On 26 July 2021, the Central Register of Beneficial Ownership of Trusts ("Central Register") was launched allowing trustees (or agents, advisors or employees of trustees) to register and file beneficial ownership information relating to trusts with the Central Register.
One of the key objectives of the creation of the Central Register is to improve the transparency of trust ownership, thereby helping to detect instances where trusts are being used for criminal and illegal purposes. The introduction of equivalent registers of beneficial ownership of trusts in other EU Member States will assist in achieving this objective on an EU-wide scale.
The Central Register was established under the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (the "2021 Regulations"). The 2021 Regulations entered into force on 24 April 2021 and further transpose the provisions of the Fourth Anti-Money Laundering Directive 2015/849 ("MLD4") (as amended by the Fifth Anti-Money Laundering Directive 2018/843 ("MLD5")) into Irish law.
The 2021 Regulations revoke and replace the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (the "2019 Regulations"). The 2019 Regulations required trustees of trusts to gather information on the trust's beneficial owners.
The introduction of the 2021 Regulations means that the beneficial ownership information gathered by trustees must now be filed with the Central Register. The Central Register is operated by the Revenue Commissioners ("Revenue").
Trusts established before 23 April 2021 must file details of their beneficial ownership with the Central Register by 23 October 2021. Trusts established after 23 April 2021 are obliged to file 6 months after their establishment.
Scope of Operation of the Central Register
The obligation to file beneficial ownership information applies to a "relevant trust" whose trustees are resident in the State or which is otherwise administered in the State. The term 'relevant trust' is defined in the 2021 Regulations by reference to the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended) (the "CJA 2010") as an express trust established by deed or other declaration in writing and any other arrangement or class of arrangements as may be prescribed but does not include an excluded arrangement.
The Revenue's FAQs provide guidance regarding the meaning of "administered in the State". These include services such as the management of trust assets, or other services, provided to the trust by legal or accounting professionals or other trust service providers who are operating in Ireland.
The 2021 Regulations may also apply where none of the trustees of a relevant trust are resident in the EU and the trust is not otherwise administered in the EU, in circumstances where:
- a trustee of the relevant trust, when acting as trustee, enters into a business relationship in the State, or
- a trustee of the relevant trust, when acting as trustee, acquires land or other real property in the State in the name of the trust.
Although the term 'express trust' is not defined in the legislation, the Revenue FAQs describe an 'express trust' as a trust "created in express terms, as distinguished from one inferred by the law from the conduct or dealings of the parties". Certain express trusts, which include arrangements frequently used in corporate and finance transactions, such as security trust arrangements and declarations of trust in respect of shares will be within scope of the requirement to file beneficial ownership information with the Central Register.
Excluded arrangements
A number of arrangements that employ the use of trusts are excluded from the scope of the 2021 Regulations by virtue of the amendments introduced by the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (the "2021 Act"). These include:
- occupational pension schemes;
- approved retirement funds;
- profit sharing schemes or employee share ownership trusts; and
- unit trusts.
Identifying Beneficial Owners
The 2021 Regulations identify the following as beneficial owners of relevant trusts:
- any individual who is entitled to a vested interest in possession, remainder or reversion, whether or not the interest is defeasible, in the capital of the relevant trust property;
- in the case of a relevant trust other than one that is set up or operates entirely for the benefit of individuals referred to in paragraph (i), the class of individuals in whose interest the trust is set up or operates;
- the settlor;
- the trustee;
- the protector; and
- any individual who has "control" over the trust.
The 2021 Regulations state that "control" means the power to deal with the trust property, vary the terms of the trust, add or remove beneficiaries, appoint or remove trustees, or control how such powers are exercised. "Control" can be exercised alone, jointly, or with the consent of another person.
The 2021 Regulations also describe instances in which the meaning of the term "beneficial owner" is more limited, including for:
- trusts of amateur sports clubs and associations;
- trusts for beneficiaries of the estate of a deceased person in the course of administration; and
- charitable trusts.
In the case of charitable trusts the beneficial owners will be the trustees, the committee/other governing body, and any other individual who has "control" over the trust.
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