As part of measures to tackle white collar crime, companies based in Ireland will have until the end of November to submit information on their beneficial owners to a central register, or risk significant fines.
The regulations form part of EU-wide measures against white collar crime and specifically to counter money laundering. The majority of businesses in Ireland will need to be compliant.
The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 continue the transposition into Irish law of some of the requirements of the Fourth Anti-Money Laundering Directive, as that Directive has been amended.
Part 3 of the New Regulations comes into effect on 22 June 2019. This provides for the establishment of a Central Register of Beneficial Ownership and sets out who can access the information on that register.
Who does it apply to?
As with the 2016 regulations, the new regulations apply to all “relevant entities”, which are defined as corporate or other legal entities incorporated in the State.
There is however an exemption for companies listed on a regulated market that is subject to EU disclosure requirements or to equivalent international standards.
Interestingly, part 3 of the new regulations requires a relevant entity filing information to the Registrar to give its company number and/or society number, as the case may be.
It isn’t clear how corporates which aren’t companies, or industrial or provident societies, will be able to satisfy that particular requirement, but it’s understood that separate central registers will be established for relevant entities which aren’t companies or societies.
Who is a beneficial owner and what information needs to be obtained and held?
The new regulations use the same definition of beneficial owner of a relevant entity as the Fourth Money Laundering Directive. That is a person who ultimately either owns or controls over 25% of the equity or voting rights or controls the entity by other means.
Should the directors of an entity be unable to identify any beneficial owners, then they are obliged to record the details of their senior managing officials on the register.
Relevant entities are already required to maintain the name, date of birth, nationality and residential address of their beneficial owners on an internal beneficial ownership register, as well as the date when each individual person was entered into the register as a beneficial owner and the date when they ceased to be a beneficial owner.
Each body corporate (to which the 2019 Regulations apply) is required to provide the Gardaí, the Revenue, the Criminal Assets Bureau and other competent authorities with timely access to information on their internal registers.
The Irish authorities can then also share that information with corresponding authorities in other member states of the EU. Competent authorities in this regard include the Central Bank, the Financial Services Authority and the Law Society, among others.
Once the central register is established, relevant entities, companies and societies will have 5 months to submit information on their beneficial owners.
Companies and societies incorporated after the establishment of the central register will have 5 months from their incorporation to submit the required information.
Relevant entities, companies and societies will be required to submit their beneficial owners’ details – name, residential address, nationality, date of birth, PPS number (if issued) and nature and extent of ownership or control – to the central register, together with either their company number and industrial & provident society number. Each PPS number will be “hashed” to keep it secure and will not be available for inspection.
Access to the central register
Individuals acting on behalf of the Garda Síochána, the Financial Intelligence Unit (“FIU”), the Criminal Assets Bureau, the Revenue Commissioners and other competent authorities will be entitled to all the information (save for PPS numbers) on the central register, subject to certain safeguards – that is, the request must come from an individual of or above a specified position or rank, acting on the authority of an individual of or above a specified higher rank.
Any such authority (save for the FIU) can disclose the information they receive from the central register to a corresponding authority in any Member State of the EU.
Designated persons will have a restricted right of access to information on the central register. They will be entitled only to details of a beneficial owner’s name, country of residence, nationality, month and year of birth and nature and extent of ownership and control.
Members of the public will be entitled to inspect those restricted items of information on the central register.
If any details are entered incorrectly or omitted from the register, or if a default is made or unnecessary delay takes place in updating the register to reflect that a person has ceased to be a beneficial owner, then the aggrieved person or any other interested person can apply to the High Court for the Register to be amended.
A relevant entity who breaches the new regulations may be liable to a class A fine (a fine of up to €5,000) or, on indictment, a fine not exceeding €500,000.
In addition to these fines, custodial sentences of up to 12 months can be imposed on any person who makes a statement to the Registrar which is false in a material particular, and does so knowingly or recklessly.
Where an offence is found to have been committed by a relevant entity under the new regulations, and is proved to have been committed with the consent or connivance of any of its officers, those officers will also be guilty of an offence.
Relevant entities should prepare for the establishment of the central register by ensuring that their internal beneficial ownership registers are up to date and that their beneficial owners are aware that their details will soon become centralised and open to public inspection.
While many companies and other bodies corporate will have complied with the 2016 regulations, and put in place internal beneficial ownership registers, they now need to obtain their beneficial owners’ PPS numbers, which they will need to submit to the central register after its establishment in June.
Some aspects of the regulation need to be clarified before the central register is established, however it’s clear that it will provide significant further powers to authorities and will also provide for further openness and transparency in the business environment in the interests of tackling white collar crime.
Nick Metcalfe is a corporate governance and compliance partner at Mason Hayes & Curran.