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Trust owners to be made public under money laundering laws

by David Campbell on Feb 21, 2014 at 12:02

Trust owners to be made public under money laundering laws

The European Parliament has approved proposals which would for the first time put the names of trust owners and beneficiaries into the public domain.

While the committee-level approval will still be subject to a vote before parliament next month before it is formulated into policy in the second half, and will then take some time to be integrated into domestic laws, the initial vote is an important step.

‘It has been known for some time that greater disclosure of beneficial owners of companies was going to be required, but until recently it had been assumed that trusts would not be included,’ said Geoffrey Todd, a private client partner and tax specialist at Boodle Hatfield.

‘Early indications are that there will be provisions to protect data privacy and to ensure only the minimum information necessary is on the register. Details of what is in the trust and what it is for, for instance, will not be included.  Individual member states will also be able to exclude certain people and activities from its scope in cases where there is little risk of wrong-doing.’

The decision is part of a package of money laundering measures currently being considered by the EU, with MEPs saying that additional disclosure was necessary to prevent criminal activity and tax evasion.      

‘If we had decided to leave trusts, for example, out of the scope of this new legislation, then it would immediately have made them a perfect vehicle for criminals wishing to avoid taxation or launder their illegal money,’ said Dutch MEP Judith Sargentini.

Tax transparency campaigners have welcome the news with anti-corruption group Global Witness saying that increased disclosure would shut down a major outlet for misappropriated funds from emerging markets.

UK tax lawyers have cautioned that the rules could force legitimate trust owners into unnecessary levels of disclosure, however.

‘Whilst it is appreciated that greater transparency may help prevent criminal activity and tax evasion, many might feel the proposals go beyond what is required to achieve this aim,’ said Todd.   

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