European Parliament to Vote on the 4th Anti-Money Laundering Directive
The European Parliament on the 13th February will vote for legislative revisions to the current EU Anti-Money Laundering Directive (AMLD). This is a once-in-a-decade opportunity, the 3rd directive was voted on 17 December 2005. The proposed revised Anti-Money Laundering Directive should have a tremendous impact on the battles against corruption, drug trafficking, tax evasion and a range of other criminal activities all currently facilitated by the ease in which money can still be laundered across Europe today.
The draft EU AMLD would, in part, require all companies registered in the EU to hold details of who really owns and controls them – their beneficial owners. This might not sound like much but consider this: in Europe less personal information is asked of a company opening a bank account than there is of an individual applying for a driver’s license, to rent a property or to simply obtain a library card.
As a result, many companies are opened in names not associated with that of the person who really owns or controls them. And once a bank account has been opened in a false name, if illegal activity is suspected it is almost impossible to follow the money laundering criminal money trail back to the true beneficial owner.
UK Companies Trust and Transparency
Various reports and analysis of the UK’s system of Companies House receiving all information in good faith, by-passing the Money Laundering Regulations, have confirmed that the trust and transparency of company structures needs to be radically overhauled.
As such a consultation document for changes to the way companies and Companies House had been released by the UK Government with many proposals concerning the Trust and Transparency of UK Companies. The changes from this consultation will mean bringing amendments to the Companies Act 2006.
A public register would have made it more difficult for organised crime groups to use UK and other shell companies to launder huge sums of money. Over the last decades, many organised crime groups used UK companies to launder funds whilst many EU and UK citizens have simply used them as part of aggressive tax avoidance or even evasion schemes.
Last year, the European Commission hired accounting firm Deloitte to look into the effectiveness of the current AMLD. They found that it did not do enough to combat international or even pan-European money laundering schemes.
One of the short-comings high-lighted in the study was the difficulty in identifying beneficial owners. Not only can the due-diligence be a costly and time-consuming undertaking, but without substantial prohibitive measures in place, the incentive for obliged entities to chase down information about clients is sometimes missing.
UK To Set Up Public Registers
The UK has already announced that it will go a step further than other European countries and set up a registry of the beneficial owners of companies. This register will be publicly accessible.
By sharing company ownership with all interested parties – including banks, law enforcement, journalists, citizens and obliged entities – The UK can ensure that adequate oversight is guaranteed and information is made available to those who need it. Obliged entities will be able to complete customer due diligence, law enforcement will be able to attach names to proceeds from crime, journalists can research political contributions or other questionable or even illegal donations (and many other stories of corruption) and average citizens or small businesses could, for example, know and understand who is behind their partners, suppliers or customers.
Providing beneficial ownership information to the public registry does not require much from the companies beyond sharing information they should already possess, such as the company beneficial owner’s full name, date of birth, the means of exercising control over the company, contact details and information detailing the legal shareholders.
SmartSearch Electronic Verification Reporting
At BTC Corporate and Compliance we offer SmartSearch for AML Verification to our obliged entity customers for their CDD purposes. The SmartSearch platform does both individual and corporate AML compliance reporting. The business reports already highlight beneficial owners within the report and are of the standard of the 4th Directive. Over 1,100 sanctions and warning lists are used by integrating the Dow Jones watch list into all searches and allowing the user to drill down and see the information returned for any negative matches.
We offer these searches on a non-contractual pay as you go basis.