knowledge | 14 May 2021 |
Beneficial Ownership of Trusts: Regulations Updated and Filing in Central Register now Required
Following the introduction of new regulations (the “2021 Regulations” – available here), in-scope trustees of relevant trusts will be subject to a new requirement to report beneficial ownership information to the Central Register of Beneficial Ownership of Trusts (“Central Register”). The 2021 Regulations revoke and replace the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (the “2019 Regulations”) and, in addition to the new reporting requirement, substantially update previously existing obligations and change what constitutes in-scope arrangements.
Scope of the 2021 Regulations
Leveraging off concepts recently introduced into Chapter 9B of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the “2010 Act”)1, the 2021 Regulations apply to:
- A “relevant trust”, being an express trust established by deed or other declaration in writing but not including an “excluded arrangement”. The currently prescribed list of excluded arrangements includes, amongst others, (i) certain occupational pension schemes, (ii) certain approved retirement funds,2 (iii) certain profit sharing schemes or employee share ownership trusts and (iv) unit trusts whose beneficial ownership information is already required to be registered pursuant to separate regulations.3
- the trustees of the relevant trust are resident in the State or the relevant trust is otherwise administered in the State; or
- if no trustee of the relevant trust is resident, and the trust is not otherwise administered, in the European Union, a trustee (acting as trustee) enters into a business relationship in the State or acquires land or other real property in the State in the name of the trust.
These new concepts alter the scope of arrangements in respect of which beneficial ownership information is required to be kept (versus that previously required under the now revoked 2019 Regulations). Consequently, entities with existing AML policies and procedures should consider what changes may be required to them to ensure they continue to be fit-for-purpose.
While the extent of in-scope arrangements has been narrowed somewhat, it is important to note that the 2021 Regulations may still extend to certain types of trusts commonly used in commercial and financing transactions. It is possible for further “excluded arrangements” to be prescribed by Ministerial order but no such order has been published to date.
Who is a Beneficial Owner?
For the purposes of the 2021 Regulations, “beneficial owner” in relation to a relevant trust means any of the following:
- any individual entitled to a vested interest in the capital of the relevant trust property;
- the class of individuals in whose interest the trust is set up or operates (save where the trust is entirely for the benefit of the individuals mentioned in the preceding bullet point);
- any individual who has control over the relevant trust;
- the settlor;
- the trustee;
- the protector.
There are also some construction provisions specifically relevant to amateur sport bodies, charitable trusts and the estates of deceased persons.
Who is in Scope?
The 2021 Regulations are primarily aimed at trustees of relevant trusts but it is worth noting that they also create obligations for “designated entities” (eg banks); beneficial owners; “presenters” acting on behalf of a trustee; officers/employees of the relevant trust and certain public authorities.
Trustee to Maintain a Beneficial Ownership Register
In-scope trustees must take all reasonable steps to obtain and hold adequate, accurate and current information in relation to the relevant trust’s beneficial owners, including:
- the name, date of birth, nationality and residential address of each beneficial owner;
- a statement of the nature and extent of the interest/control attributed to each beneficial owner;
- the PPS number of each beneficial owner or where no PPS number has been issued certain other prescribed information and documentation instead.
Helpfully, where the beneficiary of the relevant trust is a legal entity, the 2021 Regulations expressly relieve the trustee of the obligation to collect this information provided it is already recorded on one of the other Irish beneficial ownership registers4 or the corresponding register in another Member State. The trustee must, however, still obtain and hold certain prescribed information, including the name, registered address and extent of ownership/control attributable to the legal entity and any filing number assigned to the entity in connection with the relevant beneficial ownership register.
The trustee must enter the above information on the trust’s beneficial ownership register along with details of the dates on which each beneficial owner was entered into the register and on which they ceased to be a beneficial owner.
Trustee to File Beneficial Ownership Information in Central Register
The trustee must file the beneficial ownership information with the Central Register. Helpfully for cross-border arrangements, where the information is already held on the corresponding register in another Member State, the trustee can discharge its filing obligations by procuring a certificate from the corresponding registrar and holding that certificate (so that it is available for inspection) in the State.
Timeframe for Filing Information in Central Register
The trustee must file the beneficial ownership information with the Central Register:
- for an existing relevant trust, within six months of the commencement of the 2021 Regulations (which was on 24 April 2021)
- for a relevant trust created after the commencement of the 2021 Regulations, within six months of the date of its creation.
Trustees’ Ongoing Obligations
Trustees of relevant trusts have a series of ongoing obligations under the 2021 Regulations. Some of the more noteworthy are:
- Designated Persons: when entering into an occasional transaction or a business relationship with a “designated person”5 (eg a bank, solicitor, property service provider), the trustee: must inform the designated person that it is acting as trustee; must provide information on the beneficial ownership (as well as the legal ownership) of the trust in certain circumstances; and has an ongoing obligation to notify the designated person of any relevant changes to the beneficial ownership register within 14 days of becoming aware of such changes;
- Suspected Beneficial Owner/Information: where a trustee has reasonable cause to believe an individual is, or has information in relation to, a beneficial owner who is not already recorded as such, the trustee must serve a prescribed notice on that individual requiring the provision of information relevant to the accuracy of the relevant trust’s register of beneficial owners. The trustee has similar obligations in relation to suspected changes in recorded beneficial ownership information; and
- Keeping Registers Up-to-date: in addition to the obligation to promptly record any changes in the relevant trust’s own beneficial ownership register, the trustee also has a “follow-up obligation” to deliver details of any such changes to the Registrar so that they can be reflected in the Central Register. The follow-up obligation must be discharged within 14 days of the date on which the trustee should have amended the relevant trust’s own beneficial ownership register.
Who can access the Beneficial Ownership Information?
Beneficial Ownership Register
A trustee is obliged to make a relevant trust’s beneficial ownership register available for inspection on request from any member of the Garda Síochána, the Revenue Commissioners, a “competent authority” (within the meaning of the 2010 Act, eg the Central Bank of Ireland) or the Criminal Assets Bureau. Such information can be disclosed to a corresponding authority in another Member State.
As mentioned above, a trustee must also provide beneficial ownership information to a designated person in certain circumstances.
The Central Register is not open to inspection by the public, unless the person seeking access to information satisfies the Registrar that he/she meets prescribed criteria (eg that he/she has a legitimate interest and is engaged in the prevention of a money laundering offence).
The Central Register may be inspected, on a relatively unrestricted basis, by the Garda Síochána, the Financial Intelligence Unit Ireland, the Revenue Commissioners and the Criminal Assets Bureau. A competent authority may also inspect the Central Register where it is engaged in the prevention, detection or investigation of possible money laundering or terrorist financing.
Information on the Central Register may be disclosed to a corresponding authority in another Member State.
A designated person may access certain beneficial ownership information on the Central Register when entering into an occasional transaction or business relationship with a trustee or when conducting customer due diligence in respect of the relevant trust. A designated person is, in fact, now required to check that beneficial ownership information has been included on the Central Register (or at least in the beneficial ownership register for the relevant trust) before establishing a business relationship with an in-scope trustee.6
Interconnection of Registers
The Irish Central Register is to be connected with the central registers of other Member States, as contemplated by the Fourth Money Laundering Directive (as amended)7.
Other Persons subject to 2021 Regulations
As mentioned above, in addition to trustees, certain other persons also have obligations under the 2021 Regulations, including:
- Beneficial Owner: an individual who knows (or ought reasonably to know) that he/she is a beneficial owner of a relevant trust, is obliged to notify the trustee of that fact and provide the relevant beneficial ownership information (if not already recorded in the register). That individual has a similar notification obligation in relation to changes to recorded beneficial ownership information;
- Designated Entity: a designated entity (eg a bank, solicitor or property service provider) must notify the Registrar of any discrepancies that it identifies between the relevant trust’s beneficial ownership register and the Central Register;
- Officer/Employee of Trust or Presenter Acting for Trust: where the trustee’s Central Register filing obligation is discharged by (i) an employee or officer, or (ii) a “presenter” acting on behalf of the trust, the name, address, phone number, email address and capacity in which a relevant individual is acting must also be delivered to the Registrar; and
- Public Authorities: each of the Garda Síochána, the Revenue Commissioners, a competent authority and the Criminal Assets Bureau are obliged to inform the Registrar of any discrepancies between the beneficial information on the Central Register and the information they hold (to the extent this would not unnecessarily interfere with the performance of their functions).
What are the sanctions for a breach of the Regulations?
It is a criminal offence to fail to comply with the obligations set out above, with the level of penalty dependant on the obligation breached. A trustee could also be required to pay compensation to a person who successfully applies to the High Court to have their name added or removed from the beneficial ownership register. An offence committed by a body corporate can also constitute the commission of an offence by persons acting on behalf of the body corporate (eg directors, managers).
The 2021 Regulations represent a further important development of the anti-money laundering regime put in place in Ireland to transpose requirements under the EU’s Fourth and Fifth Money Laundering Directives. In particular, they follow on from the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (as modified by the European Union (Modifications of Statutory Instrument No. 110 of 2019) (Registration of Beneficial Ownership of Certain Financial Vehicles Regulations 2020), which put in place:
- the Central Register of Beneficial Ownership of Companies and Industrial Provident Societies; and
- the Central Register of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions and Unit Trusts (see our related briefings here and here).
Trustees and designated persons, in particular, should familiarise themselves with the new detailed requirements of the 2021 Regulations as well as considering whether the change to in-scope arrangements requires compliance policies and procedures to be reviewed and updated.
- Chapter 9B was recently inserted into the 2010 Act by the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021.
- For a discussion of the 2021 Regulations from a more pensions-centric perspective, please see our related briefing here.
- For further information on those regulations please see our related briefing here.
- Namely, the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies or the Central Register of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions and Unit Trusts.
- Within the meaning of section 25 of the 2010 Act.
- Pursuant to section 35(3A) of the 2010 Act, as amended by the 2021 Regulations.
- Directive (EU) 2015/849 of the European Parliament and of the Council, of 20 May 2015, on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, as amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018.
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.