From 1 April 2023, an amendment to the Money Laundering and Terrorist Financing Regulations 2022 will come into effect. It includes a new definition of ‘material discrepancy’.
What a material discrepancy is
Obliged entities carry out due diligence checks on companies under anti-money laundering regulations. They must report differences between the information they gather and the information held at Companies House.
Specifically, obliged entities must report differences in information about:
- people with significant control (PSC) of a company
- PSCs of a limited liability partnership (LLP)
- PSCs of an eligible Scottish partnership
- the registrable beneficial owner of an overseas entity (from 1 April 2023)
This difference is called a material discrepancy.
What has changed
From 1 April 2023, obliged entities must only report a material discrepancy if it can be reasonably linked to:
- money laundering
- terrorism financing
- appear to conceal details of the customer’s business
Obliged entities must also report discrepancies throughout a business relationship, rather than just at the start.
The new regulations will also apply to the Register of Overseas Entities. This means that obliged entities will also have to report material discrepancies about registrable beneficial owners of an overseas entity.
You should consider whether the money laundering regulations require you to submit a suspicious activity report (SAR).