Caribbean Trust Industry Fears EU Money Laundering Directive

by Amanda Banks, Tax-News.com, London

12 August 2004

The prospect that new provisions contained in the third European Union directive on money laundering will require professional advisers to obtain identification from trust beneficiaries has been greeted with dismay by Caribbean finance industry professionals.

Under the new proposals, which bring trusts under the same legislation which governs most other areas of the financial services sector, professional advisers will be required to obtain identification from beneficiaries who are set to receive more than 10% of a trust's assets, a move likely to create significant confidentiality problems.

The new rules mean that any EU regulated company with an offshore business in the Caribbean region, where trusts are a large part of the offshore finance sector, will be affected.

“I hope it would not be extended as such,” Attorney Anton Duckworth, Deputy Chairman and Government Liaison for the Society of Trust and Estate Practitioners (STEP) was quoted by Cayman Net News as saying.

“Some of these nations pushing this movement on trusts do not understand the measure they are pushing. For some nations it appears that they are working against money laundering and combating financial terrorism. For others it appears there is a tax agenda,” he added.

Fortunately, Mr Duckworth envisages that the third directive may not be forced onto the Cayman Islands in the same way that the Savings Tax Directive was. Either way, the STEP Deputy Chairman believes there will remain pressure for the jurisdiction to adopt its own similar initiative.

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