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ICAEW concerns over consultation on 5MLD

The fifth money laundering directive (5MLD) has to be implemented into UK law by January 2020 and the consultation process seeks views on the proposed method of transposition. However, the ICAEW notes its disappointment that only eight weeks was allowed for the initial consultation and is hoping for a longer consultation period looking specifically at trusts and 5MLD which will feed the next iteration of the trust registration service (TRS).

ICAEW says it has a number of wide ranging concerns on the extension of the scope of TRS to all express trusts rather than just those with a tax consequence, fearing that the true extent of the resulting registrations could be vast and result in a huge and disproportionate regulatory and administrative burden on trustees, companies, and individuals.

ICAEW is also recommending that the definition of express trust should follow the fiscal definition of settled property at s43, IHTA 1984 in order to reduce the scope of the TRS registration requirements. It added that consideration also needs to be given to ensure that empty non-operational trusts such as pilot trusts used for life insurance proceeds or pension distributions on death, do not have to register.

Welcoming the inclusion of crypto-currencies within the regulatory framework, ICAEW said further thought is needed to ensure that security and utility tokens are also within scope based on the proposed definitions. The government should also consider including mixer and tumbler services within the regulations, given their role in obfuscating the source of funds.

As obliged entities, Chartered Accountancy firms acknowledge their responsibility to report discrepancies in beneficial ownership data on registers of people with significant control (PSC). However, ICAEW notes that this will form a small part of the wider move for Companies House to verify the identity of company directors and beneficial owners of limited companies, as proposed in the BEIS consultation on Corporate Transparency and Register Reform. The outcome of any such reform must be that obliged entities are entitled to rely on the veracity of the data held on the PSC and other beneficial ownership registers. ICAEW believes the responsibilities of company directors for the accuracy of the information on the registers should not be overlooked in this respect.

Finally, ICAEW has concerns on the proportionality of a national register of bank account ownership, and the very grave impact on the public should such highly sensitive personal and financial data fall into the hands of hackers or other criminals.

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