In March the European Parliament voted overwhelmingly in favour of requiring the ultimate beneficial owners of trusts to be listed in publicly available registers.
The EU Council has now rejected the call for mandatory public registers of beneficial interests in companies and trusts.
Under the draft of the Fourth EU Money Laundering Directive approved by the EU Council:
- trustees of express trusts must obtain and hold information identifying the settlor, the protector (if any) and the beneficiaries or class of beneficiaries of the trust, and of any other natural person exercising ultimate control over the trust;
- the information must be accessible by Member States' competent authorities;
- but the information does not have to be included in a publicly available register.
Fourth EU Money Laundering Directive: registers of ultimate beneficial owners
The EU Member States have now agreed an updated proposal for the Fourth Money Laundering Directive. The amended proposal falls short of the public registers of the beneficial ownership of companies and trusts called for by the European Parliament, although in relation to companies (but not trusts) the draft Directive does suggest that beneficial owner information be held in a public and central company registry.
Under the amended draft Directive, the trustees of any express trust governed by the law of any part of the UK must obtain and hold adequate, accurate and current information on the beneficial owners of the trust. The information will have to be held in a specified location or in data retrieval systems which ensure timely and unrestricted access by Member States' competent authorities and Financial Intelligence Units (which the draft Directive requires each Member State to set up). It is not yet clear what mechanism the UK will employ to hold the beneficial owner information but the draft Directive does not require the information to be made publicly available.
The information that trustees must obtain and hold includes the identity of the settlor, the trustee(s), the protector (if any) and the beneficiaries or class of beneficiaries, and of any other natural person exercising ultimate control over the trust, through direct or indirect ownership or through other means. In the case of a discretionary trust or other legal arrangement where the individuals that benefit from the legal arrangement or entity have yet to be determined, the identity of the class of persons in whose main interest the legal arrangement or entity is set up or operates should be established.
Legal entities such as foundations and legal arrangements similar to trusts will be subject to equivalent requirements.
The amended draft Directive will be considered by the European Parliament and the European Commission in October.