Kosovo has recently adopted Law No. 08/L-265 on the Register of Beneficial Owners, a key piece of legislation aimed at enhancing transparency and preventing financial crimes. Officially published on November 22, 2024, in the Official Gazette of Kosovo, this law not only addresses regulatory gaps but also lays the foundation for a transparent and trustworthy business environment in Kosovo, aligning it with the practices of European Union member states.
Law No. 08/L-265 introduces a Central Register of Beneficial Owners, creating an accessible and transparent database for information on individuals who ultimately control or benefit from legal entities. The main objectives of the law include:
- Transparency: The law requires businesses to disclose their ultimate beneficial owners (UBOs). This requirement aims to provide clear and accessible data on ownership and control, eliminating the possibility of concealing the true decision-makers behind legal entities.
- Compliance with EU Standards: By integrating elements from Directive (EU) 2015/849, the law aligns Kosovo’s regulatory framework with European Union standards on anti-money laundering (AML) and combating the financing of terrorism.
- Prevention of Financial Abuse: Through mandatory ownership disclosure, the law seeks to deter and address financial abuses such as money laundering, tax evasion, corruption, and other illicit activities.
- Accountability: The law imposes strict penalties for non-compliance, emphasizing its mandatory nature. This creates a deterrent effect while reinforcing accountability among entities and their stakeholders.
The law applies to a wide range of entities operating in Kosovo, ensuring a comprehensive approach to ownership transparency. These include:
- Corporate Entities: Limited liability companies (LLCs), joint-stock companies, and partnerships.
- Foreign Companies: Branches and representative offices of international businesses.
- NGOs and Trusts: Non-governmental organizations, foundations, and similar entities.
- Investors: Legal persons or individuals holding immovable property or investments in Kosovo.
Exemptions: Sole proprietorships, political parties, and religious organizations are not subject to this law.
Key Obligations for Businesses
To meet the requirements of the law, businesses must fulfill the following obligations:
- Disclosure of Ownership Details
Entities are required to submit comprehensive information about their UBOs, including:
- Full name and identification details.
- Percentage of ownership or voting rights.
- Method of control, whether direct or indirect.
- Updating Registers
Entities must notify the Kosovo Business Registration Agency (ARBK) of any changes in ownership within 30 days. This ensures the Register reflects accurate and up-to-date data.
- Ensuring Accuracy
Businesses are responsible for verifying the accuracy of all submitted information, maintaining a high standard of data integrity. Failure to comply with these obligations may lead to administrative penalties, including fines and suspension of services by ARBK.
The law balances transparency with privacy, clearly defining access rules:
- Unrestricted Access: Government agencies, such as the Financial Intelligence Unit, have full access to the Register for monitoring and enforcement purposes.
- Restricted Public Access: Members of the public may access certain data if they demonstrate a legitimate interest, ensuring that sensitive personal information is adequately protected.
Businesses operating in Kosovo must adapt quickly to these changes. The law introduces immediate compliance requirements and ongoing obligations to maintain accurate records. Non-compliance not only risks penalties but could also harm reputations in an increasingly transparent global business environment.
The Kosovo Business Registration Agency (ARBK) is tasked with managing the Register. Obliged entities that fail to comply will face penalties, which may include fines ranging from €500 to €5,000 for entities and up to €1,000 for individuals, as well as suspension of services for continued non-compliance.
This legislation complements broader reforms in Kosovo’s legal landscape, such as the proposed Law on Business Organizations, which focuses on digitalization and improved corporate governance. Together, these laës enhance Kosovo's business environment, signaling its readiness to integrate into the global economic community.
Law No. 08/L-265 is more than a compliance measure—it is a milestone in Kosovo’s journey toward becoming a transparent and responsible jurisdiction for international and domestic businesses. By aligning with EU directives and global best practices, the law positions Kosovo as an attractive destination for investment.
By Sabina Lalaj, Partner, and Majlinda Karaj, Associate, Lalaj & Partners
