Last December, Risto Mägi, a member of the board for Brem Avarii, the emergency service for real estate management company Brem, turned to Tartu County Court to inquire how to modify a company's actual beneficiary history data in Estonia's commercial register as the records were incorrect.

Namely, there was a change in company shareholders last November 15, which simultaneously changed the actual beneficiary. The commercial register displayed the correct date for the change of ownership, however listed as the date of the change in actual beneficiary was November 27 – which is when the company director made the change in the commercial register.

Replying to Mägi's request for the data to be amended, Tartu County Court said that the county court's registration department cannot make changes to actual beneficiary data.

Unsatisfied with this response, Mägi inquired who in the Republic of Estonia is the one who can make these changes, or else who should be asked this.

"We have vast IT systems and an e-state – it cannot be the case that no one can change the incorrect history of actual beneficiary data," he underscored in his response to the court. "Shouldn't the purpose of a commercial register be that the data within it is accurate?"

Gerli Aasmäe, registrar at Tartu County Court's Registration Department, replied that they lack the functionality to modify data in the register, and that Mägi should consult with the Ministry of Finance or Ministry of Justice to specify what options exist.

Ministry refers to other ministry

The Brem Avarii representative subsequently sent a letter to both ministries, once again detailing the problem and asking for an explanation on how actual beneficiary history data can really be amended in the commercial register.

From the Ministry of Justice he received a reply from Court Registers Division adviser Berit Tasa, who explained that by law, the commercial register upon a change in company shareholder data and the database upon a change in actual beneficiary data may have differing start dates. The validity of a new actual beneficiary's data can begin from the moment the board submits the corresponding changes.

The Justice Ministry suggested requesting more detailed information from the Ministry of Finance, which serves as controller of the database of actual beneficiaries.

Speaking to ERR, Henrik Mägi, an adviser at the Finance Ministry's Financial Information and Intelligence Policy Department, said that making changes to actual beneficiary data is as easy as adding it, and that a legal entity's management board can change current actual beneficiary data at any time, however things are indeed more complicated when it comes to historical data.

"This is a database's public digital archive, which reflects previously disclosed data," Mägi explained. "The aim is for what information was available via the database during previous periods to be identifiable. Therefore, this data cannot be changed later."

He added that only valid data has legal effect. Under the Money Laundering and Terrorist Financing Prevention Act, obliged entities must verify who is the actual beneficiary of a client or person conducting the transaction at the time of the transaction, when monitoring a business relationship or at the time of establishing a business relationship.

"Historical data on beneficial owners has no direct legal effect," the adviser affirmed.

Even so, legislative intent is currently being drawn up at the Finance Ministry in which they are considering introducing additional capabilities to the actual beneficiaries database, including data revision solutions that could also include making additions to historical data as well as the publication of data.

"In any case, all provided historical data must be preserved, even if it is incorrect," he stressed.

Ministry: False addresses a crime

Previously, there have been reports in news about how companies in Estonia can be registered at strangers' addresses or actually vacant buildings, but if an apartment owner wants to check whether they have any companies registered to their address, they have to submit a digitally signed request to do so.

According to Ministry of Justice public affairs adviser Elisabet Mast, making false declarations is a crime.

"If you suspect such a situation, then you must report it to the police," Mast said.

She stressed, however, that the distinction must be made between making false declarations and situations where data has ended up false later, e.g. when a company has moved out, but hasn't yet updated its address with the commercial register. In this case, the owner of the apartment can notify the administrator of the commercial register that this data is incorrect, and then the commercial register administrator can initiate a supervisory procedure.

"It should also be noted that companies have been required for some time now to provide the register with an email address as well, and all procedural documents sent to that [email address] are deemed to have been served," the Justice Ministry representative noted. "Therefore, the provision of a false address does not grant a company the opportunity to evade proceedings."

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