The EU (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (2019 Regulations) were originally introduced to give effect to certain aspects of the fourth Anti-Money Laundering Directive (as amended). The 2019 Regulations required that all express trusts maintain an internal beneficial ownership register. This was the first required step so that all express trusts could then submit their beneficial ownership information to a central register once that was established. The 2019 Regulations created a significant level of concern in the pensions industry as it appeared that all pension schemes would also be required to maintain a register of beneficial owners and submit this information to a central register.
The new Regulations
The EU (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (2021 Regulations) came into effect on 24 April 2021 and revoke the 2019 Regulations. The 2021 Regulations now govern the law applicable to express trusts in respect of obtaining and holding information in relation to their beneficial ownership registers and filing information in the central registers.
Pensions and the 2021 Regulations
Pension trustees can breathe a sigh of relief as pension schemes and Approved Retirement Funds (ARFs) are excluded from the application the 2021 Regulations. This has been clarified by section 26 of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (Act). This amends the existing legislation by the introduction of a number of new provisions.
The new provisions became effective on 23 April 2021. The Act provides that pension schemes and ARFs are “excluded arrangements”. This means that while pension schemes and ARFs may operate by way of express trust, they are excluded from the Regulations, including the requirement to hold information in an internal register of beneficial owners or file that information in a central register.
The passage of the Act into law means that pension trustees finally have certainty with respect to maintaining a register of beneficial owners. It also ends the speculation and concern surrounding the potential data protection issues associated with filing member information in a central register. From a practical and administrative perspective as well, the decision to exclude pensions from the application of the 2021 Regulations can only be seen as a very sensible one.
For more information, please contact a member of our Pensions team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.