Synopsis: The UK Government has confirmed that it will oppose clauses in the EU’s Fourth Money Laundering Directive that would force all trusts to identify their beneficiaries in publicly accessible registries.
Date posted: Wednesday, April 09, 2014
Following on from our earlier bulletins, the UK Government has confirmed that it will oppose clauses in the EU’s Fourth Money Laundering Directive that would force all trusts to identify their beneficiaries in publicly accessible registries.
The original draft Fourth Money Laundering Directive did not require public registries of trusts, but the clauses were later inserted into the draft legislation to bring trusts within the scope of the legislation.
The legislation as it stands has been approved at committee stage followed by a plenary vote in the European Parliament, thereby making it difficult for the UK to try to block the measures at the Council of Ministers level later this year. However, the UK Government has indicated that it will not welcome an open registry of trust beneficiaries on the basis that trusts are specifically used for private purposes. With this in mind the UK Government would like to reach a compromise by restricting the obligations imposed by the Fourth Money Laundering Directive to trusts that hold financial assets.
As a result the Treasury is now negotiating for this change to be made with the EU Council presidency and other member states. If the legislation is amended to limit the scope of obligations on trusts which hold financial assets it appears that these obligations would be satisfied through existing reporting requirements, domestic reporting requirements and automatic exchange of tax information agreements.
We now have to wait to see whether or not the Treasury will be successful in its negotiations. Regardless of which, even if the EU Council is persuaded to accept the UK position the final outcome will need to be decided by a qualified majority vote which could prove to be difficult given the current progress of the directive.
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