On 3 November 2016, the BEIS published a discussion paper on the transposition of Article 30 of the Fourth Money Laundering Directive ("Money Laundering Directive") (the implementation of the Money Laundering Directive as a whole being separately addressed in a consultation with the HM Treasury) relating to the beneficial ownership of corporate and other legal entities.

Article 30 essentially requires that (i) EU 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 (ii) that such information is made available to specific authorities and organisations across the EU. BEIS considers that the existing UK people with significant control ("PSC") regime largely meets these requirements, but that some amendments and additions to the following areas may be necessary to comply with the Money Laundering Directive:

  • Scope of the entities required to obtain and hold information. BEIS considers that the scope of the existing domestic legislation should be extended to all entities that are incorporated in the UK and constitutionally capable of legitimately having a beneficial owner. This would include: European economic interest groupings; unregistered and open ended investment companies; investment companies with variable capital; co-operative/community benefit societies; building and friendly societies; credit unions; European cooperative society; charitable incorporated organisations; European groupings of territorial cooperation; Scottish partnerships and limited partnerships; and royal chartered bodies. The current tests of "significant control" in Part 1 of Schedule 1A to the Companies Act 2006 would be adapted to correspond with the structure of the new legal entities brought within scope.
  • The nature of the information on beneficial ownership collected. It must be "adequate, accurate and current". BEIS is proposing to amend the existing requirement of updating with Companies House at least once every 12 months, to an obligation for all entities to update their PSC information within 6 months of a change occurring.
  • Access to information on beneficial ownership. For new entities brought into scope of the Money Laundering Directive, BEIS is proposing that information on beneficial ownership should be publicly accessible in a similar manner to that of the PSC register (i.e., fully searchable online by anyone in any country, free of charge). There is, however, a small proportion of the PSC information which is suppressed from the public register and, as a requirement of the Money Laundering Directive, this will be protected information available to credit and financial institutions.

The Money Laundering Directive must be implemented by 26 June 2017. However, in its action plan against terrorist financing, the European Commission called on Members States to bring forward the transposition date to 1 January 2017.

The BEIS discussion paper can be accessed here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/565095/beis-16-38-4th-money-laundering-directive-transposition-discussion-paper.pdf

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.