Following its last plenary meeting, on 23 June 2022 the global Financial Action Task Force (FATF) released a consultation paper on revisions to its Recommendation 25, which will be open until August 2022. The consultation will focus on enhancing transparency on beneficial ownership of legal arrangements such as trusts.
This comes after FATF’s amendment of its Recommendation 24 in March 2022, involving reporting of beneficial ownership of legal persons in response to money laundering risks connected to the misuse of shell companies.
Major aspects covered by the consultation on Recommendation 25 will include:
i. clarifications over the scope of legal arrangements subject to Recommendation 25. On this point, FATF is evaluating the possibility to revise the definition of legal arrangements in order to harmonize it with Article 2 of the Hague Convention on the Law Applicable to Trusts and on their Recognition. Furthermore, FATF is asking whether it should create a separate definition of ‘beneficial owner’ of legal arrangements from that for legal persons;
ii. the possibility for countries to apply measures to assess and mitigate the risk of trusts or similar entities which are:
a. governed under their law, or
b. administered in their jurisdictions, or
c. whose trustees are residing in their jurisdictions.
iii. Clarifications over trustees’ obligations to obtain and hold information on parties to a trust (currently obligations involve only information on beneficiaries).
In its plenary meeting, FATF also approved other strategy reports for publication, including a report on detection and prevention of money laundering in the real estate sector and in the virtual assets sector.