United Kingdom (and EU regulation)

BEIS discussion paper on 4MLD beneficial ownership register

By Simon Lovegrove (UK) and Lisa Lee Lewis (UK) on November 7, 2016 Posted in Money laundering, United Kingdom

In September HM Treasury issued a consultation document on the transposition of the Fourth Money Laundering Directive (4MLD). Our blog entry can be found here. In conjunction with the HM Treasury consultation, the Department for Business, Energy & Industrial Strategy (BEIS) has now issued a discussion paper that further outlines possible approaches to the 4MLD’s requirement for Member States to maintain a central register of beneficial ownership information of corporate and other legal entities in their territory.

Article 30 of the 4MLD has two main requirements. That Member States hold adequate, accurate and current information on beneficial ownership of corporate and other legal entities incorporated within their territory in a central register, and that such information should be made available to specific authorities and organisations across the EU. The BEIS believes that the existing UK Register of People with Significant Control (UK PSC) regime meets these requirements in most respects, but that some amendments and additions may be needed.

The BEIS proposes:

that the rationale in determining whether an entity is in scope of the 4MLD is that it must be incorporated in the UK, and be constitutionally capable of having a beneficial owner. The information held on the register should increase transparency and be relevant to law enforcement in combatting money laundering;
for information on beneficial ownership, the BEIS proposes that such information should be adequate, accurate and current. In that, information that is solely “current”, without being also “adequate” and “accurate”, will not meet the 4MLD’s requirements. Where there is a change to the entity’s information, the BEIS proposes amending the existing UK PSC requirement to update from at least once every 12 months to a shorter timescale within 6 months of the change; and
to make certain information that is protected on the UK PSC available to credit and financial institutions.

The BEIS also notes that the European Commission has proposed amendments to the 4MLD. These are not considered in the discussion paper as they have yet to be agreed. The UK Government will address any issues arising from amendments to the 4MLD if/when the substance to clear and the amending Directive has been formally adopted.

The deadline for comments on the Discussion Paper is 16 December 2016.

View Implementing the Fourth Money Laundering Directive: beneficial ownership register, 3 November 2016