Article 30(1) of the Fourth Money Laundering Directive came into operation in Ireland on the 15 November 2016 under the EU (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (the “Regulations”).
Under the Regulations relevant entities are required to create and maintain a register of beneficial ownership. Previous legislation in the area of company registers has focused on the legal ownership of shares only. The law was not concerned with trust arrangements behind legal ownership. Under the Regulations, natural person who are the beneficial owners or controllers of companies will be able to be identified to assist authorities in combatting money laundering and terrorist financing.
The concept is different to our understanding of what constitutes beneficial ownership in Company law normally being a trust or nominee arrangement holding any number of shares on behalf of the real or beneficial owner. Under the Money Laundering Directive a natural person is a beneficial owner of a relevant corporate entity if he directly (or indirectly through ownership of a different company) holds more than 25% of the shares in that entity or otherwise directly (or indirectly) controls more than 25% of that entity.
A central register of beneficial owners under the Regulations was due to be established by the 26 June 2017 but this deadline has been pushed back to the end of 2017. The main reason for the delay centres around the question of public access to the register and privacy implications.
The central register will be established and maintained by a Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies. Companies in Ireland will be obliged to make filings in respect of their beneficial ownership to the Registrar.
The Regulations apply to the vast majority of Irish companies with exceptions for entities (1) that are listed on a regulated market and subject to disclosure requirements consistent with EU law and (2) that are already subject to equivalent international standards.
The filing of information to the Registrar will be similar to the information that should already be maintained by companies in their own registers including, name, date of birth, nationality, residential address, nature and extent of interest held by each beneficial owner and the date they became and ceased to be a beneficial owner.
If a company cannot identify who its beneficial owners are then individuals such as directors can be named as the company’s beneficial owner and their details will be entered into the register.
Companies should ensure that they have their own beneficial ownership registers in place. There will be an extended time frame being a minimum of three months for companies to make their beneficial ownership filings after the register is launched towards the end of 2017.
For more information contact Gríana O’Kelly, Partner in our Corporate and Commercial Group.