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Beneficial Ownership and the Fifth Anti-Money Laundering Directive

The Fifth Anti-Money Laundering Directive (5AMLD) came into force on 9 July 2018 to strengthen EU rules to prevent money laundering and terrorist financing. 5AMLD makes numerous amendments to the Fourth Anti-Money Laundering Directive (4AMLD).

4AMLD required all EU Members States to transpose into national law provisions for the collection and maintenance of information relating to the beneficial ownership of certain corporates entities and trusts by June 2017.

As an initial step to satisfy the requirements of 4AMLD, Ireland introduced a statutory instrument (SI560 of 2016) which took effect in late 2016. It required certain corporate entities to hold adequate, accurate and current information on their beneficial owners in registers maintained and held by them. In brief, beneficial owners are defined under the legislation as persons that have direct or indirect control of over 25% of the shares or voting rights or control via other means of the affected corporate entities.

Under 4AMLD further legislation was required in Ireland to satisfy the requirements to provide:

  • A central register to hold beneficial ownership information
  • The establishment of beneficial ownership of trusts
  • Access to these registers

The June 2017 deadline under 4AMLD was not met by Ireland. However, as a result of 5AMLD, the relevant deadlines have been extended.

The changes introduced in 5AMLD provide further clarity in respect of the obligations of Member States relating to the collection and maintenance of, and provision of access to, the central registers of beneficial ownership of corporates and trusts. There is a phased deadline for the implementation of 5AMLD, starting on 10 January 2020.

We previously discussed the likely impact of the 5AMLD directive in greater detail.

The Criminal Justice (Corruption Offences) Act 2018 (the Act)

The Criminal Justice (Corruption Offences) Act 2018 was signed into law in June 2018 and commenced the following month. The Act overhauls existing anti-corruption laws and introduces a number of new offences.

The Act will catch both corrupt activities that take place outside Ireland by an Irish company and corrupt activities of Irish and non-Irish companies alike occurring in Ireland.

A company will be presumed to be guilty of an offence where employees, directors or even subsidiaries, engage in corrupt activities on its behalf with the intention of obtaining business or gaining an advantage.

A company accused of this type of offence can defend any proceedings brought against it by proving that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. To be able to rely on this defence, at a minimum, companies affected by the Act need to have suitable bribery and corruption policies and procedures in place to combat the use of bribery and corrupt practices in the conduct of their business.

We previously examined the likely impact of The Criminal Justice (Corruption Offences) Act 2018 in greater detail.

The Companies (Statutory Audits) Act 2018 (2018 Act)

The 2018 Act was signed into law and for the most part, commenced on 21 September 2018. It amends the Companies Act 2014 so that there is now a single coherent body of legislation in Ireland regulating the profession of statutory auditor and the conduct of statutory audits. Its enactment also means that Ireland has completed its implementation of the regulatory framework proposed by the EU’s 2014 audit reform package.

We previously discussed the likely impact of this legislation in greater detail here


What’s on the horizon for 2019?

  • General Scheme of the Companies (Corporate Enforcement Authority) Bill 2018

The General Scheme of the Companies (Corporate Enforcement Authority) Bill 2018 has been published. The main objective of the General Scheme is to establish the Office of the Director for Corporate Enforcement as an agency. It will also deal with the majority of the anomalies identified as arising under the Companies Act 2014.

  • Companies (Amendment) Bill

We understand the Department of Business, Enterprise and Innovation is working on the preparation of a Bill to complete the implementation of the Government’s policy to streamline the annual filing procedures for companies in the Companies Registration Office.

At present, a company has up to 28 days after its annual return date to file its annual return with the CRO. It then has a further 28 days to submit the accompanying financial statements. This Bill will introduce a technical change to the Companies Act 2014 that will amalgamate those 2 steps into a single step procedure that can be done any time within the full 56 days. Publication of the Bill is expected before the end of this year with a view to enactment as soon as possible after that.

If you require any corporate advice or for more information on forthcoming legislation and the potential impact on your business in 2019, contact a member of our Corporate or Corporate Governance and Compliance teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice

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