Taking the Fifth

Another EU directive with a funky title has been introduced which is likely to impact your clients who have settled trusts.

The Fifth Anti-Money Laundering Directive (5AMLD) has been enhanced to tackle the fight against terrorist financing and increases transparency in financial transactions. It expands on the requirements laid out in 4AMLD (which introduced the idea of centrally recording beneficial ownership of certain structures, such as trusts) to align with modern trends and technologies and strengthen current rules regarding cooperation between financial supervisory authorities.

Under the previous directive, there was a requirement to register trusts that incurred a UK tax liability. This was estimated to be approximately 200,000. Under the new directive, the scope has now been expanded impacting trusts ‘regardless of whether or not there is a tax liability’. It estimated that up to two million trusts will now need to be registered!!

So, how does this impact you and your clients? The good news is that you have up until the summer of 2022 to register the trust with the HMRC. The even better news is that it provides you with a perfect opportunity to reconnect with trustee clients, review their trust arrangements, goals and needs and demonstrate to them the value of your ongoing financial planning. You will also be able to assure your clients that this is not a public register so the information relating to the trust remains confidential. As an adviser, the registration process is designed to be a simple data capture exercise.

The new directive, which the UK is fully committed to implementing, will impact up to 10x more trusts than its predecessor. However, this should provide you with an excellent opportunity to reach out to clients who you may not ordinarily connect with on a regular basis.

Taking the Fifth

 

Taking the Fifth