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Closed FATF’s consultation on foreign trusts’ beneficial ownership reporting duties

FATF

In June 2022, the Financial Action Task Force’s (FATF’s) opened a consultation on possible amendments to its Recommendation 25, with the aim to propose any revision during its meeting in October 2022.
The Recommendation focuses specifically on transparency and beneficial ownership reporting for trusts and similar legal arrangements.

At the centre of the discussion raised by the consultation paper lies the determination of which jurisdiction’s anti-money laundering (AML) rules should apply to a trust.
This element can be sometimes tricky to determine as a trust may be administered by trustees residing in a jurisdiction which is different from the one of the law that governs of the trust.
The trustees can also change over time and the country of residence of the trust may as well change according to the residence of new trustees.

With regards to this, the Society of Trust and Estate Practitioners (STEP) suggested for to not consider the jurisdiction of the governing law of the trust for the determination of AML rules.
STEP instead advised to consider the jurisdiction where the trustee resides or where the trust is effectively administered.

Another suggestion regarded the reporting of beneficial owners for companies, which, according to STEP, should be limited to the identification of directors and individuals with a significant control (25 per cent or more of the shares or voting rights).
In this way, requirements would be aligned with those imposed be UK’s trust register.

SOURCE: https://www.fatf-gafi.org