The UK was the first of the G20 countries to introduce a beneficial ownership register for UK companies, and now we have done it again by being one of the first countries globally to have a beneficial ownership register for trusts.
Regardless of what you make of that, many UK advisers’ business dealings with trustees will already be affected.
The EU Fourth Anti-Money Laundering Directive was brought into effect in UK law by the coming into force, on 26 June 2017, of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
The regulations apply to trustees and require them to maintain accurate and up-to-date records in writing of all the beneficial owners of the trust and any ‘potential beneficiaries’.
This latter means any individual referred to as a potential beneficiary ‘in a document from the settlor relating to the trust such as a letter of wishes’.
The term ‘beneficial owners’ for these purposes encompasses the settlor, the trustees, the beneficiaries or, where some or all of the individuals benefiting from the trust have not been determined, the class of persons in whose main interest the trust is set up, or operates, and any individual who has control over the trust.
This latter category will catch protectors of the trust (a role most commonly seen in offshore trusts) and anyone other than the trustees or settlor who has a power to add or remove trustees or beneficiaries.
If the terms of the trust confer powers of investment or powers to dispose of trust capital on someone other than the trustees, they are also regarded as beneficial owners for these purposes.
The administration of estates of deceased persons is also within the ambit of the regulations because executors and administrators are regarded as beneficial owners of their estates as well.
So anyone continuing to manage a portfolio of investments in the name of a now deceased client should consider themselves on notice that beneficial ownership information is now needed for the personal representatives.
Those of you doing business with trustees should be aware that trustees are now obliged by law to volunteer to you the fact that they are acting as a trustee.
In turn, as part of your client due diligence checks, you must ask them to provide you with their records of the beneficial owners of the trust.
If any information about the beneficial owners changes during the course of the relationship, the trustees are obliged to notify you within 14 days.
The information that the trustees must keep and give to advisers is extensive: for example, in relation to each of the beneficiaries, their full name and national insurance number or unique taxpayer reference.
If they have neither, their usual residential address must be kept and given. If that address is not in the UK, certain details on the individual’s passport or identification card need to be taken.