On March 11, 2014, the European Parliament approved a recommendation from two of its committees (Economic Affairs and Justice and Home Affairs) that legislation be enacted requiring public beneficial ownership registers for companies and trusts (and similar legal arrangements). After the 643-30 vote in favour of the recommendation, the next step is for the European Parliament to work out the details of the legislation with the EU Commission and the Council of Ministers.
In its final form, the legislation is to be implemented as part of the 4th Anti-Money Laundering Directive (AMLD) reforms. In a significant shift from earlier versions, the proposal as endorsed by the EU committees, and now by the EU Parliament as a whole, envisages publicly-accessible central registers that would make available information about the ultimate beneficial owners of all types of legal entities, including companies, foundations and trusts. With respect to the inclusion of trusts, Netherlands MEP Judith Sargentini commented: “If we had decided to leave trusts, for example, out of the scope of the new legislation, then it would immediately have made them a perfect vehicle for criminals wishing to avoid taxation or launder their illegal money into the financial system”.
Although the registers would be publicly available, privacy law compliance concerns were considered by the MEPs, who inserted several provisions intended to ensure that the register contains only the minimum information required to serve its purpose. For instance, registers would divulge the names of the persons behind a trust, but not the trust’s holdings or purpose. There would also be a registration requirement for persons wishing to access information in the registers.
In November 2013, Prime Minister Cameron of the United Kingdom wrote to Herman Van Rompuy, EU Council President, indicating that the U.K. did not intend to include trusts in its own proposals for public registers for companies. However, Mr. Cameron stated in the letter that he remained open to the “arguments around trusts and other legal arrangements in order determine what further action we might take”. The U.K. legislation is to be introduced shortly in order than it can be passed before May 2015, when the current Parliament ends.
In Canada, shareholdings in privately-held entities are generally not a matter of public record or subject to registration requirements. Neither Canada nor the U.S. appear to be contemplating legislative changes similar to those endorsed by the European Parliament.