Financial Crime World

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Transparency Proposal to Unveil Hidden Beneficial Owners in Denmark

A new proposal aims to increase transparency and combat money laundering by publishing detailed information about beneficial owners of companies registered in Denmark. The proposal, which was presented at a recent conference, seeks to expand the scope of the Central Business Register (CVR) to include more data elements.

Proposal 1: Requirements

Companies should provide a detailed description of their purpose, as well as information about:

  • Bank accounts or sufficient justification for not having one
  • Companies financed by innovation or growth funds would need to disclose financing details and whether public bodies have a mortgage on their assets

Additionally, the proposal suggests registering beneficial owners for various types of legal entities, including:

  • Cooperative housing associations
  • Trusts
  • Persons with temporary residence permits in Denmark would need to provide information about the basis of their residence

Proposal 2: Scope

Expanding the scope of the CVR could help create more transparency and increase opportunities for mapping potential criminal networks. The proposal suggests:

  • Raising ownership history from three years to ten years, allowing for a better understanding of individual beneficial owners’ activities over time
  • Lowering the ownership limit from 25% to 10%, as many companies already operate below this threshold
  • Introducing stricter rules for Nominee Agreements, ensuring that individuals are held accountable for their roles

Proposal 3: Identification

To create more certainty about beneficial owner identification, the proposal suggests:

  • Publishing additional data elements, such as date of birth and nationality
  • Removing address protection (currently used by around 20,000 individuals) and introducing a two-step verification process for passport identification

The proposal emphasizes the importance of personal data sensitivity and legal certainty in any changes to the beneficial owner registration system.

Proposal 4: Verification

For companies performing Know-Your-Customer processes, a lookup in CVR is not sufficient on its own. The proposal suggests verifying beneficial ownership information through other sources, such as:

  • Financial statements or tax returns

Case Studies

The proposal includes two case studies illustrating the value of public, free access to beneficial owner data. In one example, a journalist from Ekstra Bladet used CVR data to reveal how ICO Concerts sent millions in dividend tax-free to a company in Cyprus, whose beneficial owner was also connected to ICO Concerts.

In another example, a documentary by DR (Danish Broadcasting) exposed how Rexkern, a Danish company, helped other companies avoid paying bills to the state. The investigation used CVR data to identify beneficial owners and link them to bank statements and undeclared labor practices.

Conclusion

The proposal aims to increase transparency and combat money laundering in Denmark by publishing detailed information about beneficial owners of companies registered in the country. By expanding the scope of the CVR and introducing stricter rules for Nominee Agreements, the proposal seeks to create a more transparent and accountable business environment.