Out-Law Analysis | 01 Jul 2019 | 3:37 pm | 4 min. read
UPDATED: Regulations designed to increase transparency around who owns or controls businesses have come into effect in Ireland.
Existing Irish companies now have less than five months to disclose their beneficial ownership information for inclusion on a new central register.
Much of the data will be open for the public to access, and it is envisaged that a number of Irish authorities will seek to use the data to prevent money laundering.
Since 2016, businesses in Ireland have been obliged to maintain an internal register of beneficial ownership.
A 'beneficial owner' is someone who ultimately owns or controls a legal entity, either through direct or indirect ownership of at least 25% of the voting rights or shares or ownership interest in the entity. Where a beneficial owner does not exist or cannot be identified, the details of the "senior managing officials" of the business must be recorded on the internal register instead.
New regulations that came into force on 22 June now require beneficial ownership information to be disclosed for inclusion on Ireland's new Central Register of Beneficial Ownership (CRBO).
The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019, like the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 before them, have their origins in EU law.
The EU's Fourth Money Laundering Directive (MLD4) requires corporates and legal entities to obtain and hold "adequate, accurate and current information on their beneficial ownership" and requires that EU countries establish a central register of beneficial ownership.
In Ireland, the Companies Registration Office (CRO) has been appointed as the statutory body responsible for its establishment and maintenance of the CRBO.
Under the 2019 regulations, all corporates and other legal entities incorporated in Ireland must provide its beneficial ownership information to the CRBO unless they qualify for an exemption.
Companies listed on a regulated market where disclosure requirements consistent with EU law apply are exempt from the requirements, as are those subject to equivalent international standards regarding beneficial ownership transparency.
While many companies will have complied with the 2016 regulations by establishing internal beneficial ownership registers, they will now need to supplement this information by obtaining their beneficial owners’ personal public service (PPS) numbers, which along with previously held information will need to be submitted to the CRBO.
The list of data that needs to be disclosed to the CRBO includes:
Irish companies incorporated before 22 June 2019 have until 22 November 2019 to disclose their beneficial ownership information for inclusion on the new central register, www.rbo.gov.ie. Business incorporated on or after 22 June 2019 will have five months from its incorporation date to file such information on the central register.
There is an ongoing obligation on corporates and legal entities to keep their own beneficial ownership register up-to-date and ensure that the information aligns with that filed in the CRBO. Businesses must record any changes to their beneficial ownership on the central register within 14 days.
The 2019 regulations increase the sanctions for non-compliance by creating the possibility of conviction on indictment and a €500,000 fine for certain breaches. This represents a substantial leap from the maximum fine of €5,000 that could be imposed under the 2016 regulations.
In addition, custodial sentences can be imposed for up to 12 months on any person who knowingly or recklessly makes a materially false statement to the registrar.
As required by EU anti-money laundering laws, certain information on the CRBO will be accessible to the general public. This includes the name, date of birth, country of residence, nationality and the nature and extent of the interest held by the beneficial owner.
While there is now a requirement on businesses to obtain the PPS numbers of beneficial owners, this information will not be made available to the public.
The 2019 regulations also provide that beneficial ownership information will be made available to competent authorities with a "legitimate interest" in accessing it. This includes Ireland's police service – An Garda Síochána, as well as the Revenue Commissioners, the Central Bank and the Criminal Assets Bureau to help with the prevention of money laundering.
It is envisaged that the increased transparency of financial transactions will strengthen the fight against money laundering across the EU.
Significant company law changes often pass people by and the news of Irish companies now needing to maintain a (somewhat) public Central Register of Beneficial Ownership appears to be no different, having gained little media attention to date. However, the potential worst-case scenario fines involved in non-compliance, amounting to hundreds of thousands of euros, together with potential jail time, should see Irish company owners, directors and secretaries on high alert.
Although some may deride yet another layer of administrative “red tape” to contend with, there could be potential benefits. For example, if a company engages new bankers, or solicitors, or auditors, an up-to-date Central Register of Beneficial Ownership could hopefully help expedite the somewhat laborious anti-money laundering processes companies often go through when engaging professionals.
Dorian Rees is a corporate law expert and Susan Kinlan a trainee solicitor at Pinsent Masons, the law firm behind Out-Law.
Editor's note 14/11/2019: This article has been updated to reflect the latest developments in respect of timeframes for disclosure.