Czech lower house passes amendment on definition of real owners

The current law is not in line with EU rules on money laundering, and without a change the country could lose EU funds.


Written by ČTK Published on 08.07.2022 11:08:00 (updated on 08.07.2022) Reading time: 2 minutes

The Chamber of Deputies passed an amendment to the Czech law on the registry of real owners, based on the reservations of the European Commission to the law, in a shortened procedure. The European Commission previously said the current Czech law does not correspond with the European rules against money laundering and financing of terrorism.

The amendment will extend the definition of real owners to also concern churches and religious organizations, political parties and movements, trade unions, professional and employer organizations, hunting societies, and cooperative housing owners. So far, these groups have had an exemption.

The amendment cancels the difference between the real owner as the final recipient and the person with the final influence. It states that the real owner owns or controls the company or other entity. "The fundamental change consists in the introduction of a uniform material characteristic of the beneficial owner. This consists in the fact that the beneficial owner owns or controls the legal entity or legal arrangement," the amendment’s rationale states.

The amendment was supported by 145 out of the 153 deputies present in the lower house and will now be submitted to the Senate for approval. If it passes there, it will go to the president for his signature.

EU funding earmarked for the Czech National Recovery Plan will not be paid out to Czechia unless the required changes in the law are urgently passed. Czechia may get up to CZK 179 billion from the EU.

Finance Minister Zbyněk Stanjura said Czechia would like to apply for the first payment of EU funds for the plan already this year. For this to be possible, the amendment needs to take effect from Oct. 1.

The Pirates recently said the ANO movement threatened to block the discussion on the amendment unless it is changed so that ANO leader Andrej Babiš is not considered the real owner of the huge Agrofert holding. ANO deputy chairman Radek Vondráček said in reaction this is a lie.

ANO lower house group head Alena Schillerová said ANO would not threaten the drawing of money for the National Recovery Plan.

Vondráček said the government coalition apparently wanted to harm the Agrofert holding and Babiš irrespective of what the EU resolution demands. Finance Minister Stanjura rejected this. Pirates lower house group head Jakub Michálek said the aim is to be more transparent.

Babiš transferred the huge holding to trust funds several years ago to comply with an amendment to the Czech law on the conflict of interest.

Business corporations will have to reassess who is their real owner based on the new law. Data of a great majority of entrepreneurs will be automatically put in the registry according to records in other lists. The first recording of data will be for free for the other entrepreneurs. The recording will then cost CZK 4,000, CZK 2,000, or CZK 500, depending on the type of business entity.

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