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New EU money laundering directive will not force public naming of trust beneficiaries

Thursday, 18 December, 2014

Reports suggest trust beneficiaries have been granted a measure of confidentiality in an agreement just reached between EU national governments and the European Parliament on the Fourth Money Laundering Directive (4ML).

The requirement for central public registers of beneficial owners of trusts, as well as companies and other structures was not included in the European Commission's initial proposal for 4ML, but was added by members of the parliament during the negotiations.

The serious privacy implications of this were raised with member governments before trilogue negotiations began on the final form of the Directive this autumn. STEP in particular has consistently pointed out that trusts in common-law countries are regularly used to protect vulnerable beneficiaries, some of whom could be at significant risk if their identities were published.

In the event it appears that an agreement has been struck that will see corporate registers of beneficial ownership become mandatory throughout the EU, but it is less than clear on the issue of public access to such a register, allowing access to be limited to those with a ‘legitimate interest’.

There will also be registers of trusts, but these will be simply based on information already due to be collected by tax authorities as a result of automatic exchange of tax information agreements. Moreover the information on such registers will only be available to competent authorities, with no suggestion of any requirement for broader public access.

STEP's deputy chief executive George Hodgson said this was a 'pragmatic solution that would minimise bureaucracy and ensure that families can maintain their fundamental right to respect for a private family life.'

The agreement still requires endorsement by EU member states' ambassadors and by the European Parliament's Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees, before being put to a vote by the full Parliament next year.