The RBO are cracking down – Take action and avoid prosecution

• Ireland

• Corporate secretarial services
• Fraud and financial crime

09-08-2022

It has been almost three years since The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (the “2019 Regulations”) came into force, requiring all relevant entities incorporated in Ireland to (i) maintain information on their beneficial owners on an internal beneficial ownership register and (ii) provide this information to the Central Register of Beneficial Ownership (the “CRBO”).

Under the 2019 Regulations, existing relevant entities were obliged to file their beneficial ownership information with the CRBO by 22 November 2019, with newly incorporated companies having five months from the date of their incorporation to make their disclosures. Any changes in information pertaining to the details of a beneficial owner or beneficial ownership of a relevant entity must also be disclosed to the CRBO within 14 days of the change occurring. Further information on what constitutes a beneficial owner for the purposes of the 2019 Regulations can be found here.

According to the CRBO’s 2021 annual report, approximately 87% of companies have now filed their beneficial ownership information. Whilst submissions had been impacted throughout 2021 due to COVID-19, the CRBO saw an increase in the number of submissions received compared to that of 2020. Nevertheless, there remains a significant number of companies and relevant entities in Ireland that have failed to comply with the 2019 Regulations.

Non-compliance reminder campaign

The CRBO had planned to commence a non-compliance reminder campaign in March 2020, however this was postponed due to the outbreak of COVID-19. The campaign recommenced fully in May 2021, and the issuing of non-compliance notices to entities which had not fulfilled their obligations under the 2019 Regulations was completed by the end of August 2021. In Q3 of 2021, the CRBO commenced an ongoing reminder campaign directed at newly incorporated entities which are still within their 5-month deadline to register with the CRBO. Inconsideration of the impact of COVID-19 and the ongoing difficulties faced by some companies, no enforcements or prosecutions were initiated by the CRBO in 2021. However, the CRBO have now confirmed that that the prosecution of non-compliant entities has now commenced.

Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021

In April 2021, the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (the “2021 Act”) commenced, requiring all ‘designated persons’ (i.e. banks, financial institutions and other service providers) to inspect the RBO as part of their due diligence process before on boarding a customer, to include reporting any discrepancies and non-compliance to the CRBO. The 2021 Act, coupled with an aggressive compliance campaign by the CRBO resulted in both an increase in submissions received by the CRBO in 2021, as well as the number of non-compliance and discrepancy notices served.

Prosecutions and penalties

The CRBO brought its first cases before the Dublin Metropolitan District Court in May 2022, with nine companies facing prosecution for failure to file. Five entities were convicted and subject to fines of €3,000 each, while the remaining four entities pleaded guilty and so the Probation Act was applied.

Consequences of non-compliance with the 2019 Regulations can be severe. A relevant entity that fails to comply commits an offence and could be liable to conviction on indictment, which carries a fine up to €500,000. Custodial sentences of up to 12 months can also be imposed on any person who knowingly or recklessly makes a materially false statement to the CRBO.

We can help!

The CRBO will continue to take enforcement action against companies for non-compliance and those that are in default are advised to act now to avoid prosecution. Our multi-disciplinary team can provide assistance and advice on everything your company needs to be compliant, remain compliant with the 2019 Regulations and can also assist with any investigations or prosecutions brought against your company.

For further Information, please contact: 

Emma O'Reilly, Company Secretary - EmmaOReilly@eversheds-sutherland.ie