.png)
.png)
The Treasury is consulting on steps the government proposes to take to transpose the EU fifth anti-money laundering directive into UK law by January 2020, including an extended definition of ‘tax adviser’ and broadening the requirement to register trusts with HMRC.
The directive widens the scope of businesses to be regulated in relation to tax matters. The government proposes to extend the definition of ‘tax adviser’ in the money laundering regulations to include firms and sole practitioners who provide, ‘directly or by way of arrangement with other persons, material aid, assistance or advice about the tax affairs of other persons’.
The directive requires regulated businesses with a duty to review their customers’ beneficial ownership information during customer due diligence procedures. The government intends to require this when a business has a legal duty in a calendar year to contact customers for the purposes of reviewing their beneficial ownership information or a duty under the International Tax Compliance Regulations SI 2015/878 to identify new and pre-existing reportable offshore financial accounts for annual reporting.
The directive extends the scope of the trust registration service to:
- all UK-resident express trusts;
- non-EU resident express trusts that acquire UK land or property on or after 10 March 2020; and
- non-EU resident express trusts entering into a new business relationship with a regulated business on or after 10 March 2020.
The government does not expect to specify a full list of types of express trust, but those likely to fall within the definition are discretionary, interest in possession, charitable, employee ownership and many types of bare trusts.
The government confirmed that all trusts with UK tax consequences must register on its trust registration service, even if they are not express trusts or are non-EU resident express trusts without UK trustees. However, non-express trusts with UK tax consequences will not be liable to the wider data-sharing provisions detailed in the directive.
The 31 January registration deadline will change because the government no longer considers having one linked to submitting a tax return to be appropriate in the money laundering context. Unregistered trusts in existence on 10 March 2020 will have to register by 31 March 2021 and trusts created on or after 1 April 2020 must do so within 30 days of their creation.
The government will consult on a replacement penalty framework for late registration. This is because the current one, based on the self-assessment penalty regime, is no longer suitable because the directive extends registration to non-taxpaying trusts.
The government intends to include the main types of cryptoassets within the money laundering regulations along with crypto exchange service providers, peer-to-peer exchange service providers, cryptoasset automated teller machines, issuance of new cryptoassets, and publication of open-source cryptoasset-related software.
Comments should be emailed by 10 June 2019 to Anti-MoneyLaunderingBranch@hmtreasury.gov.uk.
Transposition of the fifth money laundering directive: tinyurl.com/5mldcondoc
