27 Oct 2017 | 10.05 am
Get Ready For The Beneficial Ownership Register
Mason Hayes & Curran's Nicholas Metcalfe explains the new EU regulations requiring beneficial ownership registers
27 Oct 2017 | 10.05 am
Companies will shortly have to identify their beneficial owners on a central register. It’s not yet clear who can access the information, writes Nicholas Metcalfe of Mason Hayes & Curran
In November 2016, the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 came into force. These regulations require every company incorporated in Ireland (with limited exceptions) to identify their ultimate beneficial owners and to record particulars of those owners on internal beneficial ownership registers.
There are ongoing obligations to update these registers as necessary. These obligations also extend to other corporate bodies that are not companies, such as Irish Collective Asset Management Vehicles, and require all such entities to record on their registers the names, residential addresses, nationalities and dates of birth of their beneficial owners, together with the nature and extent of the interests that the owners hold. There are penalties for noncompliance of fines of up to €5,000.
A ‘beneficial owner’ is a natural person who either directly or indirectly either owns or controls over 25% of the equity or voting rights in the entity in question. If the directors of an entity are unable to identify any beneficial owners, then they are obliged to record the particulars of the senior management of the entity (in practice, the directors themselves and, if distinct, the CEO) on the register.
The regulations are the first part of an anticipated two-part process designed to implement the Fourth Anti-Money Laundering Directive, which will ultimately see the particulars of each entity’s beneficial ownership collated on a central register.
According to the Companies Registration Office, the central register will be administered by the CRO and is expected to open at some point during the fourth quarter of 2017, with a three-month window for filing. Filing will be electronic and there will be no fee. However, further legislation will be necessary to implement this step.
Who will be entitled to access the information on the register? The CRO guidance to date does not address this issue, and nor do the regulations currently in place. The underlying Directive requires EU member states to ensure that information on beneficial ownership of entities is accessible by:
- Competent authorities and financial intelligence units, without exception (i.e. law enforcement agencies and similar state bodies).
- Entities that are required to carry out due diligence on their customers for the purposes of anti-money laundering legislation.
- Any person or organisation that can demonstrate a legitimate interest.
It is the third limb that causes the most uncertainty. What is a ‘legitimate interest’, who decides whether a person meets the criteria, and what if any process for decision-making and appeal will be put in place?
The answers to these questions and to whether the general public will have access to the central register are keenly awaited. In the meantime,
Irish limited companies and other relevant entities should prepare for the establishment of the central register by ensuring that their internal beneficial ownership registers are up to date, and that their beneficial owners are aware that their details will soon become centralised and open to at least limited public inspection.
Nicholas Metcalfe is a Senior Associate in the Corporate Governance & Compliance team at Mason Hayes & Curran