Financial Crime World

Slovakia Cracks Down on Shell Companies with New Beneficial Ownership Transparency Law

Introduction

In an effort to combat money laundering and shell companies, Slovakia has introduced a new law requiring the registration of beneficial owners for thousands of private entities doing business with the state. The Anti-Letterbox Act, which came into effect at the start of the year, aims to increase transparency and accountability in the country’s financial sector.

What is the Law About?

The new law requires certain entities to register in the public sector’s registry of partners, including:

  • Entities providing services or goods through public procurement
  • Companies concluding agreements with state authorities
  • Recipients of investment aid from the Slovak state
  • Holders of licenses in regulated industries such as energy or mining

Who Must be Registered?

The ultimate beneficial owner - a natural person who controls the company, directly or indirectly holding at least 25% of shares or voting rights - must also be identified and registered.

Public Access to Registry

The registry is publicly accessible online, allowing anyone to view identification data on the beneficial owners. However, only authorized individuals such as:

  • Attorneys
  • Notaries
  • Banks
  • Auditors
  • Tax advisors with a registered seat in Slovakia

can file applications for registration.

Sanctions for Non-Compliance

Companies that fail to comply with the new law face strict sanctions, including:

  • Fines of up to EUR 1 million
  • Fines ranging from EUR 10,000 to 100,000 for managing directors who are strictly liable regardless of culpability
  • Loss of license in specific cases

Criticisms and Uncertainty

Critics argue that the law is too broad and will cause problems for foreign private owners of Slovak entities who want to retain their privacy. Whether the law will achieve its main aim of combating shell companies remains uncertain.

Regional Efforts to Combat Money Laundering

Slovakia joins a growing list of European countries introducing beneficial ownership transparency measures, following the EU’s Fourth Money Laundering Directive. The move is part of a broader effort to combat money laundering and financial crime in the region.