Should a minor beneficiary be disclosed in the Central Register of Beneficial Owners?

A minor may also be a beneficiary of a family foundation. Due to the lack of full legal capacity, all rights and obligations of such a beneficiary are exercised by their legal representative.

In practice, this raises questions about fulfilling one of a family foundation's obligations under the Act of 1 March 2018 on Counteracting Money Laundering and Terrorist Financing (the "AML Act"). The concerns primarily revolve around whether a minor beneficiary should be disclosed in the Central Register of Beneficial Owners (the "CRBR") and how a family foundation should submit and update the notification.

In this article we explain:

• when disclosure of a minor beneficial owner in the CRBR is necessary,
• how to register a minor beneficiary together with their legal representative or guardian,
• what actions should be taken after the beneficiary reaches the age of majority, including deadlines for updating data.

Obligation to register in the CRBR

Family Foundation is one of the entities subject to the obligation to report beneficial owners to the CRBR pursuant to Article 58 of the AML Act.

The CRBR is an IT system used to collect and process information on the beneficial owners of entities indicated in the Act, as well as on persons authorized to submit reports.

In accordance with the guidelines of the Ministry of Finance, the application to the CRBR should be submitted within 14 days from the date of entry of the family foundation into the register of family foundations maintained by the District Court in Piotrków Trybunalski.

In a situation where a family foundation undertakes economic activities already as family foundation in the organization (e.g. opening a bank account), reporting to CRBR may be necessary already at this stage.

Who is the beneficial owner of a family foundation?

Pursuant to Article 2 of the AML Act, a beneficial owner is any natural person who directly or indirectly controls an entity by having powers enabling them to exert decisive influence on its actions or activities.

In the case of a family foundation, the beneficial owners are the beneficiaries indicated in the statute of the family foundation and on the list of beneficiaries, in accordance with the Act of 26 January 2023 on family foundation.

Is a minor beneficiary subject to disclosure in the CRBR?

Interpretative doubts arose regarding whether the reporting obligation also applied to minors. An additional complication was the divergent positions of various authorities.

However, in accordance with the guidelines of the Ministry of Finance published in the government's "Questions and Answers" section regarding family foundations, any person meeting the criteria for recognition as a beneficial owner should be reported to the CRBR – including persons under 18 years of age.

This means that a minor beneficiary of a family foundation is subject to disclosure in the CRBR.

How to register a minor beneficiary?

Due to the fact that the rights and obligations of a minor are exercised by his or her legal representative, the notification to the CRBR should also indicate the child's legal representative or guardian.

In practice, minor beneficiaries are most often the children of the founders, who, as parents, are legally their legal representatives. Often, these individuals are still subject to disclosure in the CRBR due to their roles in the foundation.

However, particular attention should be paid to situations in which:

• the beneficiary is a person unrelated to the founder,
• parents do not exercise parental authority,
• a legal guardian was appointed by court decision.

In such cases, the guardian's details should also be disclosed appropriately.

What happens after reaching the age of majority?

Once the beneficiary turns 18, it may be necessary to update the CRBR notification.

This applies in particular to situations where:

• the legal guardian was previously disclosed,
• parents were not subject to registration as beneficial owners nor persons representing.

In such a case, the update must be made within 14 days of the event justifying the change, i.e. from the beneficiary's 18th birthday.

Sanctions for failure to report

Correct and timely reporting and updating is crucial. Pursuant to Article 153 of the AML Act, failure to comply with this obligation may result in a fine of up to PLN 1,000,000:

• for the founder – in the case of a family foundation in the organization,
• for members of the management board – after the foundation is entered in the register.

Summary

In the light of the applicable regulations and current interpretative guidelines, it should be clearly assumed that a minor beneficiary family foundation is subject to disclosure in the CRBR. Age is not a factor excluding the status of beneficial owner within the meaning of the AML Act.

However, it is crucial that the representative relationship is correctly reflected in the notification and that the data is updated in a timely manner after the beneficiary reaches the age of majority.