Failure to comply with new ownership rules could lead to large fines

Companies based in Ireland will have until the end of November to submit information on their beneficial owners or risk significant fines and a possible custodial sentence of up to 12 months under new EU regulations set to come into force this year.

Draft regulations to tackle white collar crimes through the establishment of a new beneficial ownership register have been drawn up and will come into effect in the Republic on June 22nd.

Details that have emerged include the requirement for existing companies to submit information within five months of the establishment of the register while newer companies will have five months from their incorporation.

The rules were drawn up by the EU in 2016 and transposed into Irish on November 18th last. The fourth Anti-Money Laundering Directive was the original piece of EU legislation governing the changes.

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The legislation applies to all Irish companies and other corporate bodies including ICAVs and Industrial and Provident Societies.

Fines for companies failing to properly keep a register or to comply with requests from authorities, will be up to a maximum of €500,000 and there is also provision for custodial sentencing of up to 12 months for non-compliance or false information.

Under the regulation, owners holding 25 per cent or more of a company are required to be made known by company directors.

Each corporate body to which the regulations apply is required to provide the Gardaí, the Revenue, the Criminal Assets Bureau and other competent authorities like the Central Bank of Ireland and the Law Society with timely access to the information on their internal registers.

Due diligence process

Organisations obliged to carry out customer due diligence can request details of the information on an entity’s register as part of that due diligence process.

Once the register is established by the Companies Registration Office, relevant entities will have to submit their beneficial owners’ details including date of birth and PPS public service number to the central register.

Mason Hayes and Curran senior associate Nick Metcalfe said some aspects of the regulation need to be clarified before it comes into force.

He noted that an Irish Collective Asset-management Vehicle (ICAV) currently won’t be able to file to the register because it requires a company number which they don’t possess. ICAVs are, however, required to file beneficial ownership information under the regulation.

Mr Metcalfe, a corporate governance specialist, said that the regulation has the capacity to be effective.