AML Update: Public Register of Beneficial Ownership for Corporates

Central Register of Beneficial Ownership

The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (the Regulations) require the establishment of the Central Register of Beneficial Ownership (the RBO) which will set out details of the beneficial ownership of corporate entities in Ireland.

A shareholder in an Irish company can hold a legal interest in shares on trust for a beneficial shareholder (who will not appear on the company’s share register). The Regulations will now require the details of these beneficial owners to (i) be maintained by the company on an internal register and (ii) disclosed on a Central Register that can be accessed publicly.

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.

Statutory Instrument, No 110 of 2019, to establish a Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies was signed into law (in April 2019) by the Minister for Finance. This legislation provides for the appointment of a Registrar of Beneficial Ownership of Companies and Industrial & Provident Societies. This function has been delegated to the Registrar of Companies. The new website for the Registry of Beneficial Ownership has now launched: https://rbo.gov.ie/.

The Companies Registration Office announced on 24^th June 2019 that the opening of the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies has been postponed temporarily. However, under Part 3 of the Regulation, existing companies will be required to submit information in relation to their beneficial owners to the RBO before 22 November 2019. We will provide further updates when available as to the likely revised launch date of the RBO.

Entities that the Regulations apply to

The Regulations apply to all “Relevant Entities”, which are defined as corporate or other legal entities incorporated in the State. This definition includes private limited companies and other bodies corporate, but not companies listed on a regulated market (that are subject to separate disclosure requirement).

Definition of Beneficial Ownership

The beneficial owner of a Relevant Entity is a natural person who ultimately owns or has control of in excess of 25% of the shares or voting/control rights of a corporate entity.

What information must the company obtain?

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; and
• a statement of the nature and extent of the individual’s interest in or control over the relevant entity.

Who will have access to the Central Register of Beneficial Ownership?

Members of the public will be able to access the Central Register (but will have no access to the residential address of beneficial owners).

When must the filing be made?

Existing companies will be required to submit information in relation to their beneficial owners to the RBO before 22 November 2019. Corporate entities incorporated after 22 June 2019 must make their filing within 5 months of incorporation.

Sanctions

The sanctions for non-compliance have been significantly increased and new sanctions introduced. Maximum penalties for non-compliance extend to fines not exceeding €500,000 for conviction on indictment and up to 12 months imprisonment for summary conviction or conviction on indictment.

Legal Basis

Article 30(1) of the EU’s Fourth Anti-Money Laundering Directive (4AMLD) requires all EU Member States to put into national law provisions requiring corporate and legal entities to obtain and hold adequate, accurate and current information on their beneficial owner(s) in their own internal beneficial ownership register. Article 30(3) of 4AMLD requires that the information referred to above be held in a central register in each Member State.

Summary / Next Steps

The introduction of a Central Register has been long awaited and marks a continued trend in European law that requires greater openness and transparency for companies. The next steps to be followed by affected corporate entities are as follows:

1. If they have not already done so, entities should immediately create an internal register of beneficial ownership.
2. Entities should take steps (including issuing notices to persons) to obtain the required information and to enter it on a register (and keep that information up to date).
3. Affected companies must notify the Registry of Beneficial Ownership before 22 November 2019.

For further guidance regarding the Regulations, please contact Darragh O’Dea.