Following consultation last year on transposing the Fifth Money Laundering Directive (“5MLD”) into national law, HMRC and HM Treasury have recently published their technical consultation document for 5MLD and the Trust Registration Service.
The consultation last year initially suggested that charitable trusts were likely to fall within the definition of “express trusts”, and so be required to register with HMRC's Trust Registration Service - regardless of size and whether or not they incurred any UK tax liabilities - after the transposition of MLD5 into national law.
However, the technical consultation document contains, at paragraph 3.17, a statement that will be welcomed by trustees of charitable trusts:
“The government proposes that charitable trusts are not in scope to register because the risk of these kinds of trusts being used for money laundering or terrorist financing activity is low.”
The proposed regulations published with the technical consultation document are therefore drafted to provide that charitable trusts are excluded from registration, with “charitable trust” being defined as a trust which either is registered, exempt or excepted from the requirement to register as a charity in England and Wales, or is registered as a charity in Scotland or Northern Ireland.
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