Slovakia’s innovative approach
1. Definition of beneficial ownership
Slovakia adopted the EU’s Anti-Money Laundering Directive definition of beneficial ownership, but added an aspect on joint control and coordinated action, based on their own practical experiences of wrongdoing. This means that somebody may not meet the definition and threshold of beneficial ownership on their own, but they may meet it together with one or multiple other people. Joint control and coordinated action is assumed, for instance if people are family members, or if different shareholders show a similar voting history.
2. Responsibility for registration
This is delegated to a locally based ‘authorised person’ such as an attorney, notary, auditor, banker or tax advisor. The vast majority of verifications are carried out by attorneys. Verification documents showing how a beneficial owner was identified are publicly available on the Register, validated by the authorised person.
3. Qualified claim mechanism
The register has independent oversight and is governed by a Registration Court. Anyone can submit a claim querying data to the Registration Court, and if the Court finds it reasonable, there is a proceeding to require the company to verify the data they submitted. This reverse burden of proof is based on two principles:
- It is reasonable to ask people who register data to prove it is correct, because they have the best access to the data;
- It is fair for the burden of proof to be on owners, because they benefit most from the ownership.
4. Enforced sanctions for false information
If queried data remains incorrect or incomplete, the court can fine the company, remove them from the register and current government contracts can be cancelled. Fines can be up to 100% of the economic benefit of a company’s government contracts, or if that cannot be determined, up to €1m. Authorised persons and those in management positions can be fined up to €100,000. Removal from the register means a company cannot undertake contracts with the government.