Q&As

Is it considered as tipping off if a law firm tells its client that it has informed Companies House about a discrepancy in beneficial ownership information?

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Produced in partnership with Peter Steel of Augury Consulting Limited
Published on LexisPSL on 24/01/2020

The following Practice Compliance Q&A produced in partnership with Peter Steel of Augury Consulting Limited provides comprehensive and up to date legal information covering:

  • Is it considered as tipping off if a law firm tells its client that it has informed Companies House about a discrepancy in beneficial ownership information?

The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (MLR 2019), SI 2019/1511 which implement the provisions of the Fifth Money Laundering Directive (5MLD) into UK law, came into force on 10 January 2020. MLR 2019, SI 2019/1544 achieve this by amending the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692 in a number of respects.

MRL 2017, SI 2017/692, reg 30A, inserted by MLR 2019, SI 2019/1511, requires that:

  1. before establishing a business relationship with a company, unregistered company, LLP or eligible Scottish partnership a relevant person (including a law firm) must collect proof of registration or an excerpt of the register from the company, etc or from the registrar, and

  2. the relevant person reports to the registrar any discrepancy they find between information relating to the beneficial ownership of the client, which:

    1. the relevant person collects for the purposes of CDD, and

    2. otherwise becomes available to the them in the course of carrying out duties under MLR 2017, SI 2017/692 when establishing a business relationship with the client

The government has published guidance on reporting such discrepancies. This indicates that a (reportable) discrepancy should amount to a ‘material difference’, ie a clear factual error, rather than, for instance a typographical error. The guidance further

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