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The Effect of the Fourth Anti-Money Laundering Directive on the PSC Register Requirements

The register of people with significant control (the “PSC register”) was introduced by the British government in April 2016.  It was designed, amid concerns of corporate transparency, to ensure that individuals who ultimately own and/or control a company (i.e. behind all the corporate layers) are identified, and their details are made public.

Whilst the UK is regarded as a leader when it comes to corporate transparency and beneficial ownership matters, the EU Fourth Anti-Money Laundering Directive (the “Directive”), which came into force from June 2017, extends the disclosure requirements of the PSC register.

It is important that business owners understand these changes to ensure they remain compliant with UK company law. There are criminal penalties for companies and their officers for non-compliance.

Before we discuss the changes brought in by the Directive, here is a quick recap of the PSC register and its requirements.

What is the PSC register?

Since April 2016, private companies and LLPs in the UK have been required to identify and supply the details of individuals who have significant controlling interests on the PSC register, the person with significant control (“PSC”).  A PSC is identified as someone who meets one or more of the following criteria:

  • directly or indirectly holds 25% or more of a company’s shares
  • directly or indirectly holds more than 25% of the voting rights
  • has enough influence or control to appoint or remove directors
  • has the right to exercise, or does exercise significant influence or control over the organisation

Once a PSC is identified, certain information must be collected and included on the PSC register.

The details required included the PSC’s:

  • name
  • date of birth
  • nationality
  • country of residence
  • service address
  • residential address (NB: this information is not made public)
  • the date the person became a PSC of the company
  • which PSC conditions that person meets
  • any restrictions on disclosing certain information

Once the information is collated, it must be filed with Companies House and updated regularly, particularly when there is a change to any of the above details.

If you believe your organisation has no PSCs, a note to that effect must be made on the PSC register. In such circumstances, government guidance states that the following must be included on the PSC register:

“The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company”.

Protection from disclosure

In limited circumstances, a person who is a PSC may request to have their details kept off the register if they or someone they live with (i.e. a child) is at risk of violence or intimidation as a result of being connected with a company.  If a person’s details are protected, only certain public authorities can access the information.

What changes were created to the PSC regime by the Fourth Money-Laundering Directive?

Enacted on 25 June 2015, the EU Fourth Anti-Money Laundering Directive is a significant piece of European legislation. EU member states were given two years to implement the changes under the Directive, and the UK has adhered to this timeline.

The Directive changes which came into force on the 26th June 2017 included:

  • Alternative Investment Market companies (AIM companies) are now required to comply with the PSC register requirements. AIM companies are already subject to additional regulations because of they are publicly listed – the Directive could increase their administrative and reporting burden.
  • Companies required to keep a PSC register will need to update it within 14 days of any changes occurring and will then have a further 14 days to file the information with Companies House. The government had previously proposed giving entities 6 months to notify Companies House of any changes; therefore, the requirement under the Directive is a significant move away from previous proposals.
  • From 24th July 2017, all Scottish Limited Partnerships, and general Scottish partnerships where all members are corporate bodies, must register PSC information with Companies House.
  • The number of public authorities who can access protected information has been extended to include certain credit and other financial institutions, to allow them to carry out their customer due diligence obligations.

In summary

Business owners and compliance officers should be aware of the requirements of the PSC register as well as the changes brought on by the Fourth Anti-Money Laundering Directive.  If you have any concerns or are unsure of what is required, your professional legal or financial advisor will be able to clarify matters for you.

 

Saracens Solicitors is a highly-regarded law firm based in West London, opposite Marble Arch.  We have years of experience in advising clients on commercial and company law and compliance.  If you have any questions regarding matters mentioned in this article, please call our office to make an appointment with one of our solicitors on 020 3588 3500.

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