Money Laundering Regulations Extended
Published / Last Updated on 06/07/2022
Following a consultation paper in July 2021, the Treasury is extending anti-money laundering and identity verification requirements to include all firms and individuals that form a business entity that is registered at Companies House, usually limited liability companies but also to include all business entities that come within the Treasury’s definition of a trust and company service provider (TCSP).
This may not affect many of you, but it will now include verifying the identity of trustees when establishing an express trust as well as shareholders, partners in a Limited Liability Partnership (LLP) and company formations businesses.
All interested parties must offer proof of personal legal names and addresses for service as well as the usual registered business address, business administration and legal address of the business for service.
Who Should Register?
This may not affect most individuals, but it will affect some. You must now register if your business is a trust or company service provider, unless you’re already supervised by another body e.g., the Financial Conduct Authority.
You cannot run your business until HMRC confirms that your application has been successful.
Under the Money Laundering Regulations, a trust or company service provider is any company or sole practitioner whose business is to:
- Form companies or other legal persons or entities
- Provide a registered office, business address, correspondence address, administrative address for a company, partnership, other legal person, or arrangement
- Act or arrange for another person to act as a:
- Director or secretary of a company
- Partner (or in a similar position) for other legal persons
- Trustee of an express trust or similar legal arrangement
- Nominee shareholder for another person, unless the other person is a company listed on a regulated market which is subject to acceptable disclosure requirements
- Trust or company service provider services can be provided by anyone including company formation agents, professional trustees, large franchise operations providing mail holding and forwarding services, accountants, and solicitors.
Comment
These new regulations are designed to pull in parties that previously did not have to register and be forced to make Money Laundering Verification checks on clients and service users. Regulated financial services firms, accountants and solicitors are already subject to money laundering regulations by their regulators and therefore obligated to report discrepancies in beneficial ownership information to cover ongoing customer due diligence on existing business relationships, although only 'material' discrepancies must be reported. These new regulations now also catch trustees, company formations companies, mailing address firms, postal holding and forwarding services.
This is a good thing. For two long, it has been too easy for fraudsters and launderers to set up limited companies or trusts and ‘lose’, ‘wash’ and launder money via corporate ‘envelopes’ and shells.
If in doubt, check it out. HMRC has produced a list of all those that need to register: