Get ready for the 4th Anti-Money Laundering Directive – We Are

The deadline of the 26^th June to implement the 4^th Anti-Money Laundering Directive is fast approaching.

As this is an EU directive, there has been speculation that, post Brexit vote, it might not be implemented at all.  HMRC has been quick to point out in its consultation document that we are still in the EU, so MLD4, as it is sometimes known is going to happen.

So, what can we expect.  To be truthful – not a lot.

There are two stand out points worth noting: a central register of controlling interests and the inclusion of domestic Politically Exposed Persons.

Let’s start with the register of controlling interests.  Companies House is now well on the road to creating this register.  It’s snappily called the People with Significant Control (PSC) register. From 30 June 2016 a confirmation statement replaced the annual return in which details of who controls a company are required.

A PSC is anyone in a company, LLP or SE who meets one or more of the conditions listed in the legislation. This is someone who:

• owns more than 25% of the company’s shares
• holds more than 25% of the company’s voting rights
• holds the right to appoint or remove the majority of directors
• has the right to, or actually exercises significant influence or control
• holds the right to exercise or actually exercises significant control over a trust or company that meets one of the first 4 conditions.

This will make it a lot easier to find out who the beneficial owners are when engaging with a business. Just to be clear, AML checks are carried out on individuals and not businesses, hence the register.

The second point is the inclusion of domestic PEP’s for the first time.  There is still a lot of confusion around what a PEP is and whether you can do business with one.  Just to be clear, it’s the transaction that counts.  A PEP has every right to buy a house, unless they want to pay for it with a suitcase full of cash.

A PEP check is required at point of engagement but there isn’t a requirement to continually check against the register, although best practice would be at least an annual check against current clients where a relationship is ongoing or upon the opening of a new matter.

Whilst there is some tinkering with limits, penalties and clarification on Estate Agents and Lettings Agents’ obligations, not a lot will really change in the day to day application of due diligence.  As ever, Veriphy is at the forefront of compliance.