New anti-money laundering regulations set to hit many charities

It has been reported that a large number of charities could face administrative bureaucracy from the government as they bring in new anti-money laundering regulations. The Fifth Money Laundering Directive could force all registered charities to sign up with the government’s new trust and registration service (TRS).

The rules around TRS state that charities must provide up to date information about their beneficial owners – settlor, trustees, protector, beneficiaries and any “other natural person exercising effective control of the trust”.

It should be noted that, unlike its predecessor, the fifth directive applies to all ‘express trusts’ and not just those liable to tax. The ICAEW have already expressed their concerns on the extension of scope to include express trusts and have sought further clarification. The Institute have urged the government to consider application of the fiscal definition of settled property to express trusts to reduce the scope of registration.

Given the issues found by the previous directive, this will be of concern to many charities, and if not handled correctly could result in disproportionate administrative burden on trustees and companies. The impact could be for reaching, impacting on chartable trusts, unincorporated associations and potentially incorporated charities who hold trusts as restricted funds or endorsements.

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