The Dáil recently passed a Bill which will provide some certainty and relief for both pension scheme members and pension providers if it is enacted in its current form. The Bill contains provisions which ensure that Irish individuals will not find that their personal information has been placed on a State maintained central register simply by virtue of the fact that they are a member of a pension scheme. As the Bill excludes pension schemes from registering on the central register and providing beneficial owner information, trustees will not be obliged to create and maintain their own internal registers.

Background

The fourth EU Anti-Money Laundering Directive (Directive) requires information on the beneficial ownership of trusts to be submitted to a State maintained central register, the deadline of which was March 2020. The EU (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (Beneficial Ownership Regulations) were introduced to give effect to these provisions in the Directive and require that all express trusts maintain an internal beneficial ownership register. This was a necessary first step so that all “express trusts” can then submit their beneficial ownership information to the central register once it is established.

Concerns

Initially, scheme trustees and pension providers expressed concern at the potential data protection issues, as well as the cost and administrative burden of implementing and maintaining an internal register of beneficial owners. Concerns were also raised that the widespread use of trusts in Ireland, particularly in relation to pensions, would lead to potential discrimination against Irish pension members. Their counterparts in many parts of Europe will not have their personal information made available in this manner as their pension arrangements are established under contract or as corporate entities.

While national competent authorities will have access to the central register it will also be open to the public across the EU where a legitimate interest is established.

The solution

The State carried out a consultation process with the Attorney General and external advisors as well as considering arrangements in other Member States to find the correct approach. As a result of the consultation, the State has adopted an autonomous interpretation approach to the definition of "express trusts”. This means that it is entitled to exclude from the ambit of Article 31 of the Directive those trusts which would be excluded arrangements in other Member States due to the fact that trust vehicles are not utilised.

The bill

The Bill amends the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 and gives effect to the Fifth Anti-Money Laundering Directive which in turn amends the Directive. Under the Bill, the Minister for Finance may prescribe any arrangement or class of arrangement to be a “relevant trust”, where they are satisfied that such an arrangement is an express trust or similar legal arrangement within the meaning of the Directive. Any arrangement, so designated, must maintain a register of beneficial owners and submit this information to the State maintained central register. Occupational pension schemes approved pursuant to Chapter 1, Part 30 of the Taxes Consolidation Act 1997 have been defined as “excluded arrangements” for the purposes of the definition of “relevant trusts” in the Bill.

What this means

The Bill is currently before the Seanad. If it is enacted as presently drafted, it will exclude pension schemes as well as ARFs from the requirements of Article 31 of the Directive. This means that trustees will not be required to maintain an internal register of beneficial owners and will not be required to submit this information to the central register.

Next steps

Until such time that it is passed into law, scheme trustees must continue to abide by the requirements of the Beneficial Ownership Regulations. Trustees should continue to take all reasonable steps to obtain and hold relevant information on the beneficial owners of their schemes and a beneficial ownership register should also be maintained.