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Special BO register �as the main KYC tool for public contracting

The Slovak experience

February 2024| Andrej Leontiev

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Slovak Register of Partners of Public Sector - RPPS

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Factual background

2000 Public and free online Company Register
2011 Public and free online Register of Public Contracts
2012 Suspicions of a conflict of interest, bid-rigging and corruption in public procurement (e.g. CT Case)
2015 Several unsuccessful legislative attempts (e.g. disclosure of owners up to the third layer of ownership, discriminatory )

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Legal background

2016 Slovak Anti-Shell Companies Law (effective since February 1, 2017)
2017 4th AML D (closed register of BOs) (effective since June 26, 2017)
2020 5th AML D (public register of BOs)
2022 Revised FATF Recommendation 24

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Three pillars of RPPS

Broad scope
Verification by gatekeepers
Shifted burden of proof

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Seven years in figures

31 000 entities registered in RPPS (incl. app. 1 700 foreign entities)
20 Cypriot citizens as BO, 1 Maltese citizen as BO
2300 authorized persons (Top 10 AP do 10% of entities; avg. AP 15-20 entities)
Several politicians identified as BO (e.g. Holjencik case)

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Seven years in reviews

Legal Certainty Index (SBA): “3rd most positive legal measure in 2018”
2023 CIPE Study: “consensus that it was possible to remove shell companies from contractual relations between state and public sector”
Case C-601/20 (Sovim ruling): “use of public funds is a part of institutional and procedural transparency that justifies the restriction of the right to privacy”

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Cost analyses

Startup costs RPPS: 700k EUR
Annual operating costs RPPS: 700k EUR
Registration costs private entities app. 500 EUR (verification twice a year, app. 250 EUR)
Annual costs for private sector app. 24 mil. EUR

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Benefits analyses

2018-2019: 40 contracts value 15.5 mil. EUR lacking registration in RPPS
2019 -2020: 25 contracts value 5.5 mil. EUR lacking registration in RPPS
KYC transparency over app. 30 bln. EUR out of app. 50 bln. EUR public expenditures
265 000 entities in the Company Register vs. 31 000 entities in RPPS
90% of Top 100 Most Profitable Companies covered in RPPS

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Thank you for your attention!

Andrej Leontiev

Partner

Taylor Wessing Bratislava, Slovakia

+421 2 52 63 28 04

a.leontiev@taylorwessing.com

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