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New anti-money laundering measures for British companies

12 September 2017

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On 26 June 2017, the 4th Money Laundering Directive (4MLD) was implemented in all EU Member States. The directive obliges, amongst other things, that each state puts into place a register which lists the person(s) who have a significant control over a company (or ‘beneficial owner(s)’in France).

Both France and the United Kingdom (UK) implemented their own register:

  • the UK implemented the PSC ( Person with Significant Control) register which has been in place since 6 April 2016 and was amended following the implementation of 4MLD
  • France fully implemented the register of ‘Bénéficiaires Effectifs’ from 1 August 2017.

What information needs to be provided under this obligation?

The information to be indicated on both registers is very similar. It includes:

  1. the full details of the person who is a PSC or a beneficial owner (including their residential address); and
  2. logging the reason(s) why the person has to be entered on the register (if they directly or indirectly hold more than 25% of shares, voting rights or have the power to remove a majority of the Board of Directors or exercise or have the right to exercise general significant influence and control).

In France, for companies that have no ‘bénéficiaire effectif’ (e.g. if the share capital is issued and allotted in a way that no one owns more than 25% of the capital nor of the voting rights), a majority of legal writers currently shares the opinion that the name of the legal representative of the company should be shown on the Register.

When is this obligation applicable?

In both countries, the relevant information must be delivered on incorporation of a new company (with a flexibility of 15 days for French companies).

Existing entities are also affected by this obligation. In the UK, existing companies must update their PSC register within 14 days of a PSC change occurring and file these updates at Companies House within a further 14 days.

In France, existing companies have 8 months (until 1 April 2018) to file the relevant information at their local Registrar and have 30 days from the date of any change occurring to file any change to the Bénéficiaires Effectifs’ register.

Who is exempt from this obligation?

All French and English companies who are listed on either the PSC register or the Bénéficiaires Effectifs’ register are exempt of filing (with the exception of English AIM listed companies as these companies are now caught by the UK PSC regime).

Where can the mandatory information be found?

The way the register is kept by the company and its communication to third parties is the main difference between the two countries. UK companies can keep their register internally but when requested, must allow inspection or provide a copy to anyone with a ‘proper purpose’. These companies can also elect to hold the register centrally at Companies House. Unlike in the UK, French entities do not hold this register internally; the only document available is kept by the Public Registrar which is only visible by certain officers and administrations as well as by the persons who have to comply with anti-money laundering obligations, unless specific access has been granted in court to a third party that has proved a legitimate interest.

Although the 4MLD has only just been implemented, the EU is already planning for the introduction of the next directive – the ‘5MLD’. This new directive could introduce further changes to the PSC regime, such as reducing from 25% to 10 % the percentage of shares that triggers the entry of a person on the UK PSC Register.

If you require any further information, please do not hesitate to contact Dominique Tai on +44 (0)20 7337 1007 or at dominique.tai@brownejacobson.com or Alix Troënès-Smith at +44 (0)20 7871 8541 or alix.troenes-smith@brownejacobson.com. Or visit our French group page for more information.

The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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