Leave it out

I’ve been mulling over this new register of persons with significant control, of which full details are given in Schedule 3 to the Small Business, Enterprise and Employment Act 2015.  With regard to the register, and to quote from the Act, “the Secretary of State may exempt a person (whether an individual or a legal entity) [from the register] [and] the Secretary of State must not grant an exemption under this section unless the Secretary of State is satisfied that, having regard to any undertaking given by the person to be exempted, there are special reasons why that person should be exempted”.

This echoes the requirement in Article 29 of the finalised draft (dated 12 January 2015) of the Fourth Money Laundering Directive that “Member States may provide for an exemption to the access to all or part of the beneficial ownership information [as held in the required central register] on a case-by-case basis in exceptional circumstances, if this would expose the beneficial owner to the risk of fraud, kidnapping, blackmail, violence or intimidation or if the beneficial owner is a minor or otherwise incapable”.

But there is a difference.  With the exemption under the Act, you can be exempted from supplying your information to the register.  But with the exemption under the Directive (and I may need a lawyer’s eye on this), it seems to me that you always have to supply the information, but the exemption means that no-one can look at it.

And I do wonder just who is going to decide, on that much vaunted “case-by-case basis” while looking at the “special reasons”, what is quite special enough to warrant exemption (either of supply or to access).  After all, in these days of Internet trolls and Twitter bullying, isn’t anyone with the slightest sniff of publicity about them vulnerable to (at the very least) intimidation?  I write a weekly article for our local newspaper, on the most anodyne of subjects, and even that has attracted email stalking.  And surely everyone with either an email address or a telephone number has already been targeted a dozen times by attempted frauds – are these “vulnerabilities” really going to be exceptional enough for exemption?

This entry was posted in AML, Due diligence, Legislation and tagged , , , , , . Bookmark the permalink.

4 Responses to Leave it out

  1. Robert james Long says:

    My law degree is old and dusty but it seems to me your interpretation of the difference between the Act and the directive are accurate. I suppose we’ll have to wait to see how this act is used, obviously my fear would be that the very sort of indivdual whom I, in a law enforcement capacity, would hope to see on the register is the very sort of person who may be able to prevail upon the Secretary of state to be excluded.
    I am particularly intertested in the “legal entity” having that right. I know that a trust or firm or other such thing can still be a vicitm, but I would expect them to met a higher burden to be able to invoke the exception than a private individual.

  2. Dear Robert
    Many thanks for the use of your lawyer’s eye, albeit dusty – I am a careful reader, but I do like to have confirmation.
    Another reader has also written to me, making this excellent point: “The UK Act may be susceptible to possible misuse if for example the Secretary of State deems that the beneficial ownership information of a UK registered company should be “exempted” for, let’s say, a wealthy government supporter or Saudi royal (or our own royal family – both Crown and political), on the grounds that such public disclosure might not be ‘in the public interest’. Remember the BAE/Saudi arms scandal…”
    And you’re right to draw a distinction between individuals and entities.
    Plenty of food for thought here.
    Best wishes from Susan

    • Robert James Long says:

      Quite right that respondent is too. In fact a savy individual or government might even make such a excusion a condition of signing a sufficently large contract for arms/buy property/whatever.
      With the attempts to limit judical review it might prove exceedingly difficult for such dubious dealings to come to light, let alone challenege

  3. Very sobering comment, Robert – I hadn’t thought of the contractual “leaning” that might happen. And, as you say, almost impossible to suggest, let alone prove.
    Best wishes from Susan

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