An enterprise is any entity engaged in an economic activity, regardless of its legal form. These include self-employed persons and family businesses engaged in craft or other activities, as well as partnerships or associations that regularly carry out an economic activity. (13) In order to avoid arbitrary distinctions between different public bodies in a Member State and taking into account the need for legal certainty, it is considered necessary to confirm that an undertaking holding at least 25 % of its capital or voting rights and controlled by a public body is not an SME. Paris, 4. March 2022 – The Working Group on Anti-Money Laundering and the Financing of Terrorism today adopted amendments to Recommendation 24 and its interpretative note, requiring countries to prevent the misuse of legal persons for the purpose of money laundering or terrorist financing and to provide adequate information, accurate and up-to-date on beneficial ownership and control of legal entities. These changes respond to significant abuses by legal entities in money laundering, terrorist financing and proliferation financing in a number of countries. FATF mutual evaluations show that the effectiveness of combating the misuse of legal persons for money laundering and terrorist financing purposes is generally insufficient globally and that countries need to do more to implement current FATF standards quickly, fully and effectively. Both the evolution of money laundering risks and widely publicised failures to prevent the misuse of legal persons show that the applicable standards need to be updated. These higher standards are an important first step, but combating the misuse of legal entities requires constructive and sustained efforts by all countries to effectively implement the new standards and address risks. Commission recommendation of 6. May 2003 concerning the definition of micro, small and medium-sized enterprises (notified under document number C(2003) 1422)(Text with EEA relevance)(2003/361/EC)THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular the second indent of Article 211 thereof, (1) In a report submitted to the Council in 1992 at the request of the Industry Council of 28 May 1990: The Commission had proposed to limit the dissemination of the definitions used at Community level for small and medium-sized enterprises. Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises(1) was based on the idea that different definitions at Community and national level could lead to inconsistencies.

Following the logic of an internal market without internal borders, the treatment of undertakings should be based on a set of common rules. The adoption of such an approach is all the more necessary as national and Community measures to support micro, small and medium-sized enterprises (SMEs), for example in the context of the Structural Funds or research, are fully linked. This means avoiding situations where the Community concentrates its activities on one category of SMEs and Member States on another group of SMEs. Furthermore, it was considered that the application of the same definition by the Commission, the Member States, the European Investment Bank (EIB) and the European Investment Fund (EIF) would improve the coherence and effectiveness of measures targeting SMEs, thus limiting the risk of distortions of competition. (2) Recommendation 96/280/EC has been fully implemented by the Member States and the definition set out in the Annex has been incorporated into Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises(2). In addition to the need to adapt Recommendation 96/280/EC to economic developments in accordance with Article 2 of its Annex, account should be taken of a number of difficulties of interpretation encountered in its application and the comments made by undertakings. In view of the many amendments that currently need to be made to Recommendation 96/280/EC and for reasons of clarity, the Recommendation should be replaced. (3) It should also be clarified that, according to Articles 48, 81 and 82 of the Treaty, as interpreted by the Court of Justice of the European Communities, any entity engaged in an economic activity, including in particular entities carrying out craft and other activities on an individual or family basis, is to be regarded as an undertaking, whatever its legal form, – partnerships or associations, which are regularly economically active. (4) The criterion of the number of staff members («number of persons criterion») undoubtedly remains one of the most important and must be taken into account as the main criterion. However, the introduction of a financial criterion is a necessary complement to capture the actual size and performance of a company, as well as its position in relation to its competitors.

However, it would not be desirable to use turnover as the sole financial criterion, especially since undertakings in the trade and distribution sector naturally have a higher turnover than manufacturing undertakings. Therefore, the criterion of turnover should be combined with that of balance sheet total, which reflects the total assets of an undertaking, with the possibility that one of these two criteria may be exceeded. (5) The turnover ceiling refers to undertakings engaged in very different economic activities. In order not to unduly limit the usefulness of the application of the definition, it should be updated to take account of price and productivity developments. (6) As regards the total balance sheet ceiling, in the absence of any new elements, it is justified to maintain the approach whereby turnover ceilings are subject to a coefficient based on the statistical relationship between the two variables. Statistical developments require a greater increase in the turnover ceiling. Since the evolution varies according to the size class of the enterprise, the coefficient should also be adjusted in order to reflect economic developments as closely as possible and not to disadvantage micro and small enterprises compared to medium-sized enterprises. This coefficient is very close to 1 for micro and small enterprises. For the sake of simplicity, a single value should therefore be chosen for the turnover ceiling and the total balance sheet ceiling for these categories. (7) As set out in Recommendation 96/280/EC, financial ceilings and staff ceilings are ceilings and Member States, the EIB and the EIF may set ceilings lower than Community ceilings if they wish to target their operations on a specific category of SMEs. For the sake of administrative simplification, Member States, the EIB and the EIF can apply only one criterion – the number of people – in the implementation of some of their policies. However, this does not apply to the different rules of competition law, which must also take into account and respect the financial criteria.

(8) Following the approval of the European Charter for Small Enterprises by the Santa Maria da Feira European Council in June 2000, micro-enterprises, a category of small enterprises which are of particular importance for the development of entrepreneurship and job creation, should also be better defined. (9) In order to better understand the real economic situation of SMEs and to exclude from this category groups of undertakings whose economic power may exceed that of genuine SMEs, a distinction should be made between different types of undertakings, depending on whether they are autonomous or have holdings which do not hold a dominant position (partner undertakings) or whether they are linked to other undertakings. The current limit of 25% below which an undertaking is considered autonomous laid down in Recommendation 96/280/EC is maintained. (10) In order to encourage business creation, equity financing of SMEs and rural and local development, enterprises can be considered autonomous, although certain categories of investors who play a positive role in financing and business creation play a positive role in financing and setting up businesses at 25 % or more. However, the conditions for these investors have not yet been determined. The case of business angels (individuals or groups of individuals who regularly invest venture capital) deserves special mention, as their ability to provide relevant advice to new entrepreneurs is extremely valuable compared to other venture capitalists. Their equity investment also complements the activity of venture capital firms, as they provide smaller amounts at an earlier stage of the company`s existence. (11) In the interests of simplification, in particular for Member States and undertakings, account should be taken of the conditions laid down in Article 1 of Council Directive 83/349/EEC of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated accounts(3), as last amended by Directive 2001/65/EC of the European Parliament and of the Council(4), when defining related undertakings. — in so far as these conditions are appropriate for the purposes of this Recommendation.