The European Parliament has adopted a number of amendments to the proposed 5th Anti-Money Laundering Directive (5AMLD), which in turn will amend the 4th Anti-Money Laundering Directive (4AMLD) in relation to the beneficial ownership of companies and trusts. The key provisions of 4AMLD were transposed into Irish law by the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (the 2016 Beneficial Ownership Regulations).
The revised text of 5AMLD is still provisional, but it is possible that it will be adopted by the European Council in May 2018.
Key changes which, if adopted, will affect the beneficial ownership rules currently applying to companies incorporated in Ireland, when transposed in due course into Irish law, include the following:
- Any member of the general public is also to have access to the information on the central register of beneficial ownership, in addition to national authorities. The minimum information which they will be able to access will be the name, the month and year of birth and the country of residence and nationality of the beneficial owner, as well as the nature and extent of the beneficial interest held. However, Member states will have discretion to provide for access to additional information, to enable the beneficial owner to be identified. Member States are also given the discretion to choose to make the information held in their central register of beneficial ownership available on the condition of online registration and the payment of a small fee. This may mean that the accessing of such information would be traceable.
- Member states are also permitted to impose restrictions on access in certain circumstances, including where there is a risk of fraud, kidnapping, blackmail, violence or intimidation. However, the ability to create exceptions of this nature is limited, and there must be a right given to enable an exemption decision to be subject to administrative review and an effective judicial remedy. In addition, Member states that have granted exemptions must publish annual statistical data and report the data to the European Commission. In addition, no such exemptions are available for credit institutions and financial institutions.
- The beneficial ownership information is to be made available for at least 5 years, and for a maximum of 10 years after the corporate or other legal entity has been struck off the register.
- Sanctions for breach of the beneficial ownership obligations may be increased. There is an enhanced obligation under the proposed text of 5AMLD on member states to ensure that breaches of the obligation to obtain and hold adequate, accurate and current information on beneficial ownership of companies are subject to "effective, proportionate and dissuasive measures or sanctions". This may mean that the current rather low penalties that can be imposed under the 2016 Beneficial Ownership Regulations may be increased.
- Helpfully, an earlier proposal by the European Commission that would have required that those beneficial owners who have a 10% ownership in certain companies must be included in the registers, has been deleted. Instead, it is proposed that the Commission may, if appropriate, issue a report to assess the need to lower the percentage for identification of beneficial ownership of legal entities.
- There are no changes proposed to the limited exceptions in 4 AMLD in relation to listed companies etc. Our existing guidance in relation to these aspects of the disclosure requirements should therefore remain unchanged.
Certain changes have also been agreed in relation to the disclosure obligations for trusts, under Article 31 of 4AMLD. A note will be published in due course in relation to these requirements.
Member States are required to set up central beneficial ownership registers for corporate and other legal entities, by the date which is 18 months after the date of entry into force of 5AMLD. The central registers in respect of the beneficial ownership of trusts must be established by 20 months after that date.
We will update you when we have more information on the expected timeline for transposition of these amendments into Irish law.