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UK exempts employee share ownership trusts from certain registration requirements

By October 8, 2020October 27th, 2020No Comments

IPSA waiting on action from Irish government

Pressure has increased on the Government to defer the implementation of the Register of Beneficial Ownership of Trusts, following the publication in the UK of an update to its existing anti-money laundering legislation.

The UK government released Regulations (The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020) on 11th September.

The draft Regulations widens the scope of trusts required to register to include all UK express trusts, including those with no tax consequences, with explicit exemptions for the following categories:

  • legislative trusts (a trust imposed or required by an enactment);
  • trusts imposed by a court order;
  • pension scheme trusts;
  • trusts of insurance policies;
  • charitable trusts;
  • trusts created on the transfer or disposal of an asset
  • pilot trusts; and
  • trusts that have effect on death.

The Register of Beneficial Ownership of Trusts is set to be introduced under the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (S.I. No. 16 of 2019) (the 2019 Regulations). The 2019 Regulations give partial effect to the Fifth Anti-Money Laundering Directive (5AMLD) and by March 2020 Ireland was to have established a central register of beneficial owners of trusts to which trustees would be required to input beneficial ownership information.

In February, IPSA called on the Government to issue an exemption from registration requirements for express trusts, such as those used for employee share ownership purposes, that do not present a money laundering risk. Following the impact of the COVID-19 pandemic, our pre-Budget submission to the Department of Finance in June called for the implementation of the Register to be deferred.

Keavy Ryan: IPSA Chair of Advocacy

IPSA Chair of Advocacy, Keavy Ryan, said: “The UK’s updated regulations provide exemptions from registration for trusts which pose no or a negligible risk of money laundering or terrorist financing. This is the case with employee share scheme trusts and it is consistent with the aim of the Anti-Money Laundering and Terrorist Financing Directives.

“In Ireland, the use of trusts is more widespread than other EU states, and the obligations imposed by 5AMLD and ultimately the 2019 Regulations, have a far greater impact on Ireland, and therefore Irish trustees, compared to other EU Member States.

“The COVID-19 crisis is not the appropriate time for implementing the Register, which will place onerous administrative burdens on already struggling businesses, and once again IPSA asks the Government to consider its deferral given the very challenging circumstances.”