New Anti-Money Laundering (AML) Requirement and the Beneficial Ownership Register

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With effect from 15 November, 2016, companies and other bodies corporate, registered in Ireland are obliged to collect and retain adequate, accurate and current information on the beneficial ownership of interests held in those entities.

Entities and beneficial owners that breach the requirements face fines of €5,000 on summary conviction. This requirement was brought into law by S.I. 560 of 2016.

This initial requirement for entities to gather the names of beneficial owners precedes the preparation by Government under EU law for each Member State to prepare a register of beneficial powers to make the AML due diligence process easier and the ultimate ownership of each company more transparent.

The register must contain the name of the natural person who holds the underlying beneficial ownership of an interest in a corporate or other entity in Ireland. This legislation is derived from the EU Fourth Money Laundering Directive, which the UK has already implemented with effect from 1 July 2016 where the beneficial owners of UK companies and LLPs appear on the register of Persons of Significant Control (PSC register). Note that the requirements in Ireland may not be identical to the UK ones.

The term ‘beneficial owner’ is defined as the ‘natural person or persons ultimately controlling a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity. A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a natural person shall be an indication of direct ownership. A shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership’. More details of the process and the various definitions are in the Statutory Instrument.

There is a corresponding duty on beneficial owners to notify any changes in their ownership interests to the relevant entity.