New regulations on money laundering and terrorist financing came into force at the end of June which impose new record-keeping and provision of information requirements on trustees of occupational pension schemes.
Under the regulations, trustees are required to hold information on the scheme’s “beneficial owners” and, where the scheme pays certain taxes including stamp duty reserve tax and stamp duty land tax, to provide this information to HM Revenue & Customs (“HMRC”) by 31 January 2018. For these purposes, a scheme’s beneficial owners are defined as including the members, other potential beneficiaries such as members’ spouses and dependants, the trustees, and the employer that originally established the scheme. The precise details that must be held by trustees and disclosed to HMRC are unclear, but the pensions industry is liaising with HM Treasury and HMRC on this issue, and guidance from HMRC is expected. We think it is likely that most schemes will be able to comply with their duties as regards members and other beneficiaries by providing a description of the class of persons who are beneficiaries or potential beneficiaries, without having to list them all by name. We would advise trustees to hold off taking any action in respect of the new obligations until HMRC has published its guidance.
There is some debate within the pensions industry as to whether pension scheme trustees are potentially outside the scope of the regulations. However, we believe that the better view is that pension scheme trustees are within their scope. This appears to be the government’s view.
The regulations also replace previous money laundering regulations which came into force in 2007. Like those regulations, the new regulations impose obligations on individuals and companies who provide trustee services by way of business (“professional trustees”) to register with HMRC and to carry out client due diligence when taking on new clients. In 2007, HMRC published guidance which confirmed that where a professional trustee’s business activities only involved occupational pension schemes, the professional trustee was not required to register with HMRC and could carry out a simplified form of client due diligence. HMRC has updated its guidance to confirm that this remains the position now that the 2017 regulations are in force.