By Elizabeth Hearst
A white collar crime expert has welcomed the UK government’s decision to exempt trust vehicles such as registered pension schemes, life insurance policies and registered charitable trusts from the implementation of the EU’s fifth anti-money laundering directive.
David Hamilton of Pinsent Masons described the government’s decision as a “proportionate and measured approach” and said the clarification would be welcomed by many firms.
Consultation on the application of the EU’s fifth anti-money laundering directive was held earlier in 2020, with the UK government issuing a summary of responses earlier this month.
The publication includes a list of the specific types of trusts which will be exempt from registration due to their low money laundering risk. These trust vehicles include registered pension schemes, life insurance policies and registered charitable trusts.
Hamilton urged firms to “read the response carefully and take professional advice as to whether they benefit from this exemption”.
“The 5MLD’s expansion of registration requirements to express trusts irrespective of whether they generate tax consequences had the potential to bring a significant number of structures within scope. The government has, however, acknowledged that many of these are already heavily regulated or represent a comparatively low money laundering or terrorist financing risk”.
The 5MLD stipulates that access to beneficial ownership information of a trust on the register should be given to those with a legitimate interest in it, or a third party where a trust holds a controlling interest in an entity domiciled outside the European Economic Area.
In its response, the government said it would provide clear guidance to help stakeholders understand the process of requesting information, and said it would not share ‘information where doing so would lead to a disproportionate risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation”.
Fellow white collar crime expert, Andrew Sackey welcomed the move and said: “the addition of trust registration data pursuant to 5MLD, will in respect of non-exempt trusts complement its understanding of large numbers of settlers and beneficiaries”. He added, “This will open the possibility of proceeds of crime recovery or tax assessments being raised in due course or, if dishonesty is suspected, a referral to its fraud investigation service where criminal consideration may be given for money laundering or cheat investigations”.