The Money Laundering Regulations 2007 require certain businesses to have systems in place to prevent money laundering and to report suspicious transactions. The regulations require "Trust and Company Service Providers" to register with HMRC by 1 April 2008. This requirement will include trustees of pension schemes who are acting as such "by way of business", although trustees who are already governed by another regulatory body for money laundering purposes (for example the Financial Services Authority or the Law Society) do not additionally have to register with HMRC. There are both civil and criminal penalties for breaches of the requirements.
Who must register?
Neither the regulations not the accompanying HMRC guidance on preventing money laundering and terrorist financing gives any assistance as to exactly what is meant by "by way of business". It is quite clear that a professional independent trustee company would be acting by way of business (although many of these will already be registered through the FSA). Unpaid individual trustees (including MNTs) would not be caught. In our opinion neither would MNTs (or employer-appointed trustees) who receive additional remuneration for undertaking their role, as they would not be doing so by way of business but rather as part of their employment duties. More difficult is the position of a corporate trustee which is the subsidiary of the principal employer. Our view is that the trustee would not be considered to be acting "by way of business", as it would not itself be generating profit for the corporate group but this may depend on the exact arrangement and is something which may need to be explored further with HMRC. Another grey area is an individual who acts as trustee for a scheme with which he is not connected and receives a fee for doing so. It seems likely that this person would be considered to be acting as trustee "by way of business" and should be registered - even where the fee is a modest one. Where the position is not clear further enquiries could be made of HMRC or you may wish to contact us for further detailed advice.
How do I register?
Any trustee registering must complete an application form and pay a fee. He must also complete a form for the "fit and proper test", for which an additional fee is payable. The applicant and any other person who controls the business must satisfy the fit and proper test in order to be registered.
What must I do once registered?
Once registered the trustee must put in place anti-money laundering systems. This includes undertaking "customer due diligence" which, in relation to pension schemes, appears to be limited to identifying the general class of beneficiary to which the scheme relates and having systems in place to identify and report any suspected money laundering or terrorist financing. The most likely scenario with a pension scheme would be an unusual or excessive contribution by an employer or a member or from a third party. Written records of the systems in place should be kept, as they may be inspected by HMRC.
What if I suspect money laundering?
A registered person, or anyone within the organisation, is required to make a report to the Serious Organised Crime Agency where he "knows or suspects or has reasonable grounds for knowing or suspecting that a person is engaged in money laundering".