On 10 January 2020, the Fifth Anti-Money Laundering Directive (5MLD) came into force in the UK. One of its many new directives included that 'obliged entities' were required to report discrepancies in the information they held on beneficial owners compared with was on the official People with Significant Control register.
The aim of this directive is to improve the integrity of the data held on ultimate beneficial ownership and aid investigation into possible AML activity. While the requirements appear simple enough, there are still a few questions such as: who they apply to; how do report issues; what happens once you do, that businesses may be unclear on. In the following article, we aim to clarify Companies House stance on these points and what advice they have given so far.
What businesses fall under the obliged entity classification?
The first question most businesses will ask themselves is does this apply to me? Am I considered an obliged entity?
Much of the communication out there, has focussed around financial and legal institutions but the definition of an obliged entity is much wider. On the Companies House website, they state that obliged entities include:
- credit institutions
- financial institutions
- auditors, insolvency practitioners, external accountants and tax advisors
- notaries and other independent legal professionals
- trust or company service providers
- estate agents, including when acting as intermediaries
- other persons trading goods in cash amounting to 10,000 euros or more
- gambling services
- exchange services between virtual and fiat currencies
- custodian wallet providers
- art dealers in galleries and auction houses
- art dealers in free ports
What is classed as a discrepancy?
There is no definition with 5MLD of what is considered a discrepancy, this down to the individual members states interpretation. The UK governments interpretation is that any material difference in the information held by the obliged entity and the public register needs to be reported.
This could include a person listed as a PSC when they are not, PSC missing from the register, differences in address, date of birth, place of registration and legal form. Companies House do state on their website that spelling errors such as Jon Smith v John Smith do not have to be reported.
What needs to be reported is down to the judgement of the obliged entity. A misspelt name on it own doesn't need reporting, but if there were several small errors, this could consider significant.
It also worth noting this applies to that the individual registrable person, relevant legal entity (RL) and other registrable person (ORP).
How do I report a discrepancy?
Companies House has created an online form that allows you to submit a possible discrepancy to them. You will need to go to https://www.smartsurvey.co.uk/s/report-a-discrepancy/ to complete the form include information such as when the discrepancy was first noticed, your details, the company name and company number.
The types of discrepancy you can report will need to fall into one of the following categories
- Other Registered Person
- PSC Type incorrect
- PSC Missing
Depending on your choice above, you will be asked for further information relating to the category it falls into. For example, if you chose 'Statement' the next question is:
What is the discrepancy?
- Missing statement
- Incorrect statement
- Overdue statement
A lot of the additional information doesn't currently have to be submitted, and you can print off or save your submission at the end for future records.
What happens after I submit a discrepancy?
Companies House will investigate all discrepancy reports submitted to them. If they find that the is submission is valid, they will contact the offending company and ask them to resolve the issue. They will not disclose any information about the discrepancy report to the company or the fact there had one submitted against them at all. This should protect the obliged entities identity. The reporting entity will also be kept up to date on the outcome.
For further reading and to view Companies House's official advice visithttps://www.gov.uk/guidance/report-a-discrepancy-about-a-beneficial-owner-on-the-psc-register-by-an-obliged-entity