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The EU AML:  Beneficial Ownership of Corporate Entities Regulations 2016 – An Overview

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Beneficial_Ownership_Blog_300.jpgThe EU (Anti Money Laundering:  Beneficial Ownership of Corporate Entities) Regulations 2016 (SI 560 of 2016) (“the Regulations”) were commenced on 15 November 2016.  Their purpose was to transpose Article 30(1) of the EU Fourth Money Laundering Directive (MLD4) into Irish law. 

Article 30(1) requires ‘relevant entities’ to take reasonable steps to obtain and hold adequate, accurate and current information in respect of its beneficial owners and to enter this information into a ‘Beneficial Ownership Register’.  

At EU level, access to accurate information regarding beneficial ownership is seen as critical to the effective deterrence of criminal activities that could be shielded by corporate structures. It is intended that individuals at the top of complex ownership structures can be readily identified for due diligence purposes.

Article 30(1) has been transposed some seven months in advance of MLD4’s June 2017 transposition deadline.  This is to give Irish ‘relevant entities’ a ‘head start’ on collating beneficial ownership information.   

Related: Beneficial Ownership, Transparency & AML in Britain

Relevant Entities

The term ‘relevant entity’ includes any corporate or other legal entity incorporated in Ireland.   With limited exceptions, all Irish companies are affected by these Regulations. 

Beneficial Ownership

Each relevant entity must identify its ‘beneficial owners’.  ‘Beneficial owners’ are the natural persons holding (whether directly or indirectly) a shareholding, controlling interest or ownership interest of 25% or more in the entity. 

Regulation 4(4) deals with a scenario where the relevant entity is unable to identify or is uncertain as to the identity of its beneficial owner.  Then and in that event, the relevant entity may list its “senior managing officials” (i.e. its directors and CEO) in its Register as being its beneficial owners.  In this scenario, the relevant entity is obliged by the Regulations to keep a record of the steps that were taken in order to establish beneficial ownership.

Related: EU Takes Forward Plans For Beneficial Ownership Registries

What Constitutes Adequate, Accurate & Current Information?

As mentioned above, the obligation on relevant entities is to retain ‘adequate, accurate and current information’ on its beneficial owner(s).  This requires insertion on the relevant entity’s Beneficial Ownership Register of: 

  1. The name, date of birth and residential address of each beneficial owner;
  2. The nature and extent of the interest held by each beneficial owner;
  3. The date on which they were entered into the register as a beneficial owner and;
  4. The date on which they ceased to be a beneficial owner if it ceased to be such.

Sanctions 

It is a criminal offence not to comply with the Regulations.  A relevant entity which fails to comply will be liable on summary conviction to a Class A fine.   

Central Register

When MLD4 is fully transposed, in June 2017, a centralised register will be established in Ireland, and all relevant entities must report their beneficial ownership information in to that centralised register.  The register will be accessible by competent authorities, FIUs, entities obliged to carry out customer due diligence, and third parties who can demonstrate a legitimate interest’ in the entity.

How Pearse Trust Can Assist 

As the Regulations came into force on 15 November 2016, immediate action is required by all relevant entities to ensure compliance. Pearse Trust can assist and advise to ensure that beneficial ownership registers are put in place and that all requirements of the Regulations are satisfied. 

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