ICAEW has responded to the Treasury/HMRC consultation on the extension to the Trust Registration Service in the wake of MLD5. While it welcomes the efforts to narrow the scope of express trusts that will be required to register, it notes several additional trusts that it thinks would warrant exclusion – such as those set up under wills, small charities and insurance policies that pay out other than on death or critical illness. It also calls for consideration to the risks inherent in different kinds of bare trust to ensure regulation is proportionate and wants clarity on which employment related trusts and trusts used for the joint holding of property will be exempt.
ICAEW is also concerned about the proposal that all non-UK trusts that enter into a business relationship with UK entities that fall within the regulated sector should register, as it says this would damage competition and could have a detrimental effect on correct tax compliance.
PIFMA has also responded. It notes that:
- bare trusts that hold collectively pooled client assets should be excluded as these trusts, operated by regulated firms providing custodial services would normally hold assets in a nominee company, acting as a bare trust. These are markedly distinct from trusts set up to protect and segregate assets for a more limited set of beneficiaries, as there will be vast numbers of clients who are beneficial owners to holdings in an account, and thousands of trades will take place daily for clients using a custody service. If these companies were included, there would be continuous TRS updates, the need for continuous CDD checks and the need for HMRC to continously update the register. This would give cause of many risks of mistake and delay, and the use of significant resource would increase costs to clients;
- parents should not be forced to register in order to informally hold money on behalf of their minor children;
- there should be a de minimis level;
- confirmation is needed on the duty of trustees to provide information to firms asking for it, and on whether there will be mechanism in place for reporting discrepancies between the TRS information and other information available to firms; and
- that a pure due diligence investigation would not be “legitimate interest” grounds to allow a TRS query – but PIFMA suggests that making a query in the course of a pre-SAR investigation should be.
Finally, the Financial Markets Law Committee response also urges further exemptions, citing examples in the clearing, settlement and payment systems sectors where express trusts are used as efficient legitimate risk-reduction devices. The response also notes the consultation has not considered the role and importance of LEIs, especially in the ICO parts of the crypto-asset markets.