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Anti-Money Laundering Update - Beneficial Ownership
AUTHOR(S): Tara Doyle, Michael Jackson, Dualta Counihan, Anne-Marie Bohan, Shay Lydon, Liam Collins, Philip Lovegrove, Elizabeth Grace, Oisin McClenaghan, Michelle Ridge, Barry O’Connor, Donal O’Byrne
PRACTICE AREA GROUP: Asset Management and Investment Funds
There has been a number of developments in relation to anti-money laundering legislation in Q1 2019, including the publication of the European Union Anti Money Laundering: Beneficial Ownership of Trusts Regulations 2019 and the European Union (Anti-Money Laundering Beneficial Ownership of Corporate Entities) Regulations 2019.
Beneficial Ownership of Trusts
On 29 January 2019 the Department of Finance published the European Union Anti Money Laundering: Beneficial Ownership of Trusts Regulations 2019. The regulations will give partial effect to the European Union (“EU”) Fifth Money Laundering Directive (“MLD5”). Trustees will be required to take all reasonable steps to obtain and hold adequate, accurate and current information in respect of the trust’s beneficial owners, keep the register up to date and retain records for a period of five years. Trustees who fail to comply with the regulation will be liable, on summary conviction, to a class A fine.
Under the new rules, a trustee must take all reasonable steps to obtain, and hold on a register of that trust, the following information in respect of the trust’s beneficial owners:
- date of birth;
- nationality; and
- residential address.
The definition of “beneficial owner” of a trust comes from MLD5 and thus means an individual who ultimately owns or controls the trust and / or the individual on whose behalf a transaction or activity is being conducted and includes at least:
- the settlor;
- the trustees;
- the protector (if any);
- the beneficiaries or class of beneficiaries; and
- any other natural person exercising effective control over the trust.
The introduction of these regulations forms part of Ireland’s wider obligations under MLD5. By March 2020, Ireland must have established a central register of trust beneficial owners to which trustees will be required to report beneficial ownership information. The information on this central register will be shared, held and exchanged with other EU member states.
Central Register of Beneficial Ownership of Companies and Industrial Provident Societies
In a further development in relation to beneficial ownership, on 22 March 2019, the Department of Finance signed into law the European Union Anti Money Laundering: Beneficial Ownership of Corporate Entities Regulations 2019. The regulations will give effect to the Fourth Money Laundering Directive and replace the earlier regulations introducing the requirement for companies to maintain a beneficial ownership register under the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016.
The regulations establish the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies (“Central Register”) with effect from 22 June 2019. The Central Register will be maintained by the Companies Registration Office (“CRO”).
All entities that come into existence on or after the commencement of the relevant section of the regulations (22 June 2019) will be required, within five months from their incorporation, to deliver the information below to the CRO:
- the name, date of birth, nationality and residential address of each beneficial owner of the entity;
- the PPS number of each beneficial owner (where relevant);
- a statement of the nature and extent of the interest held, or the nature and extent of control exercised by, each such beneficial owner; and
- the name and number of the entity as they appear on the register kept under the Companies Act 2014.
The regulations also require that any changes to the information contained in a relevant entity’s beneficial ownership register be reflected by a corresponding change being made in the Central Register. Accordingly, relevant entities are required to deliver information to the CRO so as to allow any change to be reflected in the Central Register; this is referred to as the “follow up obligation”.
For companies incorporated before 22 June 2019, such companies must make their first filings at the Central Register within five months of the Central Register coming into operation on 22 June 2019. Accordingly, 22 November 2019 is the relevant deadline for companies incorporated before 22 June 2019.
While ICAVs appear to be included in the definition of “relevant entity” to which the regulations apply, the Registrar of Companies has confirmed that she will not register ICAVs on the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies. It is expected that separate legislation will be enacted to address the central register for ICAVs.