On 22 June 2019, Part 3 of the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulation 2019 ("Regulations") came into force. Part 3 concerns the obligation on companies and other corporate bodies to file beneficial ownership information to a new Central Register of Beneficial Ownership ("RBO") within five months of incorporation.
Who is a "Beneficial Owner"?
A Beneficial Owner is any natural person who directly or indirectly (a) owns more than 25% of the shares, (b) controls more than 25% of the voting shares or (c) controls the company by other means (e.g. by having the power to appoint the Board or by exercising a dominant influence).
Who is the Beneficial Owner of a Subsidiary Company?
If an entity is a subsidiary owned by another corporate or other legal entity, any natural person(s) who holds or controls a shareholding of 25% plus one share, or an ownership interest of more than 25% in the parent entity, is a beneficial owner(s) of the subsidiary.
Information required from a Beneficial Owner
The following information is required to be submitted:
- Date of birth
- Residential address
- Details of nature and extent of interest held / control exercised by each beneficial owner
- Date on which the beneficial owner was first entered into the company's internal register
Where a beneficial owner does not have an Irish PPS number, a Form BEN2 is required to be filed which can be used for the purpose of verification of a person's identity.
Obligations on a Company to identify its Beneficial Owner
All reasonable steps should be taken by a company to establish who the natural Beneficial Owner is.
The steps involved include:
- giving notice to any natural person(s) that the company has reasonable cause to believe to be a Beneficial Owner. Once issued, the natural person(s) to whom this notice has been issued has one month to provide the necessary details or
- giving notice to any person(s) that the company has reasonable cause to believe to have knowledge of the Beneficial Owner. Once issued, the person(s) to whom this notice has been issued has one month to provide the necessary details
Failure by the natural person to reply and cooperate with the company or to make a false statement is a criminal offence.
Circumstances where the Beneficial Owner cannot be identified
Where all reasonable steps to identify the Beneficial Owner have been exhausted unsuccessfully or where the company has no Beneficial Owner (i.e. no individual ultimately controlling more than 25%), the Regulations provide that the "Senior Managing Officials" shall be deemed to be the Beneficial Owner. When recording Senior Managing Officials as the Beneficial Owner, at a minimum a Director and Manager / CEO should be registered. The PPS number(s) of the Director(s) will be required in order to submit the RBO filing.
Availability of information filed
The Regulations provide for two types of access to beneficial ownership data in the RBO – "unrestricted access" and "restricted access". Those with unrestricted access to data include Garda Síochána, Revenue Commissioners, CAB and other government and regulatory bodies.
Restricted access to data is available to members of the general public. As the name suggests, there is a limited amount of data the public can access which is set out below:
- Forename and Surname
- Month and Year of birth
- Country of residence
- A statement of the nature and extent of the beneficial interest held or control exercised
Some concerns have been raised around the type of data that could be accessed by the public and, in particular, the requirement to supply a PPS number. The Regulations require that the information held is accurate and current. The PPS number is therefore requested so that the details can be verified to ensure that they are consistent with details registered with the Department of Social Protection. The RBO Unit advises that PPS numbers are stored securely in an irreversible hashed / encrypted format and are never shared with third parties.
Latest information from the RBO and consequences of failing to act
- nearly 81% of companies and 64% of societies had filed beneficial ownership information with the RBO in 2020.
- a Non-Compliance Reminder campaign for all entities that had not filed by the deadline of 22nd November 2019 began in October 2020 and continues into 2021.
Failure by a company to comply with registration requirements is an offence. The company may be liable to the following:
- summary conviction, to a fine not exceeding €5,000, or
- conviction on indictment, to a fine not exceeding €500,000.
In addition, designated persons (financial institutions, accountants, auditors, tax advisers, legal professionals) are legally obliged to check that information concerning the beneficial ownership of a company is entered in the RBO before commencing a business relationship with the company. Therefore, non-compliant companies will increasingly find that the failure to file the information will impact on the operation of their businesses by causing delays in, for example, setting up banking facilities or obtaining legal advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.