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Row over EU public register of foundations and trusts remains deadlocked

Monday, 24 November, 2014

The EU negotiations surrounding the new 4th AML Directive appear to remain deadlocked over the EU Parliament’s demand for publicly accessible registers showing all beneficial owners of both foundations and trusts. The European Commission initially produced a draft Directive which closely followed both the FATF Recommendations and the recent G20 statement of principles intended to improve the transparency of beneficial ownership of companies and trusts. The EU Parliament, however, continues to press for the text incorporated in its report, which it adopted earlier this spring. This calls for freely accessible public registers of the beneficial owners of companies, trusts and all other similar legal entities such as foundations.

Many practitioners in civil law countries seem unaware that the EU’s proposals for public accessible registers (outlined in its proposed Amendment 93 to Article 29, available in the European Parliament's website) include not just trusts but also foundations and all similar structures. It is also clear that if the proposal for public accessible registers is eventually adopted, the EU would then press for similar registers to be introduced in all its near neighbours.

The debate in Brussels has now entered the so-called ‘trialogue’ process where the Commission attempts to find a compromise position between the EU Parliament and Member States (who generally remain opposed to public registers). So far, however, Parliament has refused to shift on its demands for free public access to the trust (and foundation) register and the listing of all beneficiaries.

STEP remains opposed to a public register, on the grounds that they are unnecessarily intrusive into the financial affairs of families and pose unacceptable risks given that many families create such structures to protect the interests of vulnerable family members. The negotiations are scheduled to conclude shortly, with the Directive due to be finalised by the end of the year.

Sources