Earlier this year we saw the European Parliament call for amendments to the proposed Fourth Money Laundering Directive which would include the establishment of a Europe wide public register of the owners behind companies and trusts. That the register be "public" (accessible to anyone in the EU who completes a basic online registration) was fundamental to the parliament's proposals.
At the time, David Cameron wrote to the European Council highlighting the key distinction between trusts and companies and suggested that the solution to combat the potential misuse of companies (such as a public registry) may not be suitable for wider application.
Unlike trusts, companies interact with the public and the marketplace and, as such, a public register may be appropriate. Conversely, it is difficult to see the rationale for a private family arrangement by way of a trust or foundation being publicised.
As such, the Council of EU Member States has taken a different stance from the parliament, by amending the proposals so as not to include the mandatory public registers. As amended, trustees of express trusts would have to obtain and hold information identifying the settlor, the protector and the beneficiaries (or beneficial class) and any other natural person exercising ultimate control over the trust. These details would be accessible by the competent authority of each Member State and, potentially, financial institutions such as banks, but the information would not have to be made available to the wider public.
The recently elected EU parliament will have to vote on whether it subscribes to the original proposals put forward by its predecessor, or adopts these latest amendments put forward by the Council of Ministers. Full agreement of the parliament, the commission and the council is required for the directive to be adopted into law. Trilogue negotiations between the three bodies are expected to commence in October.
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