The City of London Law Society has published its response to Treasury’s consultation on MLD5 implementation. Its comments focused on two key areas:
- crypto-assets: CLLS is nervous about the suggestion that the UK should use a wider definition of crypto-assets than MLD5, on the basis that this might bring within scope types of activity that do not carry a significant money laundering risk, and might also create legal uncertainty. It also notes that using a wider definition would risk bringing into scope some things that are expressly excluded, like in-game currencies. It also says the proposed approach would focus on form rather than substance (activity) and ignores the fact that CDD requirements etc are engaged when there is a business relationship. All in all, CLLS recognises that there may be a need to extend the regime, but thinks it should be done incrementally; and
- registration of express trusts: CLLS asks that Treasury confirm the requirement for registration will continue to disapply to statutory, resulting or constructive trusts. It also wants clarification on how the changes will affect the general partner’s disclosure requirements, where the GP holds fund assets on trust for investors. An additional question is how to identify the stage at which a relevant trust is created, where agreements envisage creation only on some default.