HM Treasury has published a consultation on the transposition of the Fourth Money Laundering Directive (MLD4) into national law. The consultation identifies the changes to, and the new requirements of, MLD4 and covers the government’s approach and plans for the implementation of MLD4. Responses to the consultation will be used to inform final decisions on transposition.

Chapter 10 of the consultation relates to beneficial ownership; Article 30 of MLD4 requires Member States to use a central register to hold information on beneficial ownership for corporate and other legal entities incorporated within their territory. Member States can make the register public, or at a minimum ensure that law enforcement, obliged entities and others with a ‘legitimate interest’ have commensurate degrees of access to the information. The UK has met its commitment to establish a publicly accessible central register and the People with Significant Control (PSC) Regime became operational in June 2016.


The UK has a comprehensive anti-money laundering and counter-financing of terrorism (AML/CFT) regime, based on the international standards set by FATF. The international standards ensure that there are controls and procedures in place to combat the risk of money laundering and terrorist financing across a number of sectors, which are currently covered through the Third Money Laundering Directive (MLD3).

MLD4 came into force on 5 June 2015 and seeks to give effect to the updated FATF standards. It introduces a number of new requirements on relevant businesses and changes to some of the obligations under MLD3. All EU Member States have two years to implement MLD4 into national law i.e. by 26 June 2017, although the European Commission has published a proposal to bring forward the transposition date to 1 January 2017.

Beneficial ownership and PSC Register

Chapter 10 (Beneficial Ownership) of the consultation highlights two potential areas of difference between the requirements of MLD4 and the UK’s PSC regime, namely:

  1. MLD4 requires that the information held on the PSC Register must be current. The PSC Regime, however, requires companies and LLPs to report annually to Companies House under the PSC Regime and to update their own register following any relevant changes. The UK must consider how best to meet the requirement that PSC information on the central public register at Companies House is current: and

  2. MLD4 has a potentially broader scope of application than the PSC regime. The PSC Regime currently applies to most companies, LLPs and Societas Europaea (SEs) and the consultation lists those entities which might potentially be brought within the scope of MLD4, including, among others, Scottish limited partnerships, unregistered companies, investment companies with variable capital (ICVCs) and open-ended investment companies (OEICs).

The consultation states that the government welcomes any views on the two issues above, as well as on the PSC Regime itself.

Chapter 10 also refers to the transposition of Article 31 of MLD4, which relates to trust beneficial ownership information, and how to improve the transparency of trusts and trust-like legal arrangements. The government is seeking views on the following matters in particular:

  1. how often should a trustee be required to update the beneficial ownership information that it holds;

  2. what other arrangements should the government consider as having a structure that it similar to express trusts;

  3. what other arrangements should the government not consider as having a structure that it similar to express trusts; and

  4. further considerations that the government should take into account when developing the central register of trust beneficial information.

Next Steps

The deadline for responding to the consultation is 10 November 2016.