Ultimate Beneficial Owners – Time to Disclose?

The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (“the 2019 Regulations”), signed on 22 March 2019, sees the continued transposition of the Fourth EU Anti-Money Laundering Directive (as amended) into Irish Law.  Under the previous 2016 regulations[1], which are revoked by the 2019 regulations, all relevant entities were required to maintain an internal register of their beneficial owners, i.e. any natural person who directly or indirectly owns or controls over 25% of the share capital or the voting rights or control by any other means. The 2019 Regulations reinforce this requirement by introducing significant new rules about the accessibility of internal registers and the mandatory filing of beneficial ownership information with the newly established Central Register of Beneficial Owners.

Beneficial Ownership Register

The 2019 Regulations apply to all corporate or legal entities incorporated in the State, including Industrial and Provident Societies and ICAVs (“Relevant Entities”). However, exemptions exist for certain companies listed on regulated markets and which are already subject to transparency requirements or equivalent international disclosure standards. It should be noted that there is no group exemption provided for companies in a group structure – each individual company must establish its own beneficial ownership register, regardless of whether they are ultimately made up of the same beneficial owners.

Relevant Entities must take all reasonable steps to maintain and hold “adequate, accurate and current information on their beneficial ownership”[2], including:

  • Name;
  • Date of birth;
  • Nationality;
  • Residential address;
  • PPS number (a new 2019 requirement);
  • A statement of the nature and extent of interest/control held; and
  • Date the beneficial owner was added to/removed from the internal register.

Where no beneficial owner(s) can be identified, Relevant Entities are obliged to record the details of its “senior managing officials” (e.g. CEOs/directors) on its internal register.

The Relevant Entities must file Regulation 7 Notices (previously Regulation 6 Notices) on persons whom they believe to be their beneficial owners and may file Regulation 9 Notices (previously Regulation 8 Notices) on persons whom they believe to have knowledge about the identity of the beneficial owners. If this information has not already been requested, the beneficial owners themselves are obliged to notify the relevant entity that they hold beneficial ownership.

Accessibility

Under the 2019 Regulations, information stored on internal registers is required to be readily accessible to An Garda Síochána, the Revenue Commissioners, the Criminal Assets Bureau and competent authorities. If an entity enters into certain transactions with a “designated person”[3] (e.g. banks/ legal professionals/ accountants who are obliged to carry out anti-money laundering checks under Irish legislation), the “designated person” must also be granted access to the internal register and be informed of changes to same.

Central Register of Beneficial Owners

In addition to accessibility obligations, Relevant Entities are required to transmit beneficial ownership information to the newly established Central Register of Beneficial Owners by 22 November 2019. Relevant Entities that came into existence after 22 June 2019 must deliver this information within five months of incorporation. The information required to be delivered to the Central Register of Beneficial Owners is set out in Part 3 and includes:

  • Name;
  • Date of birth;
  • Nationality;
  • Residential address;
  • PPS number;
  • A statement of the nature and extent of the interest/control held; and
  • Name and number of the Relevant Entity as they appear on the register kept under the Companies Act 2014.

Relevant Entities will be required to keep this information up to date and will have 14 days to report changes in beneficial ownership once they occur. Competent authorities such as the Revenue Commissioners and An Garda Síochána will enjoy unrestricted access to the Central Register of Beneficial Owners, while designated persons and members of the public will have restricted access[4] to the information and may be required to pay an administrative fee.

Sanctions

  • Relevant Entities:
    • Non-compliance with the obligation to maintain an internal register, ensuring that it is accurate and up to date, shall be an offence liable on summary conviction to a class A fine[5] or conviction on indictment to a fine not exceeding €500,000;
    • Failure to give notice to a natural person believed to be a beneficial owner shall be an offence liable on summary conviction to a class A fine;
    • Failure to keep information on the internal register up to date shall be an offence liable on summary conviction to a class A fine;
    • Non-compliance with the obligation to maintain the Central Register of Beneficial Owners, ensuring that it is accurate and up to date, shall be an offence liable on summary conviction to a class A fine or conviction on indictment to a fine not exceeding €500,000;
    • In addition, on application by an aggrieved person the High Court may order the payment of compensation for any sustained loss to such aggrieved person for incorrect or omitted information, or information updated in an untimely manner.
  • Officers:
    • Failure of a presenter[6] to provide the presenter’s details, the capacity in which they act and correspondence information shall be an offence liable on summary conviction to a class A fine.
  • Beneficial owners:
    • Failure to notify the Relevant Entity of his or her status as beneficial owner, making a false statement, knowingly or recklessly to the Relevant Entity or failure to notify the Relevant Entity of a change in his or her status shall be an offence liable on summary conviction to a class A fine;
    • Failure to comply with a notice issued by the Relevant Entity or making a false statement, knowingly or recklessly to the Relevant Entity shall be an offence liable on summary conviction to a class A fine or imprisonment for a term not exceeding 12 months or both;
  • Designated Persons:
    • Where a designated person has formed the opinion that the Central Register of Beneficial Owners contains a discrepancy, failure to notify such discrepancy to the Registrar shall be an offence liable on summary conviction to a class A fine.

Conclusion

The 2019 Regulations aim to ensure that persons with significant underlying economic interests in a Relevant Entity can be identified for the purposes of customer due diligence and to combat money laundering. The scope of these regulations is broad and applies to all companies incorporated in Ireland unless they are already subject to equivalent transparency and disclosure standards. Relevant Entities, officers, beneficial owners and designated person should be aware of their increased administrative obligations.

Key points to note:

  • Relevant Entities that have not already set up an internal register should prioritise doing so now;
  • Relevant Entities with an internal register already in place should ensure it is up to date and corresponding PPS numbers have been added;
  • Relevant Entities are expected to serve notices, if necessary, to obtain all the required information;
  • Where all possible means have been exhausted and the required information has not been obtained, relevant details of senior managing officers must be listed;
  • Ultimately, all Relevant Entities will be required to file beneficial ownership information with the Central Register of Beneficial Owners by the 22 November 2019 (or within 5 months of incorporation if its date of incorporation was on or after 22 June 2019); and
  • The 2019 Regulations contain significant sanctions for non-compliance as set out above.

If you have any queries or concerns, please do not hesitate to contact the author or any member of the BHSM team to discuss how best to navigate the 2019 Regulations.

Please contact Conor Mac Nally, in the Banking & Finance Department of BHSM on 01 440 8300 and cmacnally@bhsm.ie for further information.

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

Footnotes

[1] The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016.

[2] Art. 30(1) Fourth EU Anti-Money Laundering Directive (as amended).

[3] Defined under the 2019 Regulations, “designated persons” can include financial institutions, independent legal professionals, auditors, tax advisors, trust or company service providers, and property service providers that enter into certain business transactions which require anti-money laundering checks under Irish legislation for the purpose of customer due diligence.

[4] Members of the public will have access to certain information contained on the Central Register (name, nationality, month /year of birth of beneficial owners) but will not have access to their residential address, which is available only to the competent authorities.

[5] A Class A Fine is a fine under the Fines Act 2010 which applies to certain summary convictions and cannot exceed €5,000.

[6] The term Presenter is referred to in the 2019 Regulations as that person who provides the required information to the Registrar.

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