With the deadline of 23 October 2021 for filing on the Central Register of Beneficial Ownership of Trusts fast approaching, Samantha Holton of Crowley Millar Solicitors LLP provides an overview of the recent Regulations which introduced its establishment, its aims, and the obligations it imposes.
On 24 April 2021, the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (the “Regulations”) came into force. These Regulations transposed into Irish law the 4th and 5th Anti-Money Laundering Directives (the “Directives”) which require each EU Member State to establish a Central Register of Beneficial Ownership of Trusts (CRBOT) and imposed certain reporting obligations on the trustees of relevant trusts. The stated purpose of CRBOT is twofold. Firstly, it aims to improve transparency regarding the ownership of trusts by making clear to law enforcement agencies, regulators, designated persons and, in restricted circumstances, the public, who ultimately owns and controls Irish Trusts. Secondly, it seeks to identify and tackle circumstances where Irish Trusts are being used to fund criminal activity and terrorist organisations.
The Regulations specify the types of trusts (“relevant trusts”) which are subject to CRBOT, the obligations imposed on the trustees and gives the Revenue Commissioners the authority to appoint a Revenue Officer as Registrar.
The Revenue Commissioners have created a “Trust Register” portal on Revenue’s Online Service (ROS) to facilitate trustees (or their agents, advisors or employees) to register in accordance with their obligations as set out in the Regulations.
The deadline for filing trusts created before 23 April 2021 is 23 October 2021. All trusts created after 23 April 2021 must be registered withing 6 months of their establishment.
What is a Relevant Trust?
A “relevant trust” is an express trust established by deed or other declaration in writing and whose trustees are resident in the State or are otherwise administered in the State. “Otherwise administered” means that the management of trust assets and other services, for example legal or accounting services, are provided to the trust by professionals operating in the State.
Relevant trusts established by Sports Clubs to hold the assets for an Approved Sports Body the purpose of which is promoting amateur sports, charitable trusts and trusts created by will and which come into being on the death of a testator, fall within the scope of the Regulations. In the case of estates of deceased persons, the legal personal representative (executor or administrator) of the estate will be obliged to register the newly created trust when the estate is being administered.
What is the position regarding Multi-Jurisdictional Trusts?
Where a relevant trust is administered in more than one EU state or where two or more of the trustees reside in different Member States and the trustees have complied with registration requirements in a different Member State, the trustees should acquire and retain a certificate from the corresponding Registrar stating that the Trust has been filed on the Register of that Member State. Acquiring and holding such a certificate will be deemed to fulfil the trustees initial filing obligation in this State.
Trusts in which trustees enter a business relationship in the State on behalf of the Trust or acquires land or real property in the State on behalf of the Trust are subject to the regulations even if the trustees are resident outside the EU.
What Trusts are excluded?
Unit Trusts, ICAVs and Credit Unions and Approved occupational pension schemes, ARFs, approved profit-sharing schemes or employee share ownership trusts, are excluded arrangements for the purpose of the legislation and are dealt with under separate legislation.
For the purpose of the Regulations “Beneficial Owner” of a relevant trust includes the following:
- the settlor(s);
- the trustee(s);
- the protector(s) (if any);
- the beneficiaries, both an individual who is entitled to a vested interest in the Trust or who belongs to a class of individuals in whose interest the Trust is set up or operated for; and
- any individual who has “control” over the Trust.
Control over the Trust exists where an individual has the power to add or remove a person as a beneficiary to class of beneficiaries or who has the power to appoint or remove trustees or the power to invest or dispose of Trust property.
A specific definition of beneficial owner relating to charities, approved sporting bodies and estates of deceased persons is also provided in the Regulations.
Where the beneficial owner of a Trust is an individual, the trustee must provide the following details to the Registrar: –
- The name;
- Date of birth;
- PPSN or in the case of a beneficiary not resident in the State, a foreign registration number, passport number or National Identity Number;
- Country of Residence; and
- A statement of the nature and extent of the interest held, or the nature and extent of the control exercised.
For relevant trusts established before 23 April 2021, the filing date is 23 October 2021. Trusts established after 23 April 2021 must be filed on the Register within 6 months of their creation.
The Regulations impose ongoing obligations on the trustees.
Updating the Central Register
Where there are any changes to the beneficial ownership of a relevant trust, there is a follow-up obligation imposed on the trustees to update the Trust Register. This follow-up requirement must be discharged within 14 days of the date on which the trustee should have amended the relevant trust’s own beneficial ownership.
Disclosure to Designated Persons
A trustee must also disclose to a designated person (for example, a solicitor, a bank, or an accountant) that they are acting as a trustee of a Trust when entering a business relationship and must provide information regarding beneficial ownership of the Trust in these circumstances.
Suspected Beneficial Owner Information
Where a trustee has reasonable cause to believe an individual is, or has information in relation to, a beneficial owner who is not already recorded as such, the trustee must serve a prescribed notice on that individual requiring the provision of information relevant to the accuracy of the relevant trust’s register of beneficial owners.
Who can access the Central Register?
- The Garda Síochána, the Financial Intelligence Unit Ireland, the Revenue Commissioners and the Criminal Assets Bureau may have unrestricted access to the Central Registrar. A competent authority may also inspect the Central Register where it is engaged in the prevention, detection or investigation of possible money laundering or terrorist financing. Information on the Central Register may be disclosed to a corresponding authority in another Member State.
- A designated person may access certain beneficial ownership information on the Central Register when entering an occasional transaction or business relationship with a trustee or when conducting customer due diligence in respect of the relevant trust. A designated person is required to check that beneficial ownership information has been included on the Central Register before establishing a business relationship with a trustee of a relevant trust.
- Inspection of the Central Register is not open to the public, unless the person seeking access to information satisfies the Registrar that they have a legitimate interest and are engaged in the prevention of a money laundering offence.
Other Persons subject to the 2021 Regulations
The reporting obligations set out in the Regulations are not confined to trustees of relevant trusts and are extended to other persons including:
- Beneficial Owner: an individual who knows (or ought reasonably to know) that they are a beneficial owner of a relevant trust, are obliged to notify the trustee of that fact and provide the relevant beneficial ownership information. That individual has a similar notification obligation in relation to changes to recorded beneficial ownership information.
- Designated Entity: a designated entity (e.g., a bank, solicitor, or accountant) must notify the Registrar of any discrepancies that it identifies between the relevant trust’s beneficial ownership register and the Central Register.
- Officer/Employee of Trust or Presenter Acting for Trust: where the trustee’s Central Register filing obligation is discharged by (i) an employee or officer, or (ii) a “presenter” acting on behalf of the Trust, the name, address, phone number, email address and capacity in which a relevant individual is acting must also be delivered to the Registrar; and
- Public Authorities: there is an obligation on each of the Garda Síochána, the Revenue Commissioners, a competent authority, and the Criminal Assets Bureau to inform the Registrar of any discrepancies between the beneficial information on the Central Register and the information they hold provided this would not unnecessarily interfere with the performance of their duties.
Penalty for Non-Compliance
Failure to comply with the Regulations is a criminal offence with the penalties of up to €500,000 and or up to 12 months imprisonment depending on the level of obligation breached.
Given the onerous reporting obligations imposed by the Regulations and the criminal sanctions which can result from failure to comply, it is highly recommended that trustees of relevant trusts
- Familiarise themselves with the 2021 Regulations and the obligations imposed;
- Review all existing Trust Deeds and arrangements to ascertain whether such Trusts come within the scope of the regulations;
- Ensure that they are aware of the existing beneficial owners;
- Review internal registers of beneficial ownership and ensure that all information pertaining to beneficial owners is up to date and accurate;
- Contact their legal advisor for professional advice before acting; and
- Ensure filing on CRBOT is made by 23 October 2021 or within 6 months of creation as applicable
Samantha Holton is a Senior Associate Solicitor in the Private Client Department of Crowley Millar Solicitors LLP, 2 /3 Exchange Place, St George’s Dock, IFSC, Dublin 1.
Crowley Millar Disclaimer: This is a general information note and is intended for brief guidance and information only. It does not constitute legal advice and should not be regarded as a substitute for legal or other professional advices. Such advice should always be taken before acting on any of the matters referenced in this information note.