Since November 2016 Irish corporates and certain other legal entities have been required to create and maintain a beneficial ownership register which collates adequate, accurate and current information in respect of the beneficial owners of the entity.
The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (the New Regulations) came into force on 22 March 2019, introducing new rules which:
- expand the requirements in relation to the content of, and access to, an entity's beneficial ownership register
- impose requirements to provide beneficial ownership information in certain circumstances and to file the beneficial ownership details on a public register
- significantly increase the penalties for non-compliance
What entities are affected?
The New Regulations apply to all corporate entities incorporated in Ireland except entities listed on an EU regulated market or which are subject to transparency requirements equivalent to those of an EU regulated market, including ICAVs and Industrial and Provident Societies (relevant entities).
Who is a beneficial owner?
The legislation is concerned with identifying the persons who have a significant interest in or control over the entity and so a "beneficial owner" is a natural person who directly or indirectly owns or controls more than 25% of the voting rights or issued share capital of a relevant entity.
What information must be obtained?
The relevant entity must take "all reasonable steps", including issuing notices to persons they believe to be beneficial owners, to obtain the following information:
- the individual’s name, date of birth, nationality, PPS number (personal public service number, issued by the Department of Employment Affairs and Social Protection) and residential address
- a statement of the nature and extent of the individual's interest in or control over the relevant entity
This information (except for the PPS number) must be recorded on a register of beneficial ownership. Where the beneficial owners are not identified by the relevant entity or they have a doubt as to the identity of the beneficial owner, the entity is obliged to enter the same details (name, date of birth, nationality etc) of the senior managing officials (eg directors, or the CEO) of the relevant entity into the beneficial ownership register.
Inspection & information rights
Relevant entities must permit certain parties, such as the Gardai and the Revenue Commissioners, access to the beneficial ownership register. In addition, where an entity enters into a transaction with, or does business with, a "designated person" ie a person who is required to carry out customer due diligence (cdd) for anti-money laundering purposes eg a solicitor, bank or accountant, the entity must provide details of its beneficial owners at the time the cdd is carried out by the designated person or at any time when requested to do so. Except in the case of filings in the central register (see below), a relevant entity is not permitted to disclose or allow access to the PPS of its beneficial owners.
Central register of beneficial ownership
The New Regulations also establish a Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies (the central register) which will be maintained by the Companies Registration Office (CRO). Companies and industrial and provident societies will be required to file their beneficial ownership information with the CRO for entry on the central register. Most of the information on the central register will be open to the general public. The CRO will accept filings from 22 June 2019 and existing companies and industrial and provident societies will have until 22 November 2019 to submit their beneficial ownership information. Companies and industrial and provident societies incorporated after 22 June 2019 must make their filing within 5 months of incorporation. There is no indication as yet as to where the central register for relevant entities who are not companies and industrial and provident societies will be kept.
Although the New Regulations require entities to obtain the PPS number of beneficial owners where "such a number has been issued", the CRO requires all beneficial owners, including those to whom a PPS number has not previously issued, to obtain a PPS number and to file this with the CRO, prior to registration of the beneficial ownership on the central register.
Entities are required to keep the details on the central register up to date and in this regard must notify the CRO of any changes to their beneficial owners or their details. If a designated person identifies a discrepancy on the central register, the designated person must report this to the CRO.
A relevant entity which fails carry out its obligations under the regulations, will commit an offence, and may be liable to a fine of up to €500,000.
It is also an offence for an individual to:
- fail to notify the company that he or she is a beneficial owner, where he or she knows that the details in the Register are incorrect; or
- fail to comply with a notice served by a company.
In any such case the individual may also be liable to a fine of up to €5,000.
- If they have not already done so, entities should immediately create a register of beneficial ownership
- Entities should take steps (including issuing notices to persons) to obtain the required information and to enter it on a register
- Even where entities have already created a beneficial ownership register, they will need to ensure that it is up to date and in addition they will need to obtain the PPS numbers of their beneficial owners where available
- Put in place procedures to ensure compliance with the new rules eg filing beneficial ownership information on the central register and providing this information to relevant designated persons as well as notifying any change in the particulars of a beneficial owner