How to comply with MLR-2017 reg 5(1)(a) on UBO screening

Regulation 5 of the Money Laundering Regulations 2017 says who a company's beneficial owners are: (a) any individual who exercises ultimate control over its management; (b) any individual who ultimately owns or controls, directly or indirectly, more than 25% of its shares or voting rights; and (c) any individual who otherwise controls it. Regulation 28 then requires you to identify them and take reasonable measures to verify their identity. In practice:

1. Find them. Walk the Companies House PSC tree from the client company, through each company that owns it, to five levels. Multiply stakes along each chain (use the lower end of Companies House's bands) and add up every chain to the same person.
2. Count control as well as shares. The right to appoint or remove most of the board, or other control, makes someone a beneficial owner whatever they hold.
3. Verify each one's identity, proportionate to the risk.
4. Screen each one against the sanctions lists, and for PEP. A designated beneficial owner can make the company itself subject to sanctions.
5. Record it: the company, how far you walked, who you found and why, each screening result and the lists' dates.
6. Walk it again when ownership changes, and on your review cycle.

Keep the records for five years after the relationship ends (regulation 40), then delete the personal data. Stratum's company and owners check does steps 1, 2, 4 and 5 in one run with a signed certificate; in the Stratum register the record stays with the client and is deleted five years after you archive them.

Common mistakes: missing a loop; stopping at the first person without adding up their other chains; ignoring control rights; not keeping the lists' dates.