Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Senator. While I understand the points she has made, we are concerned, to some extent, with money laundering and, possibly, some other areas. The definition of beneficial ownership in this Bill aligns with the definition in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. The specific definition of "beneficial owner" in the 2010 Act is a person who:

(a) ultimately is entitled to or controls, whether the entitlement or control is direct or indirect, more than a 25 per cent share of the capital or profits of the partnership or more than 25 per cent of the voting rights in the partnership, or

(b) otherwise exercises control over the management of the partnership.

The threshold for control is therefore applied through two tests. If a person has a shareholding of more than 25%, he or she is included in the definition and he or she is also included if he or she can control the investment. A number of people may be defined as a beneficial owner. Even if a person only has 10% of the shareholding, he or she may control more because of the way it is constructed. There may then be three other people who each hold 25% or more of the shareholding but who might not actually control it. In that case, four beneficial owners would be captured by the definition. The beneficial ownership framework is also being introduced in Ireland and it follows the provisions of EU legislation. We want to ensure the highest international transparency standards apply to investment limited partnerships. It is therefore important to have consistency with existing legislation on money laundering and EU legislation. An alternative method of dealing with this matter would not align with the various elements of existing legislation. It is important that this legislation align with existing legislation dealing with money laundering and with EU regulations.

EU regulations use the definition I have just mentioned, which is that a person with 25% of the shareholding, or control over 25% even if he or she owns less, is a beneficial owner. If a different level was set in our legislation, say 10% or 20%, we would be out of sync, which might make it more difficult for people who want to invest under the funds structure we are setting up in Ireland. If our legislation was out of kilter with the rest of the EU, it would cause unnecessary difficulties and might make it less practical to operate. We should not choose to be out of sync with money laundering legislation and EU regulations. For that reason, I am not in a position to accept the amendments.