By George Alton ACG, Head of Corporate Governance & Compliance
It is just over three years since the requirement for companies to maintain a Register of their Beneficial Owners (RBO) and provide this data to a central register became a requirement in accordance with The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019.
Enforcement
The Central Register of Beneficial Ownership (CRBO) has run several reminder campaigns since 2019 to remind companies of their obligations, however enforcement action was somewhat relaxed during the Covid pandemic.
It is understood that enforcement is back on the agenda as, during 2022, a number of companies were prosecuted and fined €3,000 each for failing to meet the requirements. Furthermore, the Registrar of Companies, Maureen O’Sullivan, announced at a conference last year that the RBO is now issuing summons’ to companies that have not met their RBO filing obligations.
Here is a guide of what you now need to know regarding the RBO and the action you should take to avoid those fines.
Background
The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019, is part of an EU-wide effort to reduce opportunities for money-laundering and terrorist financing.
Under the 2019 regulations all existing companies were required to file their relevant beneficial ownership information with the CRBO by 22 November 2019 and all newly incorporated companies were required to file their beneficial ownership information within 5 months of incorporation. Additionally, any changes to the details of a beneficial owner or beneficial ownership of a relevant entity must also be disclosed to the CRBO within 14 days of the change occurring.
The 2019 law was further reinforced in 2021 with the introduction of The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021. This legislation requires all ‘designated persons’ (i.e. banks, financial institutions and other service providers) to inspect the RBO as part of their due diligence process before on-boarding a customer. They must report any discrepancies and non-compliance to the CRBO.
For companies wishing to engage with such banks and financial institutions it is important to ensure that the information available on the CRBO is accurate and current.
What action should companies take?
New Companies
Newly incorporated companies are required to file their beneficial ownership information with the CRBO within 5 months of incorporation. We encourage our clients to make the relevant submissions following incorporation to facilitate the opening of bank accounts or engaging with other financial institutions or service providers.
Existing companies
Check that the information contained in your internal register and the CRBO is up to date. You can check to see if your company is registered and has made a return here.
If your company has not completed a filing with the CRBO, then you should ensure that this is done as soon as possible. If there is a change in the beneficial ownership of an entity, this must be reported to the CBRO within 14 days of the change occurring.
Who has access to this information?
Until recently access to the information contained on the CRBO was available as follows:
Tier 1 Unrestricted access available to certain members of An Garda Síochána, the Revenue Commissioners, the Criminal Assets Bureau or a competent authority.
Tier 2 Restricted access available to such designated persons and members of the public.
Public access to information contained on the CRBO was suspended following a landmark ruling in which the Court of Justice of the European Union found that public registers containing the personal details of ‘beneficial owners’ of companies infringe the fundamental privacy and data protection rights of citizens.
It was ruled that the provisions in the 5th EU Anti-Money Laundering Directive requiring Member States to ensure that the information on the beneficial ownership of corporate and other legal entities incorporated within their territories is accessible in all cases to the public is invalid.
Designated persons are now required to make an application to the Registrar to obtain access to information filed on the CRBO.
What are the penalties for non-compliance?
Failure to file an initial return and/or to keep the register up-to-date can result in fines of up to €500,000 on conviction.
Failure to maintain an adequate, accurate and current internal register of beneficial owners of a reporting entity and/or failure to comply with filing requirements may result in:
- On summary conviction, a Class A fine not greater and €5,000; or
- On conviction on indictment, a fine not exceeding €500,000.
DHKN provides a complete range of Corporate Governance and Secretarial services including filing and updating returns with the CRO and CRBO.
For further information contact George Alton at galton@dhkn.ie or on +353 (0)91 781315.
