On 15 July 2020, HM Revenue and Customs (HMRC) and HM Treasury published the consultation outcome on the Fifth Money Laundering Directive and Trust Registration Service outlining how the government intends to implement the changes to the Trust Registration Services on the transposition of the Directive (EU) 2018/843 (the Fifth Money Laundering Directive). The idea behind the consultation was to increase the transparency of trust ownership to ensure that the United Kingdom's anti-money laundering and counter terrorist financing regime is up to date, effective and proportionate.
The Fifth Money Laundering Directive explicitly requires certain trusts to be registered. A significant majority of the responses agreed with the list of trusts to be outside the scope of registration and most respondents gave examples of other trusts they felt should be outside the scope.
Trusts to be exempted from registration
The government response exempts the following trusts:
- trusts imposed by statute where these do not result from the clear intention of the settlor;
- UK registered pension trusts;
- charitable trusts regulated in the United Kingdom;
- pure protection life insurance policies and those paying out on critical illness or disablement, including group policies;
- trusts used by the government and other UK public authorities;
- trusts for vulnerable beneficiaries or bereaved minors;
- personal injury trusts;
- save as your earn schemes and share incentive plans;
- maintenance fund trusts;
- certain trusts incidental to commercial transactions;
- certain trusts used as part of financial markets infrastructure
- authorized unit trusts;
- co-ownership trusts where the trustees and beneficiaries are the same person;
- will trusts created on death that only receive assets from the estate and trusts that only receive death benefits from a life insurance policy and are wound up within 2 years of death; and
- existing trusts holding assets valued at less than GBP 100 unless or unit further assets are added.
Deadlines and penalties for non- or late registration
A number of respondents were concerned with the 30-day requirement to register a new trust or update information within a trust as it may not be realistic. The government agreed that requiring trusts created by will to be registered within 30 days of death was inappropriate and will not be required accordingly. The government also outlined that they intended to proceed with the proposed penalty regime as outlined in the consultation document.
Legitimate interest and third-country entity requests
The government committed to ensuring clear guidance and examples are provided to help stakeholders understand the legitimate interest and third-country entity request processes, committing to ensure each request is considered on its own merits.