On 5 September 2016, the Cabinet Office published a memorandum submitted by HM Treasury on the European Commission’s proposed Directive to amend the Fourth Money Laundering Directive (4MLD).
The memorandum lists the proposed amendments to the 4MLD and makes a number of comments concerning the policy implications. These include that the UK Government:
- reiterates that until the EU exit negotiations are concluded, the UK remains a full member of the European Union and all its rights and obligations of EU membership remain in force. During this period the UK Government will continue to negotiate, implement and apply EU legislation;
- welcomes the proposals, particularly for public registers of company beneficial ownership and those that clarify certain provisions in the 4MLD including that trusts and other legal arrangements must be registered where they are administered;
- is considering whether there are Justice and Home Affairs obligations that would trigger opt-in; and
- intends to implement the 4MLD by replacing the Money Laundering Regulations 2007 with new legislation.
However, the UK Government expressed certain concerns including those relating to the proposals to:
- reduce the registration threshold from 25% to 10% for some companies. The UK Government feels that this is a significant divergence from current conditions of becoming a person with significant control (PSC), which includes holding more than 25% in shares or voting rights. The UK Government argues that reducing the threshold would increase the number of persons on the register and the costs to businesses. It could also create a mismatch of the PSC thresholds on the register;
- register the beneficial owners of all trusts and trust-like legal arrangements and to make this information widely accessible. The UK Government argues that private and family orientated nature of most trusts raises privacy concerns;
- introduce automated centralised mechanisms which allow the identification of any natural or legal person holding or controlling payment or bank accounts: The UK Government supports a less onerous requirement to introduce a central data retrieval system as opposed to the alternative option of compelling all financial institutions to report data on all bank accounts to a centralised mechanism. Accordingly, it will seek to ensure that this requirement is deliverable, proportionate and risk-based and that options for keeping the UK’s existing system are examined closely.
View HM Treasury memorandum on proposed Directive amending the fourth money laundering directive, 7 September 2016.