Deadline for disclosing beneficial owner information looms
Companies must comply by November 22nd or face fines of up to €500,000
Solicitor Gavin Hickey: ‘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’
Irish companies have until November 22nd to disclose their beneficial ownership information for inclusion on a new central register. Much of the data will be open to public access, and it is envisaged that a number of Irish authorities and organisations will seek to use the data to prevent money laundering.
Businesses in Ireland have been obliged to maintain an internal register of beneficial ownership since 2016, according to Gavin Hickey, a solicitor with Pinsent Masons. “A beneficial owner is someone who ultimately owns or controls a legal entity, either through direct or indirect ownership of at least 25 per cent of the voting rights or shares or ownership interest in the entity,” he explains. “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.”
The new regulations will require disclosure of this information for inclusion on Ireland’s new Central Register of Beneficial Ownership (CRBO). “The Companies Registration Office (CRO) has been appointed as the statutory body responsible for the establishment and maintenance of the CRBO,” Hickey adds.
It is not as simple as just disclosing the information on the internal register, however. “While many companies will have complied with previous 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 will also need to be submitted to the CRBO,” Hickey says.
Along with the PPS numbers, the list of data that needs to be disclosed to the CRBO includes the name, date of birth, nationality and home address of each of its beneficial owners; a statement of the nature and extent of the interest held, or control exercised, by each of its beneficial owners; and the registered name and number of the entity as contained on the register maintained by the CRO under the Companies Act 2014.
“Businesses incorporated on or after the new launch date will have five months to file their information to the central register,” says Hickey. “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.”
Non-compliance can result in heavy penalties. “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,” he says. “This represents a substantial leap from the maximum fine of €5,000 that could be imposed previously. In addition, custodial sentences of up to 12 months can be imposed on any person who knowingly or recklessly makes a materially false statement to the registrar.”
Some of the information on the CRBO register will be accessible by 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”, Hickey adds. “The new regulations also provide that beneficial ownership information will be made available to competent authorities with a legitimate interest in accessing it. These include the Garda Síochána, the Revenue Commissioners, the Central Bank and the Criminal Assets Bureau. ”
According to Hickey, it is envisaged that the increased transparency of financial transactions involving beneficial owners will strengthen the fight against money laundering within the EU. “The potential worst-case scenario fines involved in non-compliance, amounting to hundreds of thousands of euro, together with potential jail time, should see Irish company owners, directors and secretaries on high alert.”
There will be benefits for business, he believes. “While this may be seen as burdensome red tape, potential benefits may include scenarios where a company engages new bankers, or solicitors, or auditors,” he explains. “An up-to-date Central Register of Beneficial Ownership will hopefully help expedite the somewhat laborious anti-money-laundering processes companies often have to go through when engaging such professionals.”