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Advisers and certain other entities are now required to report to Companies House if they think that you have not filed the correct details of the persons of significant control (“PSC”) in respect of your company. So now is the time to make sure your filings at Companies House are up to date.
Since April 2016, companies have been required to keep a record and file at Companies House details of those with direct or indirect ownership of more than 25% of the voting rights in respect of a company and those who are able to exercise significant influence or control. Although most companies have provided and updated Companies House with the relevant PSC information, many Law Enforcement Organisations and Financial Institutions thought that there was still a lot more to be done because the PSC register was perceived to hold some inaccurate information. As a result, amendments transposing the Fifth Money Laundering Directive ((EU) 2018/843) (“MLD5”) came into force last month on 10 January 2020.
MLD5 has introduced a requirement for relevant bodies subject to anti-money laundering regulations, known as ‘Obliged Entities’, to carry out checks of the beneficial ownership of companies before they establish a business relationship with them.
Obliged Entities include:
If the information that an Obliged Entity discovers when carrying out its customer due diligence, in relation to the beneficial ownership of the company, differs from that held on the PSC register, the Obliged Entity must report the discrepancies to Companies House. Once a discrepancy is reported, it will be for Companies House to take steps to investigate and, where appropriate, resolve the discrepancy. There are exceptions in respect of the obligation on Obliged Entities to report discrepancies where professional privilege would be breached or compromised. Professional privilege entitles a party to withhold evidence from production to a third party (or the Court). Legal advice privilege is the confidential communications between lawyers and their clients made for the purposes of seeking or giving advice. If a company engages a legal professional to review its PSC register then professional privilege should apply and the PSC register could be updated, if necessary, without any report being required.
It would have seemed logical that an Obliged Entity could simply advise and assist the client to update the PSC information at Companies House to fix any discrepancies. However, MLD5 does not appear to allow this pragmatic approach. Therefore, companies who are looking to establish a business relationship with anyone they think may be an Obliged Entity, they should check that the PSC information at Companies House is up to date before providing any identity and anti-money laundering information to that Obliged Entity. .
Companies House has published guidance on reporting such discrepancies and this can be found at https://www.gov.uk/guidance/report-a-discrepancy-about-a-beneficial-owner-on-the-psc-register-by-an-obliged-entity.
Please contact Jon Rathbone or Danielle Isaac if you would like further (privileged) advice on your obligations to maintain a PSC register.
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