12 Oct 2017

Fourth Money Laundering Directive (MLD4)

Money Laundering MLD4 box files

New rules for firms to notify changes to “Persons of Significant Control” (PSCs)

The fourth Money Laundering Directive (MLD4) was implemented on 26th June 2017. It made some significant changes to the way firms are to notify Companies House on changes of “Persons of Significant Control” (PSCs).

Previously, you were able to include changes of PSC details on the Confirmations Statement. The purpose of this has now changed – it is only to be used to confirm that all the detail on the public record is correct and up-to-date.

The original PSC regime was introduced by government in April 2016, to improve corporate transparency, and was also included as a legal framework in the Small Business, Enterprise & Employment Act 2015. This was in direct response to the 4th EU anti money laundering directive, enacted on 25th June 2015, which contains a requirement that “Member states shall ensure that corporate and other legal entities incorporated within their territory are required to obtain and hold ….. information on their beneficial ownership”. It also requires that such information be held in a central register, and that those details are adequate, current, and accurate.

The annual filing of the Confirmations Statement which provided the opportunity to advise of any change to your PSCs, did not comply with the requirement of “current” for the EU directive.

Therefore, MLD4 has altered the Confirmations Statement to completely remove the section in the “additional information” supplement asking for changes to PSCs. Instead, firms must declare that all details held on the Companies House register is accurate at the time of signing the Confirmations Statement.

In order to comply with the “currency” requirement, firms must take the following steps:-

  • If a company has reasonable cause to believe an entity has ceased to be a PSC, or that the details of a PSC have changed, they must contact the person to confirm the change within the following fourteen days;
  • On receiving the confirmation (due within a month), the firm must update the PSC register within the following fourteen days, and
  • Firms that have not elected to keep their PSC register at Companies House must notify the Registrar within the following 14 days after that register has been updated.

Failure to follow these requirements is a criminal offence and can result in a fine or prison sentence of up to two years.

The Companies House forms to be used to notify changes to beneficial owners (PSC01 – 09 (LLPSC01 – 09 for LLPs) are relatively unchanged under MLD4.

In summary, you have 28 days from the change of a PSC (e.g. name, address, change in PSC structure) to update your PSC register and notify Companies House, and must be done PRIOR to the submission of the Confirmations Statement.