UK government explains new trust registration rules

Thursday, 10 February 2022
The Money Laundering and Terrorist Financing (Amendment) Regulations 2022 have been approved and will come into force on 9 March 2022, changing the deadlines for extended trust registration and excluding certain low-risk trusts from the need to register.

The registration deadline for trusts newly required to register has been deferred until 1 September 2022, and the time limits for trustees to inform HM Revenue & Customs (HMRC) of changes to the information held on the register is extended to 90 days. Certain types of life insurance trusts that pay out only on death, serious illness or disablement are added to the list of excluded trusts, as are bank accounts held on behalf of minors or adults who have lost capacity.

The debate in the House of Lords over the amendment led the minister responsible, Baroness Penn, to explain the government's thinking on the expansion of trust registration, which was originally motivated by the EU Fifth Money Laundering Directive (5AMLD). 'This instrument will amend the money-laundering regulations as they relate to trust registration, to ensure that the regulations strike the appropriate balance between providing an effective anti-money laundering tool for law enforcement and minimising the administrative burden on those who use trusts for legitimate purposes', she said.

Labour peer Lord Tunnicliffe asked for clarification of the new 90-day trustee-reporting window. Penn replied that the expansion of the register of beneficial owners of trusts had brought a significant number of additional trusts into the scope of this work, and a very large number of the new trustees are private individuals with no professional expertise in managing trusts. Many of the reportable changes will be triggered by life events such as bereavement, where it is not necessarily realistic to expect individuals to update the register within 30 days, she said. Continuing with this requirement would likely mean that a large number of individuals would find themselves in breach of the regulations without realising that fact.' Tunnicliffe's alternative suggestion of retaining the 30-day limit, but with an element of flexibility, would still place affected individuals in a 'difficult and stressful' position, as they would have to apply to HMRC for such flexibility with no guarantee that such a request would be accepted, she added.

Tunnicliffe also questioned the criteria for making trust beneficiary information available to the public, citing concerns raised by civil society organisations that the barriers to accessing the register are 'far too high, potentially freezing out some of the country's leading independent experts'. Currently the information held on the register is available on request to law enforcement agencies, but from 1 September 2022 it will also be available to any third party who can demonstrate a 'legitimate interest' in the information held on the register.

'We believe that placing the information held on the trust register in the public domain would infringe the privacy rights of individual beneficial owners, the vast majority of whom are not involved in money laundering activities', replied Penn. 'However, we recognise that, for the register to be an effective anti-money laundering tool, the information must be made available to those who are at the forefront of anti-money laundering investigations.'

The criterion of 'legitimate interest' would include whether the requester is involved in anti-money laundering; the request is being made for the purpose of furthering such an investigation; and the requester has reasonable suspicion that the information being sought relates to a trust being used for money laundering.

The government will set out the detail of how those criteria will be applied in due course, but each request will be considered on its merits, she added. 'There is no desire on the part of the Government to prevent access to the information held on the register by those who are genuinely involved in anti-money laundering investigations.'

  • HMRC has stated that it will take a 'proportionate approach' to any registrable trust that comes to its attention after the 1 September 202 registration deadline.


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