In my
13 March 2014 blog on ‘Trusts and the EU’s Fourth Anti-Money Laundering
Directive’, I highlighted the EU Parliament’s plans to introduce a register of
settlors, trustees and beneficiaries of trusts, as set out in the draft of the
Fourth Anti-Money Laundering Directive.
The Directive has now been finalised and, whilst it looks as though the
register will still go ahead, the number of trusts affected will be reduced and
trust information will not be placed on a publicly available register.
Article
30 of the Directive provides that EU Member States must oblige trustees of any
trust governed by the laws of an EU Member State to hold accurate and current
information on the beneficial ownership of the trust. This includes the identity of the settlor,
trustees, a protector if one is appointed, the beneficiaries or class of
beneficiaries and any natural person exercising effective control over the
trust. Trusts implied by law, such as
constructive trusts, are not included.
The
above information will need to be given to any entity obliged to carry out
money laundering checks with whom the trustees establish a business
relationship. Only when the trust
‘generates tax consequences’ (not defined but presumably meaning, for the UK,
only if a trust tax return has to be filed) must the above information appear
in a central register. However, under
the latest version of the Directive, only competent authorities and Financial
Intelligence Units in the Member State and, if requested, other Member States,
can access the information, along with entities needing to carry out money
laundering identification checks.
The requirements apply to other types of legal
arrangement ‘with a structure or functions similar to trusts’ which suggests
that foundations will have the same reporting obligations too. Will other vehicles for holding family wealth
be similarly affected? The Directive
requires details of beneficial ownership of corporate entities (but not the
holder’s address or full date of birth) to be held on a central register and
made available to any persons or organisations who can demonstrate a legitimate
interest. Independently, the UK’s Small
Business, Enterprise and Employment Bill is currently making its way through
Parliament and is expected to introduce the need for companies to maintain a
publicly accessible register, available for
inspection at the registered office (or centrally on the register at Companies
House), stating who has significant influence or control of the company. What that means is still being thought
through, but as currently drafted in the Bill it means direct or indirect
ownership of 25% of a company’s shares or voting rights, or the right to
appoint or remove a majority of a company’s directors, among other things. For families wishing to maintain privacy over
their wealth structuring arrangements, are trusts to be preferred now?
