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AML exemptions for share schemes are good for business

By February 8, 2021February 9th, 2021No Comments

Profit-sharing schemes and clog trusts have been exempted from inclusion in the Register of Beneficial Ownership of Trusts as part of the implementation of new EU anti-money laundering legislation.

The exemptions are included in the latest version of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020, published late last year. A new chapter 9B will be inserted in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, which makes provision for the meanings of words in regulations that are made on or after the chapter becomes effective (i.e. future regulations) under section 3 of the European Communities Act 1972. This is where the new definition of relevant trust is (at what will be s106ZC).

A relevant trust does not include an excluded arrangement. An excluded arrangement includes occupational pension schemes, “a profit-sharing scheme or employee share ownership trust approved pursuant to part 17 of the Act of 1997”, and “a trust for restricted shares within the meaning of section 128D of the Act of 1997”.

IPSA Chair of Advocacy, Keavy Ryan, said: “The Government’s decision to exempt profit-sharing schemes and clog trusts from the Register of Beneficial Ownership of Trusts is a welcome development for the Irish share scheme sector.

“The use of trusts is more widespread here than in other EU states and failure to exempt them would have resulted in an unnecessary and costly administrative burden being placed business that are already under tremendous pressure.

“IPSA has been calling for such an exemption for the past year and we are pleased that the government recognises that these profit-sharing schemes and clog trusts pose no or a negligible risk of money laundering or terrorist financing.”

The Register of Beneficial Ownership of Trusts is set to be introduced under the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (S.I. No. 16 of 2019) (the 2019 Regulations). The 2019 Regulations give partial effect to the Fifth Anti-Money Laundering Directive.