As we saw in last week’s blog almost 42,000 companies (14%) and 239 Societies (25%) were non-compliant with their RBO registration requirements at the end of 2023 – the latest date reported on by the Registrar of Beneficial Ownership.
This position is in stark contrast to the numbers of Discrepancy and Non-Compliance Notices (see more below) that are being filed. One would expect such notices to be increasing when the rate of non-compliance is so high, but in fact the rate of these reports fell by up to 67% between 2022 and 2023! This may be only a temporary phenomenon (see more below), but penalties may follow unless the situation improves.
The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (the Act) requires ‘designated persons’ (defined in Regulation 20(3)(b) of SI 110 of 2019) such as accountants, law firms, banks and certain other service providers to inspect the RBO register as part of their Customer Due Diligence (CDD) processes before establishing a business relationship with a customer, and to report to the Registrar any:
-
- discrepancies and
- non-compliance.
There are also reporting requirements for what are called ‘relevant persons’ (defined in Regulation 26(1) of SI 110 of 2019) (i.e. regulatory authorities and the Revenue Commissioners, Criminal Assets Bureau and Garda reporting using the DN1 form) but it’s not the purpose of this blog to deal with these.
A ‘discrepancy’ (as defined in legislation) is where:
‘A designated person carrying out customer due diligence on an entity, or otherwise, forms the opinion that there is a discrepancy between the information in the central register (RBO) and the information the entity must hold in its internal register of beneficial ownership, then the designated person shall deliver, in a timely manner, to the Registrar notice of that opinion, specifying the particulars as respects which the foregoing discrepancy exists.’
‘Non-compliance’ (as defined in legislation) is:
‘An official notification to the Registrar stating that, having searched in the RBO Online Portal for the beneficial ownership details of a relevant entity, the person searching has found no beneficial ownership details in the RBO for the particular entity, and is reporting to the Registrar that the entity in question appears to have failed to comply with its obligations under Regulations 20 and 21 of SI 110/2019’
Notices filed in 2023 v 2022
| 2023 | 2022 | % change | |
|
Discrepancy Notices (DN 2) filed |
2,168 |
3,420 |
-37% |
|
Non-Compliance Notices (NCN) filed |
787 |
2,387 |
-67% |
Potential Cause of the Drop in Reporting
The drop in reporting in both the DN2 and the NCN notices between 2023 and 2022 may be something to do with the lack of access that accountants had to the RBO register after the ECJ decision on November 2022. This problem has since been resolved so one would expect the rate of DN2 and NCN notices to increase in 2024/2025.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
- Our latest CPD Webinar on The Main Changes in Irish GAAP (recorded July 2024)
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion you receive a CPD certificate for attendance in your inbox.
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
