We previously reported on the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations, 2016 (S.I. No. 560 of 2016) (the “2016 Regulations”). [1] With effect from 15 November 2016, the 2016 Regulations imposed an obligation on all entities incorporated in Ireland to put in place and maintain a register of its “beneficial owners”. The 2016 Regulations have been repealed and replaced by the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations, 2019 (the “2019 Regulations”).
What has stayed the same?
The 2019 Regulations retain the obligation on all “relevant entities” to identify and obtain and update information in respect of, their “beneficial owners” and to enter same in a register of beneficial owners. The definitions of “relevant entity” and “beneficial owner” in the 2019 Regulations are the same as the corresponding definitions in the 2016 Regulations. To recap:
Every corporate or other legal entity incorporated in Ireland, including a company and any other body corporate so incorporated, is a relevant entity. The 2019 Regulations apply to all relevant entities except for companies and bodies corporate listed on a regulated market that are subject to disclosure requirements consistent with the law of the European Union or subject to equivalent international standards which ensure adequate transparency of ownership information.
The 2019 Regulations incorporate by reference the definition of beneficial owner contained in point 6(a) of Article 3 of the EU’s Fourth Anti Money Laundering Directive as follows:
“in the case of corporate entities:
(i) the natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market that is subject to disclosure requirements consistent with Union law or subject to equivalent international standards which ensure adequate transparency of ownership information.
A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a natural person shall be an indication of direct ownership. A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership…;
(ii) if, after having exhausted all possible means and provided there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s), the obliged entities shall keep records of the actions taken in order to identify the beneficial ownership under point (i) and this point”
Some guidance as to what constitutes “control by other means” is provided in Recital 13 of the Fourth Anti Money Laundering Directive as follows:
“Control through other means may, inter alia, include the criteria of control used for the purpose of preparing consolidated financial statements, such as through a shareholders' agreement, the exercise of dominant influence or the power to appoint senior management”.
The “senior managing officials” which the relevant entity is to record as its beneficial owners if, having exhausted all possible means and if there are no grounds for suspicion, no person has been identified under limb (i) of the definition set out above or if there is doubt as to whether the persons identified are beneficial owners include its directors and its chief executive officer.
The obligations imposed on relevant entities as regards the sourcing of information on the identity and particulars of their beneficial owners and the duties imposed on those beneficial owners themselves, by the 2016 Regulations have been replicated in the 2019 Regulations. Please refer back to our original note (hyperlink below) for guidance on these aspects of the 2019 Regulations.
What has changed?
We have set out below some obligations newly imposed by the 2019 Regulations of which corporates should be aware.
In addition to being obliged to obtain and hold details of the name, date of birth, nationality, and residential address of each beneficial owner and a statement of the nature and extent of the interest held by him or her or the nature and extent of control exercised by him or her, a relevant entity must obtain and hold the PPS number of each beneficial owner to whom such a number has been issued.
A relevant entity is obliged to provide “timely access” to its register of beneficial owners on request by any of the Garda Síochána, the Revenue Commissioners, the Criminal Asset Bureau, an inspector appointed under section 764(1) of the Companies Act, 2014 and a “competent authority” (as defined in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the “2010 Act”)).
Where a relevant entity enters into an “occasional transaction” or forms a business relationship with a “designated person”, it will be required to provide the designated person with information about its beneficial ownership when the designated person is undertaking customer due diligence; to identify all of its beneficial owners to the designated person; and if there is a change to the relevant entity’s beneficial ownership register which is relevant to the occasional transaction or that occurs during the course of the business relationship within 14 days of the date on which the relevant entity becomes aware of the change. An “occasional transaction” is one to which a designated person is required to apply customer due diligence measures pursuant to the 2010 Act. A “designated person” has the meaning given to it in section 25 of the 2010 Act. It includes financial institutions and, in respect of certain matters, legal professionals.
The most publicised development introduced by the 2019 Regulations is the establishment of a central register to which relevant entities must file information in respect of their beneficial owners. The register, which is to be administered by the Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies (the “Registrar”) is live at www.rbo.gov.ie. Relevant entites incorporated before 22 June 2019 must make the obligatory filings on or before 22 November 2019. Relevant entities incorporated after 22 June 2019, must make such filings within five months of incorporation.
A relevant entity is obliged to deliver details of the name, date of birth, nationality and residential address of each beneficial owner of the entity to the Registrar, along with 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 or, as the case may be, the register kept under the Industrial and Provident Societies Acts 1893 to 2014. Relevant entities must update the information which they have provided to the Registrar when changes occur to same. Filings may only be made online and they are free of charge. So that the Registrar can verify the information submitted to it, the relevant entity is also required to submit the PPS number of each beneficial owner. The Registrar is prohibited from disclosing a PPS number and is obliged to store same in an encrypted form.
Where a beneficial owner does not have a PPS number, the relevant entity will have to arrange for the beneficial owner concerned to execute a declaration of identity referred to as a BEN2 Form and then submit same to the Registrar. Execution of a BEN2 Form in Ireland must be witnessed by a person authorised to take and receive statutory declarations. Execution of a BEN2 Form outside of Ireland must be witnessed by a notary public. Once the BEN2 Form has been completed it must be scanned and uploaded to the RBO portal in order to obtain an “RBO Number” which can then be used to complete the online beneficial ownership form. The RBO Number will act in place of the PPS number for beneficial owners with no PPS number for the purpose of the submission.
The Registrar will verify details of beneficial owners against the records of the Department of Employment Affairs and Social Protection (“DEASP”). The Registrar has identified the following as common reasons why submissions by relevant entities are being rejected:
PPSN and/or Date of Birth is incorrect
Mismatch on name
Using maiden name instead of married name and vice versa
Using middle name in everyday usage, but not matching with forename as registered with DEASP (Paul Smith vs Michael Paul Smith)
Using shortened versions of a name (Des/Desmond, Eddie/Edward)
Using variations of a name (Bridget/Breege, Ted/Edward)
Using Irish version of a name, when English version is registered with DEASP (Eibhlínn/Eileen) or vice versa
Mix-up on entering details for multiple beneficial owners.
A relevant entity which fails to submit the requisite information to the Registrar or which fails to update information so filed, will commit an offence and be liable on summary conviction to a class A fine (currently €5,000) and on conviction on indictment to a fine of up to €500,000.
The 2019 Regulations provide for two levels of access to the information which a relevant entity has filed in the central register. First, the following persons enjoy an unrestricted right of access to the central register:
a member of the Garda Síochána, not below the rank of inspector, who is engaged in the prevention, detection or investigation of possible money laundering or terrorist financing;
a member of the Financial Intelligence Unit (a State body which is to act as a central repository for reports of suspicious transactions concerning terrorist financing or money laundering);
an officer of the Revenue Commissioners, holding a position not below that of Higher Executive Officer,
an officer of the Criminal Assets Bureau, holding a rank not below the rank of inspector in the Garda Síochána, or holding a position not below that of Higher Executive Officer;
subject to certain exceptions, a member of staff or an officer of a competent authority who is engaged in the prevention, detection or investigation of possible money laundering or terrorist financing; and
an inspector appointed under Companies Act, 2014.
In the case of persons referred to in (a), (b) and (d) above, exercise of the right of access is subject to the authorisation of a member of the Garda Síochána, not below the rank of superintendent. In the case of persons referred to in (c) above, exercise of the right of access is subject to the authorisation of by an officer of the Revenue Commissioners, holding a position not below that of Principal Officer.
Secondly, designated persons with whom a relevant entity enters an occasional transaction or forms a business relationship or who are undertaking customer due diligence pursuant to the 2010 Act in relation to the relevant entity and members of the public may access the name, the month and year of birth and the country of residence and nationality of each beneficial owner and the statement of the nature and extent of the interest held, or the nature and extent of control exercised, by each beneficial owner.
Next steps for companies
To the extent that they have not already done so, relevant entities incorporated before 22 June 2019 should act without delay to ensure that they make the requisite filings to the Registrar before 22 November, 2019.
Further information
If you would like to discuss the impact that these new measures have on your organisation, please get in touch with your usual RDJ contact or contact:
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