An increasing number of clients have requested a view from the practice in recent times regarding the new regulations, adopted by the European Union and designed to improve on current anti-money laundering legislation throughout Europe. We thought it might be useful, in our first blog post, to offer an overarching view on this topic.
Background
New regulations have been adopted by the European Union to improve on current anti-money laundering legislation.
These were implemented in Ireland by Statutory Instrument No 110 of 2019 which requires all companies / legal entities to make filings in relation to their beneficial ownership with the Central Register. This filing requirement will go live on 22 June 2019.
Companies will be required to file details such as the nature and extent of their beneficial owner’s interest and to file this information by 22 November 2019.
What is a Beneficial Owner?
A Beneficial Owner is defined in Article 3(6), 4AMLD, as any natural person(s) who ultimately owns or controls a legal entity, either through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in the entity, including through bearer shareholdings, or through control via other means.
These include:
- ownership (directly or indirectly) of more than 25% of the company/society’s shares,
- controlling (directly or indirectly) more than 25% of the company’s voting rights,
- control via other means
Control by other means is explained in Recital 13 of 4AMLD, as follows:
“Control through other means may, inter alia, include the criteria of control used for the purpose of preparing consolidated financial statements, such as
- through a shareholders’ agreement,
- the exercise of dominant influence or
- the power to appoint senior management”.
Subsidiary Companies
Where the company is a subsidiary owned or controlled by a single corporate entity, any natural person who owns or controls 25% or more of the shares, voting rights or ownership interest in the parent entity, or controls the parent through other means, is a beneficial owner of the subsidiary.
Where the company is a subsidiary owned or controlled by multiple corporate entities, if the same natural person(s) controls the parent entities, he/she is a beneficial owner of the subsidiary.
Companies are required under Regulation 5(2) of SI 110/2019 to take all ‘reasonable steps’ to identify its beneficial owners.
Helpful Steps
One potential step that a subsidiary company can take to identify its beneficial owners is to issue notice under Regulation 9 of SI 110/2019 to any person(s) (including a company) it has reasonable cause to believe to have knowledge of the information set out in Regulation 9. Once issued, the person(s) to whom this notice has been issued has one month to provide the necessary details.
If, having exhausted all possible means to identify the beneficial owner(s), and no natural person has been so identified, the name(s) of the person(s) who hold the position of senior managing official(s) (SMOs) of the relevant entity (i.e. the subsidiary company) must recorded as the beneficial owner(s). Relevant entities shall keep records of the actions taken to identify their beneficial owners.
Accordingly, companies must first take all ‘reasonable steps’ ascertain whether there is any natural person which owns or controls 25% of shares or voting rights or controls its parent companies ‘through other means’.
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Disclaimer
The material contained in this post is for general information purposes only and does not constitute legal advice. Specific legal advice should be sought on any particular matter. No liability whatsoever is accepted by PF Solicitors for any action taken in reliance on the information in this post.
