Trust and Estate Practitioner respond to treasury’s consultation on AML

Trust and Estate Practitioner STEP have responded to the HM Treasury’s consultation regarding anti-money laundering(AML) saying a legitimate interest test should apply when applicants seek access to information regarding trusts.

The Treasury’s consultation on improving the effectiveness of the UK’s anti-money laundering (AML) regulations have now closed. Themes that included clearer direction on the scope of the regulations and registration requirements for the Trust Registration Service (TRS) were discussed and a post consultation response has involved opinions that suggest ‘streamlining requirements and transparency’.

As reported on STEP’s site the consultation focused on four main themes: making customer due diligence more proportionate and effective, enhancing system coordination, clarifying the scope of the regulations, and reforming the TRS registration requirements.

“A key principle in the [money laundering regulations] is proportionality,” the consultation paper stated, “We aim to address any imbalances between the demands placed on regulated firms and customers and the risk of money laundering and terrorist financing. The consultation also targets areas of the [money laundering regulations] where additional clarity might enhance compliance or where stakeholders could collaborate more effectively.”

STEP’s UK Technical Committee responded to the consultation, particularly addressing the questions on TRS registration requirements reform.

Emily Deane,Technical Counsel & Head of Government Affairs at STEP said : “STEP echoes comments made in our previous response to the Cross-Government Consultation on Transparency of Land Ownership Involving Trusts in England and Wales: a legitimate interest test should apply when applicants seek access to information about trusts.”

STEP’s response highlights concerns about the multiple reporting obligations related to trusts and beneficial land ownership, each requiring different information. STEP has urged the government to ‘streamline these requirements’.

Regarding the proposal that trusts acquiring UK land before 6 October 2020 should register on the TRS, STEP’s response suggests that any such change must be well-publicized in overseas jurisdictions. Overseas trustees should be given a “sufficiently long period” to check records and provide the necessary information.

On the proposed changes to TRS data-sharing rules, STEP claim that they see no issue with sharing information about registered trusts for AML purposes or by government bodies or local authorities in their official duties.

However, STEP’s response adds: “Pending a proper consultation on the extent to which trust information should be made public, we believe that access to trust information, including for land-owning trusts (both UK and non-UK resident), should be limited to applicants who can demonstrate a legitimate interest in the particular trust, regardless of whether the trust owns an offshore company.”

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