The UK may have officially left the EU on 31 January, but there are several EU directives which the UK is implementing into its domestic legislation. One is the 5th Anti-Money Laundering directive (5 AMLD), which builds on the transparency drive aimed at trusts introduced in the 4th Anti-Money Laundering directive (4 AMLD) .
A little history
In June 2017, 4AMLD heralded the introduction by HMRC of their trust registration service (TRS), which I wrote about at the time. Trustees were required to upload information to the register, including the names and other details of settlors, beneficiaries and trustees, but only where the trust had a tax liability or requirement to submit a tax return.
Widening the net
5AMLD broadens the scope of the TRS considerably by removing the link to UK tax. With limited exceptions, it is proposed that all UK express trusts will need to register with HMRC. Offshore trusts holding UK property or entering into a business relationship with an “obliged entity” in the UK will also be required to register.
Currently only law enforcement (and HMRC!) have access to data held on the TRS. This will be extended to any third party where they have a “legitimate suspicion” of money laundering or terrorist financing. HMRC assert that “each request will be rigorously reviewed on its own merits”, but it remains to be seen how this will operate in practice.
New trusts will need to be registered within 30 days of being settled, and changes to trusts must also be updated on the TRS within 30 days. However, there is a two year transition period from the implementation date of 10 March 2020.
HMRC’s consultation on the new TRS closed on 21 February 2020, so more details are expected once the results of this have been published. For now, it is recommended that trustees prepare by ensuring that the data they hold on their trusts is up-to-date. We will report back with more information when it is made available.