knowledge | 13 May 2021 |
Pensions and Share Plans Exempt from the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021
On 24 April 2021, the Minister for Finance signed the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (the “Regulations”). The Regulations transpose Article 31 of the Fourth Anti-Money Laundering Directive (Directive (EU) 2015/849)1, as amended by the Fifth Anti-Money Laundering (Directive (EU) 2018/843)2, into Irish law with immediate effect. The Regulations revoke pre-existing regulations from 2019 that governed this area.3 The introduction of these Regulations marks another step towards preventing abuse of the financial system for money laundering and terrorism purposes. Despite being applicable to express trusts, pension schemes, certain specified employee share schemes and a number of other trusts are excluded from the scope of the Regulations.
What do the Regulations do?
In line with the Regulations, trustees of express trusts must establish and keep a register of beneficial owners. There is a requirement on the trustees to take “all reasonable steps” to acquire accurate information relating to the beneficial owners and update the contents when necessary. The required information includes the name, date of birth, nationality and residential address of each beneficial owner. Each beneficial owner will also have to provide a statement of the nature and extent of the interest they hold and the degree of control they exercise. Where the beneficial owner has been issued a PPS number, this must be documented too. In the absence of such, any unique number the beneficial owner has been issued for tax administration purposes, a passport number or a national identity card number will be required if the beneficial owner is resident in another State.
There are allowances regarding the information that must be submitted by trustees where the beneficiaries of a trust are legal entities and the corresponding beneficial owners are already recorded on an appropriate central register. This includes the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies, the Central Register of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions, Unit Trusts or an equivalent register of another EU Member State.
What trusts do the Regulations apply to?
The Regulations apply to express trusts, but there are notable exceptions as detailed in section 106ZC of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended in 2021).4 Occupational pension schemes (as approved under Part 30 of the Taxes Consolidation Act 1997), approved retirement funds, approved profit sharing schemes/employee share ownership trusts, trusts for restricted shares, Haemophilia HIV Trusts, unit trusts on the Central Register of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions and Unit Trusts and any trusts prescribed as exempt by the Minister for Finance are therefore excluded from the Regulations. These schemes will be excused from setting up and obtaining information for a beneficial ownership register, as previously required of them under the 2019 Regulations. They will also be under no obligation to file information regarding beneficial ownership with the Central Register. This is of particular note from a pensions and incentives perspective for approved occupational pension schemes.
The Central Register of Beneficial Ownership of Trusts
The Regulations establish a ‘Central Register of Beneficial Ownership of Trusts.’ Although the 2019 Regulations required trustees to establish a register of beneficial owners, they did not reference a central trusts register. This Central Register will be maintained by the Registrar, as appointed by the Revenue Commissioners.
Where a trust already exists at the time these Regulations come into effect, the relevant trustee must deliver the required information within 6 months of the Regulations commencing. The trustees of all trusts set up on or following the Regulations taking effect will have 6 months from the date the trust comes into existence to submit the necessary information to the Registrar. There is a further duty on trustees to keep the information stored on the Central Register up-to-date and to notify the Registrar where details recorded on the beneficial ownership register are amended. This is known as the “follow up obligation.” In the event that the information is delivered to the Registrar by a ‘presenter’ on behalf of the trustee, this presenter must provide the Registrar with their own personal details for the record.
Who can access the Central Register?
The Register will be private, with access limited to those who have a legitimate interest in inspecting the Central Register. These individuals include members of the Garda Síochána (not below the rank of inspector), Higher Executive Officers of the Revenue Commissioners, members of the State Financial Intelligence Unit (as authorised by an Garda Síochána) and high ranking officers of the Criminal Assets Bureau. There are also officers of competent authorities that will be able to access the Central Register where those persons are involved in investigating potential money laundering or financial terrorism.
While the Register will not be available to the public, access to the Central Register can be afforded to a designated person with a legitimate interest in the beneficial ownership information. In such circumstances, the Registrar can require this designated person to pay a fee for access to the Central Register. This fee shall not exceed the administrative cost of facilitating the request for access.
The protection and safety of the PPS numbers provided to the Registrar is emphasised in the Regulations. These numbers will be stored securely by the Registrar and shall not be disclosed. The information stored on the Central Register will be deleted if 10 years have elapsed since the final distribution was made under the trust. Similarly, if the relevant trustees cease to be resident in the State or the trust ceases to be administered in the State, the Registrar will delete the information from the Central Register after 10 years have passed.
What are the consequences of non-compliance with the Regulations?
A trustee will commit an offence by failing to provide the information required or by failing to update the Central Register as instructed. This offence will be punishable either on summary conviction with a fine not exceeding €5,000 or on conviction on indictment, with a maximum fine of €500,000. The Registrar has the power to serve a notice on the trustee to provide information within a specified time where a discrepancy in the particulars is brought to their attention. If a trustee fails to satisfy this demand, without reasonable excuse, the trustee is committing an offence and the same potential fines may apply. There is also provision for a designated person to update the Central Register where they detect a discrepancy.
How can we help?
The Employment, Pensions and Incentives Group can assist organisations with any queries in relation to the developments mentioned in this briefing. Your usual McCann FitzGerald contact would also be pleased to provide additional information on the matter.
Also contributed by Jessica O'Neill.
- OJ No. L 141, 5.6.2015, p. 73
- OJ No. L 156, 19.6.2018, p.43
- European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (S.I. No. 16 of 2019).
- Section 106ZC (inserted by section 26 of the Criminal Justice (Money Laundering and Terrorist Financing)(Amendment) Act 2021 (No.3 of 2021)) of the Act of 2010.
This briefing is 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.