Beneficial ownership registers of trusts
Planned European Union legislation due to come into effect between 2019 and 2021 will provide varying levels of public access to national beneficial ownership registers of trusts.
The fourth Anti-Money Laundering Directive (AMLD) came into force on 26 June 2017. Amongst other measures, it increased the transparency of beneficial ownership for trusts by requiring central registers of beneficial ownership to be compiled.
In the UK these requirements were met for trusts by a new online registration system launched in June 2017. Currently, the details of the trusts are only accessible by tax and law enforcement authorities companies.
In light of the Panama Papers in April 2016 and recent terrorist attacks, discussions have been ongoing within the EU to strengthen the existing provisions of the fourth AMLD and particularly those relating to access to information on beneficial ownership.
A fifth AMLD was proposed in July 2016 and agreement was reached between the European Parliament and European Council in December 2017 on the latest amendments. The final wording has yet to be published but the following measures are to be introduced across European member states:
- limited public access to national beneficial ownership registers of trusts and similar legal entities administered within the EU where there is a legitimate interest to access such information
- interconnection of national registers to allow cooperation and sharing of information between member states
- verification measures to help improve accuracy and reliability of the register.
The new measures do not allow full public access to beneficial ownership registers of all trusts. It is recognised that beneficial ownership information for trusts set up for non-commercial purposes, such as to preserve family assets, should only be made available to competent authorities, organisations (including professional sectors subject to banks and legal firms) and persons who can demonstrate a legitimate interest. The fourth AMLD did not define a "legitimate interest" and the fifth AMLD is to provide clarification of this point. However, it is understood that NGOs and investigative journalists will be able to demonstrate such an interest.
It is expected that the fifth AMLD will be in effect from the end of 2019. Those with a legitimate interest will be able to access beneficial information for trusts by 2020 and national registers will be interconnected by 2021.
These new requirements represent a significant change to the publicly available information on the beneficial ownership of trusts, even though some limitations will be in place. The extent to which Brexit impacts on the UK's acceptance of EU legislation remains to be seen. However, given the position the UK has taken in encouraging international openness and disclosure, it would seem unlikely that the UK will not adopt these provisions.
Finally, it is worth noting that the UK is also considering a further register of overseas legal entities that hold or purchase UK property – we will publish more information in respect of this as matters become clearer.