Disclosure Requirements - Georgia
Disclosure Category: 2
Consent
In order to comply with the legislation as aforementioned, customers entering into transactions in the Georgian domestic market must consent and are hereby deemed to consent to disclosure requirements.
Customers not willing to give this consent cannot hold such securities and/or financial instruments in their account with CBL.
In the case of holding Georgian securities, Clearstream Banking S.A. (“CBL”) may fall under a legal obligation, under the Georgian Laws (as referenced below), to disclose the identity and holdings of its customers.
Disclosure Requirements
The obligations of identification of beneficial owners of the accounts are stipulated in the law of Georgia on Facilitating the Prevention of Illicit Income Legalisation (article 6, paragraphs 10,11,14), decree #4 of Financial Monitoring Service of Georgia (article 6) and the obligation of the nominee account holder to provide information to commercial bank with respect to their clients and/or beneficial owners is defined in decree #24/04 of National Bank of Georgia (article 5, paragraph 2).
Additionally, commercial banks have their reporting obligations to the Financial Monitoring Service of Georgia on the transactions that fall under monitoring (article 5, paragraph 2, law of Georgia on Facilitating the Prevention of Illicit Income Legalisation), which generally includes the identification of beneficial owners of the nominee accounts, record of the content of transaction, identification of a person on whose order the bank implements operation and/or a person in case if transaction is implemented in favour of the third party and basis for executed operation (article 10 and article 12, paragraph 11, decree #4 of Financial Monitoring Service of Georgia; article 10, paragraph 6, article 12, paragraph 5, law of Georgia on Facilitating the Prevention of Illicit Income Legalisation).
If the information is requested by or reported to the Financial Monitoring Service of Georgia , commercial banks do not have any right to reveal the purpose of the request and the requester itself to CBL (law of Georgia on Facilitating the Prevention of Illicit Income Legalisation Article 12, paragraph 1, Criminal Code of Georgia Article 2021 ; decree #4 of Financial Monitoring Service of Georgia ,article 12, paragraph 13).
Background and Legal basis
As described in article 17, paragraph 1 and 2 law of Georgia on activities of commercial banks, the commercial banks regulated on the territory of Georgia can reveal confidential information about any person (including the beneficial owners of the accounts)1 to the following institutions and bodies:
- National Bank of Georgia (article 17, paragraph 1 law of Georgia on activities of commercial banks),
- the Financial Monitoring Service of Georgia (article 17, paragraph 2, law of Georgia on activities of commercial banks),
- Enforcement Authority (article 17, paragraph 2, law of Georgia on activities of commercial banks),
- Other entities based only on the relevant court order.
Sanctions
There is no direct sanctions applicable to CBL or its customers in case of failure to disclose relevant information in accordance with the legislation either to the regulator or to monitoring body.
Disclaimer
It remains the sole responsibility of the customer to ensure compliance with local disclosure requirements. If a local requirement is not met, it is the customer who will be liable to any related penalty. Customers are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
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1 - Person - an individual or legal entity or any other organisational formation, which is not strictly a legal entity (article 1, law of Georgia on activities of commercial banks);
- Person – any resident or non-resident natural person and legal entity, as well as organisational formation considered under legislation, which does not represent a legal entity (unregistered union, partnership, partnership of apartment owners) (article 2, decree #4 of Financial Monitoring Service of Georgia);
- Person involved in a bank operation (transaction) – all persons participating in the bank operation (transaction), including parties of the bank operation (transaction), their representatives and agents, as well as third parties in whose favour bank operation (transaction) is concluded (article 2, decree #4 of Financial Monitoring Service of Georgia).
- Client - any person who addresses to the bank for the service defined by the Georgian legislation as the principal activity of the latter or/and uses such service.