles: amendments to local Companies Act
Seychelles adopted amendments to the Companies Law 1972, which governs local (not international) companies. The amendments do not affect International Business Companies that are subject to a separate IBC Act of 2016 (previously – 1994).
The new version of the Law strengthens the status of a company secretary (whose appointment is mandatory for local companies). The secretary should be resident in Seychelles; the position of secretary must not remain vacant for more than 90 days (otherwise the appointment of a secretary may be ordered by the court). Failure by the directors of the company to comply with these requirements is an offense and entails a fine of up to SCR 20,000.
The revised section 305 (on striking names of defunct companies off the register) stipulates that such striking shall not affect the liability of any director, shareholder, secretary, officer or member of a company, and such liability shall continue and may be enforced as if the company has not been dissolved.
Other amendments deal with maintaining the register of companies by the Registrar, annual fees, issuance of certificates of good standing and certificates of official search.