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Beneficial Ownership

Beneficial Ownership Regulations

The 2016 Regulations that came into force in November 2016 have now been revoked and replaced by the 2019 Regulations ‘The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019’ with effect from the 22 March 2019. The 2019 Regulations establishes the Central Register of beneficial owners which goes live on 22 June 2019 and requires all corporate and legal entities in existence before this date to submit particulars of their beneficial owners to the Central Register before 22 November 2019. In addition the 2019 Regulations provides greater clarity surrounding the beneficial owners for corporate and legal entities. We have summarised a number of the key features of the 2019 Regulations below.

Beneficial Owner

Article 3(6) of the Directive sets out the meaning of a ‘beneficial owner’ being any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least:

  • 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. This applies without prejudice to the right of Member States to decide that a lower percentage may be an indication of ownership or control. Control through other means may be determined, inter alia, in accordance with the criteria in Article 22(1) to (5) of Directive 2013/34/EU of the European Parliament and of the Council (3);

(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;

Obligation to Obtain and Hold Beneficial Ownership Information

The 2019 Regulations continue to place an obligation on corporate and legal entities (the “relevant entities”) to take all reasonable steps to obtain and hold adequate, accurate and current information of its beneficial owners to include: -

  • the name, date of birth, nationality, and residential address of each beneficial owner of it;
  • a statement of the nature and extent of the interest held, or the nature and extent of control exercised, by each such beneficial owner;
  • the PPS number of each such beneficial owner to whom such a number has been issued;
  • the date on which each natural person was entered into the register as a beneficial owner;
  • the date on which each natural person who has ceased to be a beneficial owner of it ceased to be such an owner.

The 2019 Regulations also places a duty on the beneficial owners to notify the relevant entity of his or her status as a beneficial owner and of any relevant change to the particulars of the beneficial ownership within a specific time period.

If after taking all reasonable steps in determining the beneficial owners, no natural persons have been identified or if there is any doubt that a natural person so identified is not a beneficial owner, the particulars of one or more natural persons who hold a senior ranking position of the relevant entity shall be entered in the register of beneficial owners and the entity shall keep records of the actions taken to identify the beneficial owner.

Where a relevant entity enters into an occasional transaction with a designated person where the designated person is required to apply due diligence measures, or forms a business relationship with a designated person the relevant entity shall, on request from the designated person, provide information identifying all the beneficial owners of the relevant entity. The relevant entity shall also notify the designated person of any change to the beneficial ownership of the relevant entity during the course of the transaction or the business relationship within 14 days from the date on which the relevant entity becomes aware of the change.

Steps to be Taken to Identify the Beneficial Owners and any Occurrence of Change

A relevant entity that has been informed of the required particulars of a natural person as a beneficial owner by that natural person or with that natural person’s knowledge is not required to give notice to a natural person believed to be a beneficial owner however the 2019 Regulations place a duty on relevant entities to give notice to any natural person whom its reasonably believes to be a beneficial owner of it, requiring the beneficial owner to confirm or correct any particulars and to supply any particulars that are missing and the notice shall state that the addressee has one month from the date of the notice to comply with the notice.

A relevant entity may give notice to any person, whether a natural person or not, whom it has reasonable cause to believe that the person may know the identity of or have information concerning the beneficial ownership, requiring the addressee to confirm whether they know the identity of the beneficial owner or any person likely to have that knowledge and the notice shall state that the addressee has one month from the date of the notice to comply. Notice under this section shall take consideration of any claim to legal professional privilege.

A relevant entity that has been informed of a change concerning a beneficial owner by that natural person or with that natural person’s knowledge is not required to give notice however if a relevant entity has reasonable cause to believe that a relevant change has occurred, that entity is obliged to give notice to the natural person concerned to confirm or correct any particulars and to supply any particulars that are missing and the notice shall state that the addressee has one month from the date of the notice to comply with the notice.

Central Register

The 2019 Regulations establishes the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies known as the ‘Central Register’ and provides for the appointment of a Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies, the ‘Registrar’ and such assistant registrars. The Registrar is responsible for the maintenance of the Central Register.

All relevant entities in existence before the 22nd of June 2019 will have a 5 month period to make the appropriate beneficial ownership filings with the Registrar with a deadline of 22 November 2019.

Any relevant entity that comes into existence on or after the 22nd of June 2019 will have a 5 month period, from the date of its incorporation to make the appropriate beneficial ownership filings to the Central Register.

Such filings shall contain:-

  • the name, date of birth, nationality and residential address of each beneficial owner of the entity;
  • 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;
  • the PPS number of each beneficial owner to whom such as number has been assigned, or such information as stands determined by the Registrar;
  • particulars of the presenter to include the name, address, phone number, email address of a natural person and acting capacity of the presenter.

The PPS numbers included in any submissions to the Registrar will merely be used for verification purposes only. The Registrar shall not disclose any PPS numbers received and shall only store a hashed version of the PPS number.

Following the initial filings made to the Central Register, all relevant entities will be obliged to notify the Registrar within 14 days of any changes that occur in the information contained in the register of beneficial ownership.

Access to the Central Register and the Register of Beneficial Ownership

In accordance with the 2019 Regulations members of the Garda Síochána, the Financial Intelligence Unit, the Revenue Commissioners, the Criminal Assets Bureau or a competent authority who are engaged in the prevention, detection or investigation of possible money laundering or terrorist financing shall have the right to unrestricted access to inspect the register of beneficial ownership and the Central Register and that information may be disclosed to any corresponding authority of another Member State.

In addition to the above, a designated person or a member of the public shall have restricted access to the Central Register and as such shall have the right to the following information with regards to a relevant entity:-

  • the name, the month and year of birth and the country of residence and nationality of each beneficial owner of it; and
  • a statement of the nature and extent of the interest held, or the nature and extent of control exercised, by each such beneficial owner.

Where a request is made to inspect the Central Register and relates to a minor who is a beneficial owner of an entity, the Registrar shall request in writing a summary of the grounds whereby the requestee considers it in the public interest. The information to be disclosed and access to such information will be subject to the Registrars discretion of opinion.

Reporting Obligations

The 2019 Regulations imposes an obligation on a number of competent authorities to report certain discrepancies to the Registrar by way of notice of opinion, specifying the particulars as respects the discrepancy. On receipt of such notice the Registrar may make an entry in the Central Register to the effect of that notice and serve a notice on the relevant entity setting out the procedures surrounding resolving the discrepancies.

Offences

Any relevant entity that fails to comply with Regulations 20, 21, or 23 of the 2019 Regulations commits an offence and shall be liable:

  • on summary conviction to a class A fine, or
  • on conviction on indictment to a fine not exceeding €500,000.

Any person who, in compliance with Regulations 20,21, 22 or 23 makes a statement that is false in a material particular, knowing it to be so false or being reckless as to whether it is so false commits an offence and shall be liable:

  • on summary conviction to a class A fine or imprisonment for a term not exceeding 12 months or both, or
  • on conviction on indictment to a fine not exceeding €500,000 or imprisonment for a term not exceeding 12 months or both.

A presenter that fails to comply with Regulation 22 commits an offence and shall be liable to a class A fine. The Registrar will be contacting all relevant entities about their filing obligations in the coming weeks.

In addition, a web-site will be launched on 29 April 2019 by the office of the Registrar which will provide further information to relevant entities.

If you have any queries on the above or require clarification on any of the Regulations, please contact Donna Carey, Corporate Compliance Manager or Catherine Sweeney, Corporate Consultancy Manager on (090) 6480600.