Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

These amendments address part of the overall transposition of the 5^thanti-money laundering directive, 5AMLD, for which various statutory instuments have been introduced in respect of other articles. Further measures are contained in this Bill.

Article 31 of the directive requires that all member states establish a central register of beneficial ownership of express trusts. The deadline for transposition of this article was March 2020. It has been difficult to introduce legislation to provide for the establishment of this register, largely due to the extensive use of trusts in our common law jurisdiction. Trusts are far more widespread in Ireland than in other civil law member states. Fortunately, many trusts operate in sectors that are regulated and where the risk of money laundering is low. As a widely-used mechanism in common law states, the flexibility of the trust is shown by its use for purposes such as pension funds, employee share funds, charities and sports clubs. Trust are generally not used for these purposes in other members states. Rather, the legal vehicles used across the EU are contractual arrangements or corporate entitles and as a result they come within the article 30 remit, which has less onerous reporting requirements. As a result of trusts being used for these purposes in Ireland, Irish individuals could be discriminated against vis-à-viscitizens of other member states as they could find their personal information placed on a register merely by virtue of being a member of a pension scheme or in receipt of shares from their employer. There are also significant data protection considerations, as acknowledged by the European Commission and echoed in advices from its legal services.

It is important to note that there is a requirement for the registers of all member states to be interconnected by March 2021. This means that access to the information on these registers will be available not only to authorised bodies such as financial intelligence units and national competent authorities but also to the public across the EU where a legitimate interest can be shown. Extensive consultation has taken place with the Office of the Attorney General, with external counsel and with solicitors both domestic and international to find an approach to transposition that would meet with the spirit of the directive, align us as closely as possible with our member state counterparts and impose only a proportionate and equitable legislative framework on Irish trustees and beneficiaries of trusts, whether institutional or individual. These amendments are the result of that consultation.

An autonomous interpretation approach has been taken to the definition of "express trusts" and in doing so, similar arrangements in other member states have been considered. The Attorney General advised that the effect of this interpretation under EU law is that a member state is entitled to exclude from the ambit of the article those trusts that are excluded by other member states by reason of their using a legal vehicle or similar arrangement that is not a trust. As a result, occupational pension schemes, employee share schemes and the Haemophilia HIV Trust have been excluded from the requirement to register. With regard to pensions and share schemes, further provisions may be made by regulations to capture beneficial ownership in a similar manner to other member states that do so with reference to article 30. I am introducing a specific definition of "beneficial owner" for amateur sports bodies and unincorporated charities such that only the trustees, committee, governing body or individuals in control of the trust will have to register rather than every member of a club or every individual who donates to or is assisted by a charity. Incorporated sports bodies and charities are obliged to register under SI 16 of 2019, which transposed article 30 and established a register of beneficial ownership for corporate identities. These amendments also provide that I may further prescribe trusts to be included or excluded from the requirement to register under article 31 legislation, having taken into account factors such as the risk of money laundering and the way similar structures are captured in other member states. For example, if it comes to my attention that there is an issue with a particular trust type, I can, as Minister, include them on the register. Conversely, if it is shown that there is low risk, the Minister for Finance can exclude them completely.

AML, and counter-terrorist financing, CTF, has become an increasingly high-profile item on the EU agenda. At the most recent meeting of ECOFIN, a comprehensive set of conclusions were agreed that aimed to strengthen and reform legislation in this area with the aim of publishing legislative proposals in the first quarter of next year. Two of the most significant proposals concern the introduction of an EU single rule book and single supervisor in these areas. It is anticipated that these matters will be achieved through the establishment of a stand-alone EU authority in these areas. Given the uniqueness of our common law jurisdiction following the exit of the UK from the Union, I have ensured that these conclusions require any future developments of frameworks in these areas to take account of common law jurisdictions as well as civil law ones.