QCA Response to HM Treasury - Consultation on the transposition of the Fourth Money Laundering Directive

10th November 2016

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Our Corporate Governance Expert Group contributed to our response to HM Treasury's consultation of the transposition of the Fourth Money Laundering Directive.

We noted that, since 6 April 2016, UK companies and companies that have a subsidiary incorporated in any part of the UK have been required to keep and maintain a new register that records all the people or legal entities that have significant influence or control over it – a register of people with significant control (the PSC Register).

We commented that establishing the PSC Register indicated Parliament's wish to make a distinction between the tests to determine people with significant control and those who are beneficial owners and therefore questioned how the Government would equate one with the other. We encouraged the Government to publish further guidance explaining how this would work in practice.

We noted our concern that the Fourth Money Laundering Directive could effectively obligate AIM and ISDX companies to keep a register of persons with significant control if they have a shareholder who owns more than 25% of the company, despite the fact that listed companies are exempt from this requirement in the text of the Directive.

We commented that requiring small and mid-sized quoted companies on multilateral trading facilities with a primary market function, such as AIM and ISDX, to obtain and hold information on their beneficial owners would create significant added costs and compliance burdens.

We also noted that companies with disclosure requirements under the Disclosure and Transparency Rules 5 (DTR 5) are exempt from the requirement to keep a PSC Register. With companies listed on AIM and ISDX being subject to DTR 5, we commented that these companies should not need to address the issue of beneficial owners.

We encouraged HM Treasury and BEIS to foster a greater degree of co-operation to ensure the effective transposition of the Directive, so that the administrative cost to small and mid-size quoted companies is minimised.

Click here to download our response (pdf)

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