Guest Article: Do the Anti-Money Laundering: Beneficial Ownership of Corporate Entities regulations affect your business?

A new piece of legislation came into force in March 2019 which could affect your company.

If you noticed the passing of the EU (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 in March of this year, you may well have thought it was just another bit of administrative box-ticking from Brussels. However, this is not so.

This is an important piece of legislation that will affect every company in Ireland and involves changes that are definitely onerous on all shareholders as well as company management. Crucially this legislation came into force on March 22^nd 2019 and the requirement to make public filings on June 22^nd, 2019.

Naming beneficial owners

The most important thing about these new regulations is that it means every person including a director with a shareholding of 25% or more must now be clearly identified. In the first instance the beneficial owners should be identified.

However, if this doesn’t happen and if, for whatever reason, the company cannot identify an individual beneficially owning more than 25% then it falls to the company senior management officers to be disclosed on the public register.

It is also the duty of the company, and the officers of that company, to maintain a register of beneficial ownership that may be inspected at any time. The very bad news is that failure to do so could mean a large fine of up to €500,000 and/or a spell in Mountjoy, or similar. These are not good options.

Doing business online

There are very many benefits of doing all or parts of your business online. However online can also provide a greater ability to hide taxable income or to anonymise ownership of companies involved in some form of illegal activity. I assume these new regulations are a (better late than never) attempt to catch up with the way in which many businesses operate, particularly across borders, nowadays.

These regulations aim to achieve transparency of company ownership, across the EU. To do this there can no longer be any beneficial owners hiding behind nominee shareholders or companies. If owners try to camouflage themselves in this fashion then the senior management officers of the company, including company secretaries like myself, will be liable.

Transparency

Achieving the required transparency is not that straightforward. For example, each company director and beneficial owner needs to have an individual PPS number. For persons located in Ireland, that should not be an issue.

However, for every conceivable commercial reason there are many, many (probably tens of thousands) of companies that are registered in Ireland but whose directors and major shareholders are not domiciled here. Each one of those beneficial owners will now need a PPS number. Some estimates suggest that up to 20,000 new PPS numbers may need to be issued.

Dates to remember

Here are some key dates and details that you need to know:

• The Central Register will be available to entities and presenters for filing by 22^ndJune 2019. Relevant entities which exist before 22^nd June 2019 will have 5 months to deliver the required information to the central register. Companies incorporated on or after 22^nd June 2019 will have 5 months to deliver the required information to the central register
• The 2019 Regulations provide for the beneficial owners and the relevant entities to keep the beneficial ownership register up to date. This register must be open to any member of the Garda Síochána, the Revenue Commissioners, a competent authority, the Criminal Assets Bureau or an appointed inspector.

Conor Sweeney, Managing Director of CLS Chartered Secretaries is a Council Member of ICSA: The Governance Institute.