What is the new requirement? 

On 10 January 2020, the Fifth Anti-Money Laundering Directive (5MLD) came into force in the UK through the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (SI 2019/1511). 

Firms taking on a new client that is either a company, LLP or eligible Scottish partnership are now required to obtain an excerpt of the register of people with significant control (the PSC register) and report any discrepancy between the information they hold (or obtain) and what’s on the PSC register.

How do I report a discrepancy?

Companies House has published guidance on reporting a discrepancy which includes a link to a reporting form. Companies House will then decide what action, if any, to take. 

Are PSCs and beneficial owners the same thing?

No, although there may well be an overlap. 

PSCs are individuals who meet one or more of the five conditions as set out in Part 1 of Schedule 1A to the Companies Act 2006. BEIS has produced detailed guidance for companies, limited liability partnerships (LLPs) and eligible Scottish partnerships on the register of people with significant control (PSC) requirements which sets out these conditions and how to apply them. 

The meaning of beneficial owner is set out in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, guidance on which is available in Section 5 of the CCAB Anti-money laundering guidance for the accountancy sector.

Can legal entities appear on the PSC register? 

A PSC is, by definition, an individual and not a legal entity. However, a legal entity’s details must be put on the PSC register if it is both relevant and registrable in relation to the company. 

It will be relevant if it meets one or more of the five PSC conditions itself (see above) and:

• it keeps its own PSC register; or
• it has voting shares admitted to trading on a regulated market in the UK or EEA or on specified markets in Switzerland, the USA, Japan and Israel. 

It will be registrable if it is the first relevant legal entity in the company’s ownership chain. 

What if a company has no PSCs?

If there are no individuals or legal entities which meet any of the conditions in relation to the company, then that fact must be entered on the PSC register. The register must say “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.”

What about nominee shareholdings? 

If shares or voting rights in the company are held by a nominee, they should be treated as if they were held by the person for whom the nominee is acting. 

Questions?

If you’re an ICAEW member, affiliate or member of staff in an eligible firm with member firm access, you may discuss your specific situation with the Technical Advisory Service.