Debrief from Brussels

This summer, the European Union will elect a new parliament for the next five years. Therefore, the European institutions are currently running at full speed to finalise the still ongoing legislative initiatives before the end of the term. This offers the opportunity to take a look at the most important European legislative proposals from a notarial perspective.

EU Anti-Money Laundering Package

Four legislative proposals make up the EU AML package of which three are relevant to the notarial practice: The new Anti-Money Laundering Regulation (AMLR), the Sixth Anti-Money Laundering Directive (AMLD) and the new Regulation establishing the Anti-Money Laundering Authority (AMLA Regulation). After the European institutions reached a political agreement in December 2023 and January 2024, final compromise texts were published in February which still have to be formally adopted by the European Parliament and the Council.

The AMLR provides uniform rules for obliged entities, the risk assessment, the scope of the applicable customer due diligence requirements and beneficial ownership creating a full harmonisation within the European Union. Regarding the rules for the identification of clients and beneficial owners, the AMLR coincides with current German law. There will be a change, however, regarding the determination of beneficial ownership. While the threshold remains at 25 %, a new calculation method will apply: Within a chain of entities, ownership interest is being multiplied and in case of various chains, the ownership interests are then being added up. In addition, the AMLR provides that when a new business relationship is entered into or a transaction is being performed, the source and destination of funds have to be obtained (but not verified). However, in low-risk cases, it is not mandatory to obtain such information.

The AMLD addresses the organisation of institutional AML systems at national level in the various member states. This includes, among others, the organisation and interconnection of national transparency registers.

The AMLA Regulation will establish a new EU Anti-Money Laundering Authority (“AMLA”) which will be based in Frankfurt. Regarding the non-financial sector, the AMLA will neither have direct supervision nor a right to directly intervene with national supervisory authorities. Nevertheless, the AMLA remains relevant for notaries as it can issue standards, guidelines and recommendations, both to supervisory authorities and to obliged entities including notaries.

Digital Tools Directive 2.0

The first Digital Tools Directive from 2019 introduced notarial online procedures in company law. Last year, the Commission took the next step in digitalising company law by publishing its proposal for a new directive. The so-called Digital Tools Directive 2.0 aims to further expand and upgrade the use of digital tools and processes in European company law. On 13 March 2024 the European Parliament announced that a compromise had been reached.

The proposal stipulates a mandatory public preventive control in company law by administrative authorities, courts and/or notaries. Furthermore, as part of this public preventive control, a catalogue of minimum requirements that need to be checked is established to ensure reliable register data within the European Union. To enable the use of this previously checked company data across borders, the proposal introduces a so-called EU Company Certificate which can be, among others, obtained electronically via the BRIS. The initiative also provides for a contractual, digital EU Power of Attorney, which shall be accepted as evidence of the authorised person’s entitlement to represent the company in cross-border measures under the Directive.

Revision of the eIDAS Regulation

Back in 2014, the European legislator adopted a regulation on electronic identification and trust services for electronic transactions which was being revised during the course of the current Parliament’s term. The final agreement has now been adopted by the Parliament and the Council, so that only the publication in the Official Journal of the European Union is still pending. The revised eIDAS Regulation will introduce an EU-wide wallet, the so-called European Digital Identity Wallet. The wallet will enable citizens to identify themselves and provide signatures by means of qualified electronic signatures within the EU. It will also be possible to use this electronic tool for identification purposes in the context of notarial online procedures. Furthermore, users may add so-called attributes to the wallet, such as driver licences, diplomas or bank accounts. Last, the aforementioned EU Company Certificate and the digital EU Power of Attorney are intended to be compatible with the wallet.

e-Justice Regulation

The European institutions adopted the Regulation (EU) No 2023/2844 on the digitalisation of judicial cooperation in cross-border civil, commercial and criminal matters (e-Justice Regulation) on 13 December 2023. However, the regulation will only apply from 1 May 2025. It will facilitate electronic communication of authorities with each other on the one hand and of citizens or companies with authorities on the other hand. For the former, using electronic communication is generally mandatory in regard to the laws covered by the regulation, while for the latter it is optional. The electronic exchange will be done via a decentralised IT system “e-CODEX”, which was developed with the financial support of the European Commission. The e-CODEX system will also interconnect national and European IT systems.

The regulation has only limited applicability to notaries. While notaries constitute authorities in the meaning of the regulation, the scope is currently limited to, among others, the issuance of certificates regarding the content of an authentic instrument for their enforcement abroad or to proof the evidentiary effects of authentic instruments abroad within the framework of European regulations, such as the EC Maintenance Regulation (Regulation on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligation), the EU Succession Regulation (Regulation on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession) and the EU Matrimonial Property Regulation (Regulation on implementing enhanced cooperation in the area of jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes). The e-Justice Regulation also applies to the communication with courts within the scope of the EU Succession Regulation.

Outlook

The above-mentioned legislative initiatives are anticipated to be adopted within this legislative period, if they have not been passed yet. In addition, there are more legislative dossiers relevant to notaries which are, however, not expected to be finalised before the new parliament will be elected. This includes for example the parenthood proposal or the legislative package regarding the protection of adults. The former will provide a uniform set of rules on jurisdiction, applicable law, recognition of decisions and acceptance of authentic instruments in matters of parenthood. The initiative shall further create a European Certificate of Parenthood. The package on the protection of adults is comprised of two legislative acts: The first is a proposal on a Council Decision that will oblige all member states to become or remain parties to the 2000 Protection of Adults Convention, the second is a proposal for an accompanying regulation.

Unlike the Bundestag, the European Parliament does not follow the principle of discontinuity. Thus, legislative files that have not yet been finalised will be continued by the newly elected parliament in the new term. We can therefore continue to expect legislation from Brussels which will be relevant to the notarial profession.

About the author

Monika Pickard is a notary candidate in the district of the Koblenz Chamber of Notaries and works as a legal advisor in the Brussels office of the German Federal Chamber of Notaries.