5th Anti Money Laundering Directive - Update

The UK government has enacted regulations bringing into force the EU Fifth Anti-Money Laundering Directive (5AMLD).

However, the provisions relating to trust registration will be delayed until later in 2020, following a more detailed technical consultation on implementation.

5AMLD requires not just public access to the trust register, but also that it is extended from trusts with UK tax consequences to include all express trusts. This will extend the number of registrable trusts from around 200,000 to as many as two million.

HMRC stresses that the Trust Registration Service will have to contain a ‘robust and proportionate framework’, and the consultation will include additional information on the proposals for the type of express trusts that will be required to register; data collection and sharing provisions; and penalties.

Although this will undoubtedly create a lot of work for those registering, it is good news that time is being taken to ensure the software is ready and the type of trust being defined.

Lucy Orrow
Lambert Chapman LLP

2 Likes

HMRC seem to have updated their guidance already, even before the consultation has finished!

Cindy Chaplin
Larking Gowen

Is there further guidance re the requirement to register all trusts ? Is it the clients responsibility and where does the responsibility lie with practitioners and existing clients who have made trusts ? Should they be notified of the requirement ? Any help or insight much appreciated.

Lucy Leach
Wilford Smith

Cindy - that guidance is horribly wrong and misleading. It’s a bad mishmash of the current and incoming rules. It would be nice to think HMRC would allow reliance on it because some of the exclusions they quote (e,g. “the trust has to pay Income Tax of less than £100 … from interest”) will no longer apply to express trusts in 10 days’ time.

Lucy - I believe the most recent info is the January consultation and draft regulations (which read like they were knocked up overnight):

Andrew Goodman
Osborne Clarke LLP

Dear Lucy,

There was a very helpful HMRC talking points talk last Monday Watch Recording
It answers a lot of questions and I can confirm that it is the owners responsibility to report. I have been liaising with local solicitors and estate agents to create an awareness of the reporting requirements.

Lucy Orrow CTA TEP
Lambert Chapman LLP

It is the trustees’ responsibility to register.

If the practitioner has an ongoing relationship with the trustees (and/or, perhaps the settlor) I suggest that it would be preferable to let them know of the requirement (perhaps via a general newsletter or something of that ilk), and that assistance to register can be provided if requested.

Going forward, though, I believe the practitioner will be in a more difficult position when advising/assisting in the creation of a new trust if the settlor and/or trustees are not apprised of any need to register. Perhaps it should be costed within any instructions to create a trust. After all, if a practitioner suspects that particular trustees do not intend to register, does that not give the practitioner a problem in continuing to act for them as, to my mind, such suspicion may likely bring them into conflict with the Professional Conduct in Relation to Taxation, to which the main practitioner bodies have subscribed?

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

This is really interesting, thank you for your responses.

Going forward in practice for new Trusts how are practitioners approaching Trust registration and the requirement to register? Would you insist on a signed disclaimer confirming that the advice to register the trust has been given?

Lucy Leach

Why not just provide the advice in writing?
If the trust has a tax liability then they will need to register to file a return (and a suspicion they have not/will not file brings in the AML rules).
If it is a dry trust but registrable as a non-exempt express trust, I don’t think AML is in point - it is just like any other advice you may give them.

Andrew Goodman
Osborne Clarke LLP

I cannot find guidance on this now. Is this now in force? Are all trusts registerable from now? Any one have any guidance on this.

Lucy Leach

The software has still not been updated and there is no clear guidance on ‘what’ trusts will need to register. My understanding is that we would have until April 2021 to complete all registrations anyway…although in the current climate this may move.

Lucy Orrow CTA TEP
Lambert Chapman LLP

The timing details are all set out in the draft regs - see page 24 (Appendix A) of the consultation I linked to a few comments above.

Not sure if it’s come in but the earliest change is from 6 April and those trusts have an initial transitionary period to register (31/1/21 being the earliest date). Next year it will change to 30 days.

Andrew Goodman
Osborne Clarke LLP

Thank you @andrew.goodman and @Orrowlo Very helpful.

Lucy Leach