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How does AMLD5 affect the implementation of CDD?

MLR 2019 clarifies electronic identification may be used to complete <a href="/glossarycollection/customer-due-diligence" style="color:#48277C;" target="_blank" title="Customer Due Diligence"><u>CDD </u></a>, providing that the mechanism is secure from fraud and misuse and providing an appropriate level of assurance has been provided that the person claiming their identity is in fact that person.<br/><br/>

MLR 2019 adds another scenario where CDD must be applied : where there is any legal duty to contact an existing customer for the purpose of reviewing any information which:
is relevant to the risk assessment for that customer; and
relates to the beneficial ownership of the customer, including information which enables the relevant person to understand the ownership or control structure of a legal person, trust, foundation or similar arrangement who is the beneficial owner of the customer.<br/><br/>

Other amendments to the CDD regime also centre on beneficial ownership:<br/><br/>

- Where a customer is a body corporate and the beneficial owner cannot be identified, relevant persons must instead take all reasonable measures to verify the identity of the senior managing official. The relevant person must keep records detailing all actions it took to do this and any difficulties encountered in doing so.<br/><br/>

- Where a customer is a legal person, trust, company, foundation or similar legal arrangement, the relevant person must take reasonable measures to understand the ownership and control structure of that legal person, trust, company, foundation or similar legal arrangement.<br/><br/>

- Before entering into a new business relationship with a company subject to beneficial ownership registration requirements (i.e. the <a href="/glossarycollection/person-with-significant-control" style="color:#48277C;" target="_blank" title="Person With Significant Control"><u>PSC</u></a> regime), the relevant person must collect from the company either:
proof of the company's registration on the PSC Register; or
an excerpt of the PSC Register.<br/><br/>

Where the relevant person identifies a discrepancy between the beneficial ownership information available in the PSC Register and the beneficial ownership information provided by the company in the course of CDD, it must report this to Companies House.

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