To kick start the New Year the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 will come into force and, whilst still a member of the European Union, these regulations will amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to implement Fifth Money Laundering Directive amendments in the UK.
The regulations will make consequential amendments to primary and secondary UK legislation, including the Companies Act 2006 – BUT what will this mean for businesses in the UK?
Size based exemptions for businesses no longer permitted
Among other changes, the Fifth Directive draws additional businesses into the scope of anti-money laundering regulatory framework. For example, the requirements of the Fifth Directive transposed by the 2019 Regulations will no longer allow for the exemption of small businesses or any exemptions based on size.
New regulations impose stricter customer due diligence measures to be taken by businesses
Further, regulation 5 will amend the UK’s existing anti-money laundering legislation to include more stringent customer due diligence measures to be taken by businesses. When in force, the new regulation 30A will impose new requirements for businesses to:
take reasonable measures to understand the ownership and control structure of their customers. Relevant persons must also take reasonable measures to verify the identity of senior managing officials in instances where the beneficial owner of a body corporate cannot be identified;
check beneficial ownership registers of legal entities in scope of the People with Significant Control (PSC) requirements before establishing a business relationship. If discrepancies are found between the beneficial ownership information on the registers and the information that is made available to them in the course of carrying out customer due diligence, there is now a requirement to report these discrepancies to Companies House. Companies House will then investigate and, if necessary, resolve the discrepancy in a timely manner.
It is important that business owners working with other corporate bodies ensure that these requirements have been met and will continue to be met following the implementation of the Fifth Directive which comes into force in the UK on 10 January 2020.
For advice on how the new regulations will affect your business, get in touch with Farleys’ corporate law team on 0845 287 0939 or contact us by email.