The Fifth EU Anti-Money Laundering Directive (5MLD) imposes new duties on accountants to not only check beneficial ownership of client companies and trusts for both direct and indirect tax advice but also to report any discrepancies found at Companies House.
The new directive comes into force on 10 January 2020.
- For both existing and new clients: accountants must check that details of the Persons with Significant Control have been filed with the registrar, Companies House and to report any discrepancies identified.
- Accountants will have to take the necessary reasonable measures to verify the identity of the natural person who holds the position of senior managing official, keep records of their actions and keep records of any difficulties encountered.
- Electronic ID verification is now considered as a reliable source of evidence, where the electronic process is free from fraud and provides sufficient assurance of the identity of the individual.
- Firms' policies should be updated to identify transactions that are either complex or unusually large. (Previously it was complex and unusually large).
The changes apply to firms providing both direct and indirect tax advice. This extends to repayment agents.
To the extent that the changes affect the trust registration service they have not yet been transposed into UK law as HMRC are still consulting on this. They expect draft legislation to be available on this aspect sometime in early 2020.
Other changes bring letting agents, art dealers and cryptocurrencies into the scope of the rules.
Policies should be amended to ensure that when new products, business practices or technologies are adopted, the firm assesses and mitigates any risk associated with money laundering and terrorist financing. If a firm has exhausted all possible means of identifying the beneficial owner of a company, they must take reasonable measures to verify the identity of the senior managing official in the company.
Enhanced due diligence is required for additional risk factors including:
- golden visa applicants,
- dealing with a client without face-to-face contact,
- without reliable electronic CDD,
- transaction risks
- including oil,
- arms,
- precious metals,
- tobacco,
- ivory and protected species.
Useful guides
Fifth EU Anti-Money Laundering Directive checklist
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