10 July 2023
The Minister for Finance signed a new Statutory Instrument S.I No 308 of 2023 on 13 June 2023, amending the European Union (“EU”) (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (the “Principal Regulations”).
The amendments to the Principal Regulations include that access to restricted information on the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies (“CRBO”) previously afforded to the public is now revoked and limited only to persons who can demonstrate that they have a legitimate interest in accessing that information.
This amending legislation has been introduced following a ruling of the Court of Justice of the EU ("ECJ") last November that public access to information on the CRBO constitutes a serious interference with the right to respect for private life and protection of personal data, enshrined in Article 7 and Article 8 of the EU Charter of Fundamental Rights and was not proportionate to the objective of combatting money laundering and terrorist financing.
Public access to the CRBO has been suspended since the ECJ ruling. This new amendment introduces, rather than public access, the concept of access to those with a legitimate interest, such concept already regulating the access to the central register of beneficial ownership of Trusts maintained by the Revenue Commissioners.
It will be necessary to provide to the Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies (the "Registrar") evidence that the person seeking access to the CRBO has a legitimate interest in the detection, prevention, or investigation of money laundering or terrorist financing offences. It must also be demonstrated that the relevant entity concerned is connected with persons convicted (whether in Ireland or elsewhere) of an offence consisting of money laundering or terrorist financing or holds assets in a high-risk third country (as defined).
There has been no change to the unrestricted access allowed to Competent Authorities (e.g., persons of a particular rank in An Garda Síochána, F.I.Us., Revenue Commissioners, Criminal Assets Bureau) and to the restricted access granted to Designated Persons. (e.g., Banks, Trust and Company Service Providers etc., required to carry out customer due diligence measures in accordance Criminal Justice (Money Laundering and Terrorist Financing) Act 2010).
The Registrar is required to keep a record of each request for inspection of, or access to, the CRBO by (i) a person seeking to demonstrate a legitimate interest or (ii) a Designated Person or any other person requesting information which relates to a minor. The Registrar is also required to record each decision that is made to refuse or to permit such requests. These records must then be retained for 5 years.
The Principal Regulations were introduced as a measure to meet Ireland’s obligations under the EU Fourth and Fifth Anti-Money Laundering directives (“AMLD4 and AMLD5”) and provided for the creation of the CRBO, which opened on 29 July 2019, providing the public access to restricted information (name, month and year of birth, country of residence, nationality and statement of nature and extent of interest held or control exercised). AMLD5 introduced the concept that access rights should be afforded to the public and not merely to those with a legitimate interest as was directed under AMLD4. The reasoning in moving away from the legitimate interest threshold when AMLD5 was introduced in 2018, included providing a practical solution to finding a common definition of what would demonstrate a legitimate interest between member states and avoid delays in demonstrating same to Registrars.
It is unclear if this hurdle has been overcome and if timely access will be granted to those seeking access to CRBO and we await guidance from the Registrar. It is likely to be a difficult task to be able to demonstrate to the Registrar that a relevant entity is connected with a person who has been convicted of money-laundering or a terrorist financing offence or has assets in a high-risk third country prior to having access to the beneficial ownership information of the relevant entity.
The public no longer have access to view the beneficial ownership information on file for corporates on the CRBO. However, there is no change to the obligations for corporates that are in scope of the Principal Regulations, to identify their beneficial owners, create and maintain an internal register of beneficial owners and both file and provide updates to the CRBO within fourteen days of any change.
As before, if a corporate enters into a transaction with a Designated Person, such Designated Person will be afforded access on request to the CRBO to view information on file for the corporate and if such Designated Person forms the opinion that there is a discrepancy between the beneficial ownership particulars provided by the corporate to the Designated Person and the information in the CRBO the Designated Person is still obliged to deliver a discrepancy notice to the Registrar.
The UK, not being part of the EU, is not obliged to follow EU Directives or adapt legislation to align with rulings of the ECJ. The beneficial information filed for UK corporates under the Persons of Significant Control Regulations is available for public access at Companies House. Therefore, an Irish group, although not publicly disclosing its beneficial owners on the CRBO, will be obliged to publicly file such information for any UK subsidiaries at UK Companies House.
Although it is acknowledged, an amendment to the Principal Legislation was required following the ECJ ruling (on the basis that public access was considered in breach of the right to privacy and protection of personal data under the EU Charter and was disproportionate to the objectives of AMLD4 and AMLD5), challenges will now be faced both by those seeking access to the CRBO and by the Registrar in considering and responding to requests on a timely basis. AMLD5 was influenced by the terrorist attacks in 2015/2016 in Paris and Brussels and the leaks from the Panama Papers. Its intention was to improve transparency in financial transactions to include public access to the identity of beneficial owners of corporates. Consequently, it is difficult to see how those aims can be met in light of these changes.
KPMG Law LLP has extensive experience in advising clients on their beneficial ownership obligations. The combination of our unique full service legal, tax and technical accounting expertise and access to the KPMG Law Network across the globe, make us ideally placed to advise our clients.
Contact our team below to discuss beneficial ownership obligations and the implications of the ruling of the European Court of Justice.