On September 15, 2016 HM Treasury published a consultation paper on, among other things, the transposition of the Fourth Money Laundering Directive (Directive (EU) 2015/849). The consultation will play a key role in deciding how best to transpose the Directive and, where appropriate, the Fund Transfer Regulation (FTR) into UK law in a way that appropriately balances the need for a proportionate approach which manages the burden on business, with the need for businesses to actively discourage money laundering and terrorist financing activity.
The Government proposes to create the Money Laundering and Transfer of Funds (Information on the Payer) Regulations 2017 in order to transpose both the Directive and the FTR. The current Money Laundering Regulations 2007 and Transfer of Funds Regulations 2007 will be revoked with appropriate transitional provisions being included in the new Regulations. The Government intends that the new provisions will come into force by June 26, 2017, in line with Article 67 of the Directive and Article 27 of the FTR.
The consultation paper includes a chapter on the beneficial ownership of legal entities. Although the UK has introduced the “people with significant control” (or PSC) regime, it notes that the Directive requires information on beneficial ownership to be “current”. While the PSC regime requires entities in scope to update their own PSC register following any relevant changes, the central register at Companies House is only updated annually as part of the filing of the entity’s Confirmation Statement. The Government must now determine how to meet the requirement that PSC information on the Companies House register is current and seeks views.
The consultation paper notes that the PSC register applies to most companies, Limited Liability Partnerships (LLPs) and Societas Europaeae (SEs). However, the Directive is intended to apply to a wide range of corporate and other legal entities. The Government must identify which other legal entities are in the scope of the Directive and how they would register information on their beneficial ownership. The consultation paper sets out a list of some types of entity in the UK which might be viewed as coming within the scope of the requirements to register information on beneficial ownership and requests views on whether these entities are in the scope of the Directive and on the approach that should be taken to these entities.
Additionally, Article 31 of the Directive provides that Member States must require trustees of any express trust governed under their law to obtain and hold adequate, accurate and up-to-date information on beneficial ownership of the trust and make this information available to competent authorities. Similar measures apply to other types of legal arrangements having a structure or function similar to trusts. Further, the Directive requires that the beneficial ownership information is held in a central register when the trust generates tax consequences. The Government seeks views on the implementation of these requirements for trustees.
The Government has requested comments on the consultation paper by November 10, 2016.
(HM Treasury, Consultation on the transposition of the Fourth Money Laundering Directive, 15.09.16)