The European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 came into effect on 29 January 2019. These regulations impose obligations on trustees to establish and maintain a register of the beneficial owners of a trust. The regulations took immediate effect so it is important that trustees take the necessary steps to ensure they are in compliance with their new obligations.
The regulations apply to any trust, the trustees of which are resident in the State or is otherwise administered in the State, including charitable trusts.
Definition of a Beneficial Owner
A beneficial owner means any natural person(s) who ultimately owns or controls the trust and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least in the case of a trust:
- the settlor
- the trustee(s)
- the protector, if any
- the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates
- any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means
Trustees of a trust must take all reasonable steps to obtain and hold adequate, accurate and current information in respect of the beneficial owner(s) of the trust.
The regulations do not specify a minimum beneficial ownership threshold, therefore details of all beneficial owners of a trust must be obtained and included in the register.
What information must be obtained?
The following must be obtained for each beneficial owner:
- date of birth
- residential address
How is the information maintained?
The information above must be entered into the beneficial ownership register of the trust known as an “express trust (beneficial ownership) register” along with the date on which each person was entered into the register as a beneficial owner and the date on which each person who has ceased to be a beneficial owner ceased to be such an owner.
The information on the register must be kept up to date so as soon as a trustee learns of a change in beneficial ownership or in the particulars of a beneficial owner, the register must be updated to reflect the details of the change.
Who can access the register of beneficial ownership?
Trustees must provide the Revenue Commissioners or any State competent authority (e.g. Central Bank of Ireland) with timely access, on request, to the register. A State competent authority may disclose the information contained in the register to a corresponding competent authority of another Member State.
What other duties arise?
The trustees of the trust must keep a record of the actions taken to identify the beneficial owners of the trust and must retain those records for a period of not less than five years after the date on which the final distribution is made under the trust.
Further, the trustees must make arrangements for the records to be deleted at the end of the five-year period unless there is a legal requirement to retain the information or the person to whom the information relates consents to the information being retained.
Where a trustee of a trust enters into an occasional transaction or forms a business relationship with a designated person (for example where they engage the services of a legal professional or an accountant), the trustee must:
- Inform the designated person in writing it is acting as a trustee; and
- On request from the designated person, provide the designated person without delay with information identifying all the beneficial owners of the trust; and
- If, during the course of the business relationship with the designated person, there is a change in the information provided at the commencement of the business relationship, the trustee shall notify the designated person of the change and the date of the change within 14 days of becoming aware of the change.
What are the penalties for not complying with the new regulations?
A trustee who fails to comply with the obligations to create and maintain an “express trust (beneficial ownership) register” is guilty of an offence and shall be liable to a class A fine, being a fine not exceeding €5,000.