UK Government Accepts Industry Advice Over Laundering Regs

by Robin Pilgrim, LawAndTax-News.com, London

07 June 2007

The Society of Trusts and Estates Professionals has warmly welcomed the UK government's revision of controversial money laundering regulations announced yesterday by Economic Secretary to the Treasury Ed Balls.

The proposed regulations, which implement the Third European Money Laundering Directive, would have required that client due diligence is carried out not merely on the customer setting up a legal arrangement, such as a trust, but also on any beneficial owner of the relevant property. A beneficial owner is defined as someone who either has at least a 25% interest in the property or who controls at least 25% of the property.

The Law Society and several major City law firms had warned that private equity funds could be driven out of the UK if the money laundering regulations went ahead in their current form. In the case of private equity funds, many of which are a mix of other funds with cross-holdings in each, determining who has a 25% interest would be difficult and time consuming, and could act as a deterrent to equity funds investing in the UK.

STEP has also been invited, along with the British Bankers Association and other industry bodies to continue to work with HM Treasury on issues arising from the Regulations . STEP will use its expertise to work with regulators and Government to help provide industry guidance.

Keith Johnston, Director of Policy and Communications at STEP, said: ‘STEP demonstrated that the EU's definition of beneficial ownership was incapable of being applied to everyday trusts. We have worked constructively with HM Treasury to help provide a new definition which will provide legal certainty – a basic requirement of statute. We are delighted that our relationship with HM Treasury has been constructive and we have made great strides. This was an area of great concern to our members and this is a major STEP forward. ‘

Working with HMT is part of a wider STEP campaign to demonstrate to the public benefits of trusts to opinion formers in the UK, the EU, at FATF and the OECD.

Recommended