The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (S.I No. 560 of 2016) (the ‘Regulations’) impose new obligations on Irish companies and other incorporated bodies (such as ICAVs, listed UCITs and most AIF investment companies) to take immediate measures to compile a ‘beneficial ownership register’.
The Regulations are the latest measure introduced to combat money laundering and terrorist financing. The Regulations transpose Article 30(1) of the European Union’s Fourth Money Laundering Directive (Directive (EU) 2015/849 (the ‘Directive’)) into Irish Law.
Beneficial Ownership Threshold: The Regulations require companies and other incorporated entities to identify those natural persons holding (whether directly or indirectly) a shareholding, controlling interest or ownership interest of 25% or more in those entities (a ‘Beneficial Owner’).
Beneficial Ownership Register: The obligation under the Regulations is for every company or other legal entity incorporated in Ireland to take ‘all reasonable steps’ to maintain a beneficial ownership register. A beneficial ownership register should record certain particulars regarding an entity’s Beneficial Owners including: (a) the name, date of birth, nationality and residential addresses of each of the entity’s Beneficial Owner(s); (b) a statement of the nature and extent of the interest held by each such Beneficial Owner; (c) the date on which each individual was entered into the register as a Beneficial Owner of the entity; and (d) the date on which each individual who has ceased to be a Beneficial Owner of the entity ceased to be such an owner.
The only exceptions to the above requirement to maintain a beneficial ownership register are for companies or entities: (a) listed on a regulated market subject to disclosure requirements consistent with EU law (including the Transparency (Directive 2004/109) Regulations 2007 (as amended)); or (b) subject to equivalent international standards which ensure adequate transparency of ownership information.
The Regulations make specific provision for instances where an entity cannot identify the person who ultimately owns or controls it or if there is any doubt as to whether an individual so identified is its Beneficial Owner. In such circumstances, the entity must enter the individuals who are its “senior managing officials” (a definition which includes each of the directors and the CEO) in its beneficial ownership register. Before doing so, it must have exhausted “all possible means” and have no grounds for suspicion as to the identity of the relevant individual. A Company must keep records of the actions taken in order to identify its beneficial ownership.
Notice Requirements for Companies: The Regulations require every entity to take “all reasonable steps” to obtain and hold adequate, accurate and current information on its Beneficial Owners. Companies must issue a notice in writing (a ‘Regulation 6 Notice’) to any individual that it has reasonable cause to believe to be a Beneficial Owner, requiring the addressee to state whether or not he or she is a Beneficial Owner. If the addressee is a Beneficial Owner, he or she must confirm or correct any particulars included in the Regulation 6 Notice that are relevant to that addressee and supply any that are missing.
Companies may also give notice (a ‘Regulation 8 Notice’) to any other person/entity if it has reasonable cause to believe that that person/entity knows the identity of any individual who is a Beneficial Owner or any person/entity likely to have that knowledge.
Companies must also issue a notice in writing (a ‘Regulation 10 Notice’) to its Beneficial Owner, to be responded to by the Beneficial Owner within one month, if it knows or has reasonable cause to believe that a change has occurred in its beneficial ownership. The Beneficial Owner will be required to confirm the details of the change as they believe them to be by notice to the company.
Notice Requirements for Beneficial Owners: If a natural person knows or ought reasonably to know that they are a Beneficial Owner within the meaning of the Regulations and they are not already listed in the beneficial ownership register and the relevant company has not issued them with a Regulation 6 Notice within the period of 1 month from the date of coming into force of the Regulations (i.e., by 15 December 2016), they must notify the relevant company in writing (a ‘Regulation 11 Notice’) of their status as a Beneficial Owner, confirm the date on which they became a Beneficial Owner and supply the company with relevant details. If a natural person whose details are listed in a relevant company’s beneficial ownership register knows or ought reasonably to know about a change in the beneficial ownership and the relevant company has not issued them with a Regulation 10 Notice, they must notify the company by notice in writing (a ‘Regulation 12 Notice’) of the relevant change, the date of same and any necessary information required to update the beneficial ownership register.
Failure to Comply with the Regulations: Failure to comply with the Regulations will result (on conviction) to a class A fine (not exceeding €5,000) being imposed on the company and/or on the Beneficial Owner.
A national register of beneficial interests is required to be in place by June 2017 (to be held by the Companies Registration Office) which will be accessible to certain competent authorities and financial intelligence units, entities required to carry out customer due diligence and any person or organisation that can demonstrate a legitimate interest.
Action to be taken: Companies should take action to identify their Beneficial Owners (if any) and prepare a beneficial ownership register. Beneficial Owners should consider their position and seek advice in preparing a Regulation 11 Notice if they have not already received a Regulation 6 Notice from the relevant company.