The regulatory drive towards Ultimate Beneficial Owner (UBO) transparency continues through the 5th Anti Money Laundering Directive (AMLD V), further complicating an already complex landscape. From 10 January 2020, the Member States and firms will now be responsible for ensuring that discrepancies in beneficial ownership data in central registrars, like Companies House are reconciled.
The consequences of bad quality data, therefore have just gone up. Firms may face hefty fines if their customer data quality controls are lacking. How will you know if your data is good enough? Good question – we have yet to find out who will be judging and how.
Why not make your life easier and join JWG, firms, vendors, and the FCA, on the 13th December 2018 in London to discuss how a new UK AMLDV industry customer data effort under the auspices of the RegTech Council could help solve these issues.
The UBO data challenge
According to the AMLD IV Article 30, corporate entities are required to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held. This information must be stored in a central, national register. The AMLD V Article 30 builds on these requirements in the following ways:
- by introducing an explicit obligation for beneficial owners to provide obliged entities with the data which is required under Article 30;
- by widening the circle of persons who have access to such information. AMLD V will grant access to Beneficial Owner data to ‘any member of the general public’, thereby abolishing the need to establish a legitimate interest. However, this amendment will be mitigated by limiting the information which must be made available to the public to only: the beneficial owner’s month and year of birth, country of residence, and nationality, as well as the nature and extent of the beneficial interest held;
- Article 30 requires that by implementation ‘In the case of reported discrepancies, Member States shall ensure that appropriate actions be taken to resolve the discrepancies in a timely manner and, if appropriate, a specific mention be included in the central register in the meantime’
- AMLD V requires that the registers of beneficial owners are interconnected on a European-wide level by 2021.
It has been noted that firms find it increasingly challenging to obtain and retain good quality data on beneficial owners and that there are hundreds of thousands of client accounts at large institutions which need to be reconciled with new data sources. This largely manual labor will be required in a very short amount of time once the registries are available. Therefore, not only is there a case for RegTech, but for collaborative action as well.
The role of RegTech
There are inherent challenges in having to reconcile client data across national registers, clients, and their internal systems, mainly due to data quality problems within national UBO registries. The challenge presents a significant RegTech opportunity for data vendors and the wider industry. Interested in learning more?
Contact us at firstname.lastname@example.org to register your interest for our next Client Management Special Interest Group on the 13th of December. Members will be discussing:
- FCA update on global AML techsprint efforts
- RegTech Council project framework update
- Article 30 + 31 problem statement for Firms, Data providers, FCA, EBA, NCA and Companies House
- Desired AMLDV customer data project outcomes
- Draft plan and Next Step