New EU measures against money laundering could impact beneficial ownership screening!

In an announcement made on 28th March 2023 in the European Parliament News, ( New EU measures against money laundering and terrorist financing | News | European Parliament (europa.eu)), it was announced that on the 21st March 2023, MEP’s from the Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees, agreed to adopt their position on pieces of draft legislation of the EU’s Anti Money Laundering and Countering the Financing of Terrorism Policy.

One of the proposed changes, concerns the % at which an individual or entity will be considered to be a beneficial owner.

Typically, and under current EU directives, the beneficial ownership threshold has been taken to mean 25% shareholder, or lower when considering overall control. However, MEPs have agreed that beneficial ownership means having 15% plus one share, or voting rights, or other direct or indirect ownership interest, or 5% plus one share in the extractive industry or a company exposed to a higher risk of money laundering or terrorist financing.

The European Parliament will be ready to start negotiations on the proposed AML/CFT Policy changes during a plenary session in April.

If the proposed changes go through, this will create an additional screening workload for EU based firms. In addition and assuming the UK does not amend its Regulations in line with these proposed changes, this will generate a conflict between the % holding thresholds of beneficial owners in the EU and the UK, resulting in a disparity between the depth of information requested from customers and processed by firms in the EU compared to the UK.