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New anti-money laundering regime mandates registration of trust beneficiaries

 

Following the passage of S.I. 16 of 2019 European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019, trustees will be subject to a requirement to maintain certain information pertaining to the beneficial owners of a trust

 

Provisions

Section 3(1) states as follows:

'A trustee of a trust shall take all reasonable steps to obtain and hold adequate, accurate and current information in respect of the trust's beneficial owners, that is to say the name, date of birth, nationality and residential addresses of each beneficial owner of it'.

The trustee is then expected to enter this information into the trust's beneficial ownership register together with the date that each person was: (a) entered into the register as a beneficial owner; and also (b) ceased to be such an owner. Trustees must make this information available on request to the Revenue Commissioners or any other State competent authority in a 'timely' manner.

According to s 5, these records must be kept for a period of 'not less than five years' after the date on which the final transaction occurs under the trust. Arrangements must then be made for the deletion of the stored information, except where the information is required for the purpose of court proceedings or the trustee has 'reasonable grounds' for believing the records may be used in future legal proceedings. 

Requests for rectification of such registers are to be heard by the High Court. Finally, s 7 creates a series of offences for failure to comply with the provisions of this Regulation. The offending party will then be liable on summary conviction for a class A fine.

 

Comment

While these regulations are quite comprehensive, there is no provision made for secret trusts - a contentious creation of the common law whose operation has formed the basis of countless cases down through the centuries. It would be desirable if such trusts were dealt with, given the clear need for statutory intervention in this area.

It could also be argued that while the bona fide intentions that accompany this enactment are clear, this regime could prove too onerous for trustees, particularly those managing trusts with thousands of beneficiaries, ie pension funds. Therefore, it is fair to say that the requirements contained in this enactment will serve to amplify and bolster the comprehensive common law and statutory trustees' duties already in existence.

Moreover, no provision is made for circumstances where it has not been possible to identify the beneficial owners of a trust, and indeed no corresponding duty has been created which would mandate such individuals to come forward. 

The eventual aim is that a central register of beneficial trust ownership will be maintained by the State by March 2020. Access to this registry will be granted to competent authorities and those who can demonstrate a 'legitimate interest' in the information. For more on the EU's anti-money laundering regime, please click hereFor more information on trusts generally, see here.

 

 

 


Note: This is not intended to be relied upon as legal advice. Any errors should be notified to the editor and will be dealt with accordingly.

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