What is a person with significant control (PSC)? This term, introduced by the UK government in 2016, refers to individuals who have significant influence or control over a company or other legal entity. Identifying PSCs is crucial for compliance with the UK’s anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. In this article, we will delve into the definition, significance, and implications of a person with significant control.
The concept of a PSC is designed to address the challenges posed by corporate structures that can shield the true beneficial owners of a company. By requiring companies to disclose information about their PSCs, the government aims to enhance transparency and prevent the misuse of corporate vehicles for illegal activities. A PSC is defined as an individual who satisfies one or more of the following conditions:
1. Holds more than 25% of the shares or voting rights in the company.
2. Holds the right to appoint or remove a majority of the board of directors.
3. Exercises significant influence or control over the company through other means.
It is important to note that a PSC may not always be the same as a company’s ultimate beneficial owner. For instance, a trust or a corporate entity may be the PSC, even though the ultimate beneficial owner is an individual. Companies are required to maintain a register of PSCs and make this information available to law enforcement agencies upon request.
Identifying PSCs is not only a legal requirement but also a practical necessity for businesses. By understanding who has significant control over their operations, companies can better assess risks associated with their business relationships and transactions. This knowledge can help prevent money laundering, corruption, and other illegal activities that may be facilitated by anonymous or hidden ownership structures.
The process of identifying and registering PSCs involves several steps:
1. Companies must conduct a thorough search to identify potential PSCs, including individuals with significant ownership, voting rights, or control over the company.
2. Companies must obtain and verify the identity of PSCs, ensuring they have the necessary information to comply with AML and CTF regulations.
3. Companies must maintain a register of PSCs and update it whenever there are changes in ownership or control.
4. Companies must make the register of PSCs available to law enforcement agencies upon request.
Failure to comply with these requirements can result in penalties, including fines and criminal charges. It is, therefore, essential for companies to take the identification and registration of PSCs seriously.
In conclusion, a person with significant control is an individual who has significant influence or control over a company or other legal entity. Identifying and registering PSCs is a critical step for companies to comply with AML and CTF regulations, enhance transparency, and mitigate risks associated with illegal activities. By understanding the definition and implications of a PSC, companies can better protect their reputation and ensure compliance with the law.
