The Register of Beneficial Ownership was established by the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019, Statutory Instrument 110 of 2019.
Regulation 20 of this Statutory Instrument requires relevant entities to file information on their beneficial ownership to the Register of Beneficial Ownership. Regulation 23 requires that information to be kept up to date while Regulation 28 provides for penalties in cases of failure to meet these obligations.
A ‘beneficial owner’ is defined by reference to the definition used in Article 3 (6) (a) of the 4th Anti-Money Laundering Directive, Directive (EU) 2015/849:
‘beneficial owner’ means 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:
(a) 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 ( 2 );
(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;
From this definition, it is clear that the obligation on relevant entities is to identify the natural persons who ultimately own or control the entity in question and to then file to the Register the necessary information on those persons.
Accordingly, if trustees or shareholders are not the persons ultimately owning or controlling an entity, then they should not be identified as beneficial owners and filing information on them as such in those circumstances would be an offence under these regulations.
I would draw particular attention to Regulation 28 (5) which states that
(5) A person who, in purported compliance with Regulation 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 -
(a) on summary conviction, to a class A fine or imprisonment for a term not exceeding 12 months or both, or
(b) on conviction on indictment, to a fine not exceeding €500,000 or imprisonment for a term not exceeding 12 months or both.
In relation to the possible risk of attempts to circumvent financial sanctions, it is important to note that all natural and legal persons in the State are obliged to comply with EU sanctions measures. Regulations issued at EU level have direct effect across the Union. A breach of such a sanction is a criminal offence.
Furthermore, Section 35 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended, requires designated persons (e.g. financial institutions), as part of their customer due diligence procedures, to inspect the Register of Beneficial Ownership prior to the establishment of a business relationship with a company which is obliged to file to that Register, while Regulation 20 of SI 110/2019 requires designated persons to report to the Registrar any discrepancy they find between information that comes to their knowledge and the information in the Register of Beneficial Ownership.
While persons may attempt to obscure the true ownership of companies, it is clear from the above that the obligations which are already in place require the identification of those ultimately owning or controlling companies.
The effectiveness of these measures is something which is kept under review and officials of my Department liaise with the Register of Beneficial Ownership in this regard. Furthermore, the Financial Action Task Force (FATF) , which sets global standards in the area of anti-money laundering and combating the financing of terrorism, has recently completed a revision of its Recommendation on the beneficial ownership of legal persons. As a long-standing member of that body, we will be working to ensure that our framework is aligned with these revisions. We are also continuing to engage with the FATF's revision of its standards on the beneficial ownership of legal arrangements and will be working to ensure that any changes address emerging risks and any gaps identified in the EU framework in particular.
