Legal
The European union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (“the new AML Regulations”) which took effect from 15th November 2016, require most Irish registered companies to gather and retain on a register information on individuals who are its beneficial owners.
Companies listed on a recognised stock exchange that are subject to disclosure requirements consistent with EU law and those already subject to equivalent international standards which ensure adequate transparency of ownership information are not captured by the new rules. However all other corporate entities formed in Ireland (“Relevant Entity/ies”) establish and maintain the new list.
What will constitute beneficial ownership of a Relevant Entity?
A beneficial owner under the new rules is an individual who ultimately owns or controls the Relevant Entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in the relevant entity. A shareholding of 25% plus one share or an ownership interest of more than 25% will be evidence of ownership or control.
What information needs to be maintained on the register?
The following information must be maintained on the register which the relevant entity must ensure is “adequate, accurate, and current”:-
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Name
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Date of birth
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Nationality
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Residential address
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Statement of the nature and extent of the interest held by each such beneficial owner
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The date on which the beneficial owner was entered in the register of beneficial owners;
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The date on which that person ceases to be a beneficial owner
What does my company need to do?
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Establish an internal register of its beneficial owners
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Where the beneficial owners are not known, take "all reasonable steps" to ensure the beneficial ownership information is obtained and entered on the beneficial ownership register
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Where no beneficial owners can be identified, enter the names of the senior managers (including the directors and CEO) of the relevant entity on the beneficial ownership register as the "beneficial owners".
Obligations on beneficial owners
If an individual is a beneficial owner and knows, or ought reasonably to know, that to be the case but the individual is not listed on the register of beneficial owners and has not received a notice from the Relevant Entity, then that individual must notify the Relevant Entity of his or her status as a beneficial owner and provide his or her relevant details.
Where an individual is already listed on the register of beneficial owners, he or she also has a duty to notify the Relevant Entity if he or she ceases to be a beneficial owner or if there is any change in his or her details.
Failure to comply with the new AML Regulations
Failure by a Relevant Entity to comply with the new rules is an offence and is liable on summary conviction to a fine up to a maximum of €5,000.
The Irish High Court has the power to order rectification of the register and to award compensation for any loss sustained by an aggrieved party as a result of the requirement to rectify the register.
Similarly, where an individual who is a beneficial owner fails to advise a Relevant Entity of his or her status, or where he or she receives a notice from a Relevant Entity requesting details as described above and fails to comply with same or makes a statement that is false or is reckless as to whether or not the statement is false, that individual commits a criminal offence and is liable, on summary conviction, to a fine.
New AML Regulations an early transposition of part of proposed Fourth Directive on Anti-Money Laundering (MLD4)
The new AML Regulations are an early transposition of Article 30(1) of the Fourth Directive on Anti-Money Laundering 2015/849 (MLD4) which has not yet been implemented in Ireland and bears a June 2017 transposition deadline.
When implemented, MLD4 requires contracting states to make available on a Central Register information contained in the beneficial ownership register of Relevant Entities to certain classes of individuals. MLD4 states that competent authorities (i.e. the Central Bank in Ireland), financial intelligence units, entities carrying out customer due diligence and those who can demonstrate a “legitimate interest” in the information, will be entitled to access the information without knowledge or notification to either the beneficial owners or the Relevant Entities in question.
It remains to be seen how the Irish government will go about obtaining the information required to populate its Central Register.
As regards allowing the general public unrestricted access to the information, much will depend on the approach of the Irish government to discretions given to member states in the MLD4 as to who is entitled to view the relevant shareholding information.
The EU Commission has adopted a proposal to amend MLD4 to the effect that unrestricted access to the information on the proposed Central Register would be made available to the public for the stated aim of contributing to enhanced public scrutiny of corporate entities to prevent money laundering and terrorist financing. The proposed amendment has not yet been adopted by the EU Commission.
Comment
The New AML Regulations indicate a marked departure from Irish Company law. It is unusual to have instances where there is a direct responsibility on beneficial owners of shares to comply with Irish company law. Section 261 of the Companies Act 2014 requires an officer of an Irish company to notify the company of the existence of any interest (legal or beneficial) held, acquired or disposed of by that officer (or the spouse or minor child of that officer) in shares or debentures of that company only. However in other cases, transparency regarding ownership usually requires the intervention of the courts.
If you require further information in respect of the New AML Regulations please contact Deirdre Farrell, solicitor of Amorys Solicitors on 01 213 59 40 or email deirdre@amoryssolicitors.com .