In 2018, Directive (EU) 2018/843 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the “Fifth Money Laundering Directive” or “5MLD”) came into force in the E.U. While certain sections of 5MLD have already been implemented in the U.K., changes required by 5MLD in respect of the registration of the beneficial ownership of trusts have not yet come into force. HM Treasury and HM Revenue and Customs are now jointly consulting on this aspect of the regime.
The FMLC has submitted a response urging HM Treasury to consider further exemptions from the registration requirement in the clearing, securities settlement and payment systems space where express trusts are used as legitimate and efficient legal devices designed to reduce systemic and other risks. This is part of a wider issue concerning the ubiquity of trusts in financial markets arrangements which is a unique feature of Common Law jurisdictions. The FMLC would urge HM Treasury to deliberate on the onerous nature of the proposed requirements to register trusts, especially in the context of the need for proportionality. Finally, although the Consultation does not specifically address the question of legal entity identifiers (“LEIs”), the Committee would like briefly to bring to HM Treasury’s attention the importance of LEIs in the context of the expansion of the anti-money laundering regulatory regime to cover virtual currencies.
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