New anti-money laundering laws now require corporate and other legal entities, incorporated within this State, to hold adequate, accurate, and current information, on their beneficial ownership, including details of beneficial interests held.
The commencement date of the new rules, is the 15th November, 2016, and therefore, they are already in operation.
The rules are set out in the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016, Statutory Instrument No.: 560/2016.
The Statutory Instrument transposes the first sub-paragraph of Article 30 (1) of the Fourth Anti-Money Laundering Directive of the EU (hereinafter referred to as “4AMLD”).
The first sub-paragraph of Article 30 (1) of 4AMLD provides as follows:- “Member States shall ensure that corporate and other legal entities incorporated within their territory are required to obtain and hold adequate, accurate and current information on the beneficial ownership, including the details of the beneficial interest held”.
The purpose of the legislation, is to establish details of the natural persons, who are the real owners/controllers of a given company. In many cases, the legal owners and beneficial owners are one, and the same parties. However, many companies are owned by other companies, and therefore, it is not possible, other than via 4AMLD, to identify a particular beneficial owner.
The Regulation applies to every corporate or legal entity, except one that is listed on the Regulated market, which is subject to disclosure requirements, consistent with the laws of the EU, or subject to equivalent international standards, which ensure adequate transparency of ownership information.
The term “beneficial owner”, is set out in Article 3(6)(a) of 4AMLD, which sets out how beneficial ownership is to be determined. This is for the purposes of identifying the natural person, or person ultimately controlling a legal entity, through direct, or indirect, ownership of a sufficient percentage of the shares of voting rights, or ownership interest, in that entity.
The ownership of 25% of the shareholdings, in the name of a natural person, constitutes an indication of direct ownership.
A shareholding of 25% held by a corporate entity, which is under control of a natural person, shall constitute an indication of indirect ownership.
The Regulations require every corporate entity to hold details, as to name, date of birth, address, statement of nature and extent of interest, held by each beneficial owner, and to maintain, within the entity’s records, a register of that information.
The requirement to keep and maintain the beneficial owner register, is in operation since the 15th November, 2016.
If an entity is not in a position to identify its beneficial owners, the entity must then enter the individuals, who are senior managing officials, in its beneficial ownership register.
It is an offence for an entity to fail to keep and maintain a beneficial ownership register. The penalties, on summary conviction, comprise a Class A fine (not exceeding €5,000.00).
The register of beneficial ownership, is accessible, pursuant to the Regulations, by financial intelligence units.
The CRO has commenced work in establishing a Central Register of Beneficial Ownership.
Patrick Mullins
Partner – BDM Boylan Solicitors, Clarkes Bridge House, Hanover Street, Cork.