Anti-Money Laundering

STEP supports the principle of effective measures to prevent money laundering.

The European Union’s Fifth Anti-Money Laundering Directive (5AMLD) came into force on 10 January 2020 although the enhanced trust registration service (TRS) obligations will not come into force until 10 March 2020. 5AMLD expands the reporting requirement from trusts with UK tax consequences to include all express trusts and access to the trust register is extended to the public, subject to each jurisdiction’s discretion.

HMRC ran a technical consultation early this year to identify a number of aspects such as how wide the scope of access to the register will be, clarification of the definitions of ‘express trusts’ and ‘legitimate interest’ as well as a review of the schedule of deadlines and penalties.

Another point of concern for STEP is where a trust enters into a business relationship in a member state. A ‘business relationship’ is defined in 5AMLD by reference to the business of an ‘obliged entity’ (i.e. the financial institutions, accountants, lawyers, tax advisers, trust or company service providers and others who have to comply with the money laundering rules.) If interpreted in a board way this could deter significant amounts of trust work away from the UK.

Although the transposition deadline falls after the UK’s projected exit from the EU in March 2019, the post-Brexit transitional period, agreed in March 2018, is set to expire on 31 December 2020 and during this time EU law will continue to apply to the UK.