SECTION: REGULATORY COMPLIANCE

Anti-Money Laundering The 4th EU Anti-Money Laundering (AML) Directive and Beneficial Ownership and what it means for Companies Limited by Guarantee (CLG)

Published: 18.05.2017 |
Last Updated: 19.05.2017
Diarmaid
Diarmaid
Diarmaid Ó Corrbuí

Diarmaid is Chief Executive Officer of Carmichael Centre for Voluntary Groups.

 

When I first came across notices about the 4th EU Anti-Money Laundering Directive and the Beneficial Ownership of Corporate Entities, I said to myself, that this doesn’t affect companies with a limited by guarantee (CLG) legal structure as these companies do not have beneficial owners. However, on further enquiry, I discovered that all companies including CLGs, are covered by the directive and all EU member states are required to put into national law provisions around beneficial ownership information for companies and legal entities. The deadline set for this is June 2017.

 

So what does this mean and how does it impact CLGs?

There are two stages to the process of implementing the directive in Ireland

1)  Companies and legal entities must hold information on their beneficial owner in their own companies beneficial ownership register

2) Companies and legal entities must file this information to the central Beneficial Ownership Register

 

Stage 1

As of 15 November 2016, all companies and legal entities must take all reasonable steps to hold adequate, accurate and current information on their beneficial ownership and keep this information in their own companies’ beneficial ownership register. This requirement is set out in law through statutory instrument No. 560 of 2016 entitled ‘European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016’ available here: http://www.irishstatutebook.ie/eli/2016/si/560/made/en/pdf  

This obligation applies to all companies and legal entities incorporated in the State. A non-exhaustive list of such companies and legal entities includes: Private Company Limited by Shares; Designated Activity Company; Designated Activity Company Limited by Guarantee; Company Limited by Guarantee; Unlimited Company; Undertakings for Collective Investment in Transferable Securities, etc.

The only exceptions from the beneficial ownership requirements are for companies and legal entities that are:

(a) Listed on a regulated market that is subject to disclosure requirements consistent with the law of the EU, or

(b) Subject to equivalent international standards which ensure adequate transparency of ownership information.

The onus is on companies and legal entities to comply with the obligations in relation to beneficial ownership.

 

Stage 2 A Central Beneficial Ownership Register (BOR)

The Department of Finance is currently in the process of establishing the central BOR and it is expected to be in place by 26 June 2017. The filing of beneficial ownership information to the central BOR will need to be done within three months of that date i.e. by the 26th of September 2017. Failure to file with the central register will be a breach of the company’s statutory duty. Filing will be through an on-line portal. There will be no paper filing facility option available.

 

For CLGs, who are considered as the “beneficial owners”?

Article 3(6): of the 4th EU Anti-Money Laundering Directive defines a beneficial owner as “any natural person(s) who ultimately owns or controls” a legal entity.

So while CLGs do not have shareholders they do have people who control the company and these for the purposes of AML directive, are deemed to be the beneficial owners of a CLG. Therefore, to meet the requirements of the directive, every CLG should have a company beneficial ownership register that holds information of its company directors. The name of the person(s) who holds the position senior managing official(s) (e.g. the CEO) should also be included in their company beneficial ownership register.

 

Information Filing Requirements

The information to be filed with the central BOR in respect of each beneficial owner (must be a natural person and cannot be a corporate entity) for a CLG will include the following:

  • Forename & Surname
  • Date of birth
  • Nationality
  • Residential address and Eircode
  • A statement of the nature of the interest held by each beneficial owner (e.g. a controlling director)
  • The date on which each natural person was entered in the register as a beneficial owner of the corporate entity

Details of the person making the entry in the register on behalf of the company will also be required to be filed, i.e. name, postal address, e-mail address and telephone number.

Until the Central BOR is live, the information requirements listed above are what is expected to be required. However, until the necessary enabling Statutory Instrument (SI) is formally passed, this information is subject to change. As soon as the SI is passed, the Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies will launch an information campaign providing more definite information to companies and industrial and provident societies.

Any queries in relation to this directive can be sent to the following email address: aml@finance.gov.ie.  

 

SECTION 6: REGULATORY COMPLIANCE

Anti-Money Laundering The 4th EU Anti-Money Laundering (AML) Directive and Beneficial Ownership and what it means for Companies Limited by Guarantee (CLG)

Published: 18.05.2017 |
Last Updated: 19.05.2017
Diarmaid
Diarmaid
Diarmaid Ó Corrbuí

Diarmaid is Chief Executive Officer of Carmichael Centre for Voluntary Groups.

 

When I first came across notices about the 4th EU Anti-Money Laundering Directive and the Beneficial Ownership of Corporate Entities, I said to myself, that this doesn’t affect companies with a limited by guarantee (CLG) legal structure as these companies do not have beneficial owners. However, on further enquiry, I discovered that all companies including CLGs, are covered by the directive and all EU member states are required to put into national law provisions around beneficial ownership information for companies and legal entities. The deadline set for this is June 2017.

 

So what does this mean and how does it impact CLGs?

There are two stages to the process of implementing the directive in Ireland

1)  Companies and legal entities must hold information on their beneficial owner in their own companies beneficial ownership register

2) Companies and legal entities must file this information to the central Beneficial Ownership Register

 

Stage 1

As of 15 November 2016, all companies and legal entities must take all reasonable steps to hold adequate, accurate and current information on their beneficial ownership and keep this information in their own companies’ beneficial ownership register. This requirement is set out in law through statutory instrument No. 560 of 2016 entitled ‘European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016’ available here: http://www.irishstatutebook.ie/eli/2016/si/560/made/en/pdf  

This obligation applies to all companies and legal entities incorporated in the State. A non-exhaustive list of such companies and legal entities includes: Private Company Limited by Shares; Designated Activity Company; Designated Activity Company Limited by Guarantee; Company Limited by Guarantee; Unlimited Company; Undertakings for Collective Investment in Transferable Securities, etc.

The only exceptions from the beneficial ownership requirements are for companies and legal entities that are:

(a) Listed on a regulated market that is subject to disclosure requirements consistent with the law of the EU, or

(b) Subject to equivalent international standards which ensure adequate transparency of ownership information.

The onus is on companies and legal entities to comply with the obligations in relation to beneficial ownership.

 

Stage 2 A Central Beneficial Ownership Register (BOR)

The Department of Finance is currently in the process of establishing the central BOR and it is expected to be in place by 26 June 2017. The filing of beneficial ownership information to the central BOR will need to be done within three months of that date i.e. by the 26th of September 2017. Failure to file with the central register will be a breach of the company’s statutory duty. Filing will be through an on-line portal. There will be no paper filing facility option available.

 

For CLGs, who are considered as the “beneficial owners”?

Article 3(6): of the 4th EU Anti-Money Laundering Directive defines a beneficial owner as “any natural person(s) who ultimately owns or controls” a legal entity.

So while CLGs do not have shareholders they do have people who control the company and these for the purposes of AML directive, are deemed to be the beneficial owners of a CLG. Therefore, to meet the requirements of the directive, every CLG should have a company beneficial ownership register that holds information of its company directors. The name of the person(s) who holds the position senior managing official(s) (e.g. the CEO) should also be included in their company beneficial ownership register.

 

Information Filing Requirements

The information to be filed with the central BOR in respect of each beneficial owner (must be a natural person and cannot be a corporate entity) for a CLG will include the following:

  • Forename & Surname
  • Date of birth
  • Nationality
  • Residential address and Eircode
  • A statement of the nature of the interest held by each beneficial owner (e.g. a controlling director)
  • The date on which each natural person was entered in the register as a beneficial owner of the corporate entity

Details of the person making the entry in the register on behalf of the company will also be required to be filed, i.e. name, postal address, e-mail address and telephone number.

Until the Central BOR is live, the information requirements listed above are what is expected to be required. However, until the necessary enabling Statutory Instrument (SI) is formally passed, this information is subject to change. As soon as the SI is passed, the Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies will launch an information campaign providing more definite information to companies and industrial and provident societies.

Any queries in relation to this directive can be sent to the following email address: aml@finance.gov.ie.