TCSPs

Essential reading for interim managers, non-executive directors and company secretaries

You may or may not recognise yourself as coming under the main title above, but if you read the definition of a trust and company service provider (TCSP) as given in the Money Laundering Regulations 2007 (MLR 2007), you should be in little doubt as to your need to be supervised for anti-money laundering purposes. Be warned that similar requirements are scheduled to cover TCSPs in the Republic of Ireland later this year and will eventually cover those working in all other EU member states.

MLR 2007 article 3(10) defines a TCSP:

'Trust or company service provider' means a firm or sole practitioner  who by way of business provides any of the following services to other persons:

(a) forming companies or other legal persons;
(b) acting, or arranging for another person to act—
(i) as a director or secretary of a company;
(ii) as a partner of a partnership; or
(iii) in a similar position in relation to other legal persons;
(c) providing a registered office, business address, correspondence or administrative address or other related services for a company, partnership or any other legal person or arrangement;
(d) acting, or arranging for another person to act, as—
(i) a trustee of an express trust or similar legal arrangement; or
(ii) a nominee shareholder for a person other than a company whose securities are listed on a regulated market, when providing such services.
 
Some of these activities are covered by CIMA's council regulations and require registration as a Member in Practice. Members in Practice have already been told that unless they have made arrangements to be supervised by another supervisory authority, they will be deemed to be supervised by CIMA.

However, non-executive directors and company secretaries of all companies (i.e. both financial and non-financial) and those who arrange the appointment of such persons, should note that they are included as designated persons. Accordingly, such persons (whether CIMA members or registered students) must comply with the requirements of the law whether or not the company of which they are a director or secretary is caught separately by the law, as, for instance a non-executive director of a credit/financial institution or collective investment scheme.

Recruitment agents and search and selection agents should also carefully determine if they may be caught as arrangers of persons to act as directors and company secretaries.  Professional institutes or associations which match directors or secretaries to companies seeking such officers may also have to consider registration.

The largest group of CIMA members covered by the regulations (apart from 'external accountants' and tax advisers) is likely to be those who are offering interim management services, either individually or through a company or agency. The Institute of Interim Management (http://www.ioim.org.uk/) is not a designated supervisory authority under the regulations, and CIMA is therefore pleased to be able to supervise CIMA members or students who are TCSPs, but they must email prof.standards@cimaglobal.com without delay requesting supervision. There is absolutely no requirement to register with HMRC either instead or as well.

Monitoring of all CIMA's supervised persons under MLR 2007 will begin later this year, but all concerned should know the major requirements under MLR 2007 which they must observe, including customer due diligence, training and the keeping of records. Other matters, such as the reporting of suspicious transactions (SARs) to SOCA, are covered under the provisions of the Proceeds of Crime Act 2002 as amended by the Serious Organised Crime and Police Act 2005 and other UK legislation referring to money laundering and terrorism. Articles have appeared in past editions of Financial Management magazine, CIMA Insight e-magazine and the quarterly MIP News – back numbers of the last two may be downloaded from the http://www.cimaglobal.com/ website.