The main thrust of the Fourth Anti-Money Laundering Directive (Directive (EU) 2015/849), which came into force on the 26th June, 2015 was to enhance the transparency within entities and structures. In order to achieve this aim, this Directive created the way for the central register of beneficial owners, the local implementation of which took place by means of the Companies Act (Register of Beneficial Owners) Regulations, 2017 for companies, and the Trusts and Trustees Act (Register of Beneficial Owners) Regulations and the Civil Code (Second Schedule) Register of Beneficial Owners- Foundations) Regulations 2017 for trusts and foundations respectively.
Who is the Beneficial Owner?
A beneficial owner is defined as “any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted.” In the case of corporate entities, the beneficial owner relevant for AML purposes is considered to be such “… natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market.” Henceforth, any natural person having direct or indirect ownership or voting rights of twenty-five percent (25%) plus one (1) needs to be identified and reported.
The Information Required
All corporations and other legal entities are required to obtain and hold accurate and current information on their beneficial ownership, which information must be kept in a central register of beneficial owners. The information to be kept shall include:
- The name, the date of birth, the nationality, the country of residence and an official identification document number indicating the type of document and the country of issue, of each beneficial owner;
- The nature and extent of the beneficial interest held by each beneficial owner and any changes thereto;
- The effective date on which a natural person became, or ceased to be, a beneficial owner of the company or has increased or reduced his beneficial interest in the company.
Legal Requirements
As from 1st January, 2018, the proposed director/s of a new company to be incorporated is now required is submit a declaration providing the name, date of birth, nationality, country of residence, official identification number, the document type being presented, its country of issue and the extent and nature of beneficial ownership of each beneficial owner together with the incorporation documents to be presented to the local Registrar of Companies.
In terms of Regulation 6 of the Companies Act (Register of Beneficial Owners) Regulations, 2017, as from 30th June 2018, the director/s or the legal representatives of the corporation are obliged to notify the Registrar with such updated changes in beneficial ownership within fourteen days from when the relevant change is recorded with the company. Where there are no changes which would have occurred, the first delivery of the beneficial ownership declaration shall take place within forty-two days from the first anniversary of the company’s registration falling immediately due after 30th June, 2018.
Access to the Central Register of Beneficial Owner
The information on beneficial owners provided by each company will be registered and will be accessible to the following:
- National competent authorities responsible to combat money laundering and terrorist financing
- Competent authorities that have the function of investigating or prosecuting money laundering, associated criminal offences and terrorist financing, or of tracing, seizing, freezing and confiscating criminal assets’
- The Financial Intelligence Analysis Unit
- The national tax authorities;
- any other national competent authority within the meaning assigned to it under the PMLFTR
- Subject persons in terms of the PMLFTR
- Any person or organisation who upon a written request, satisfactorily demonstrates a legitimate interest to access the register of beneficial ownership
Access to the central register of beneficial owners may be limited where it results that such access may expose the beneficial owner to a risk of fraud, kidnapping, blackmail, violence or intimidation.
Trusts and Other Similar Arrangements
Similar obligations were imposed for trusts and foundations. In relation to trusts, trustees of an express trust must submit to the Authority a declaration of beneficial ownership in respect of every trust which generates tax consequences.
In the case of trusts, ‘beneficial owner’ shall refer to:
- The Settlor
- The Trustee(s)
- The Protector (if any)
- The Beneficiary or Beneficiaries
- All other natural persons having control of the trust
Unlike in the case of corporations, where the central register of beneficial owners is accessible to those persons who satisfactorily provide a legitimate interest, the central register of beneficial owners of trusts shall not be accessed to such persons.
How can we help?
We can assist clients by providing guidance and evaluation of the application of the implications in relation to the various legal obligations so as to ensure compliance in terms of the newly introduced requirements stemming from the regulations