![]() Do you see challenges in respect of record-keeping obligations for non-professional trustees noting that all other obligations under R.25 apply to such trustees? Do you agree with the proposed nexus of such obligations based on residence of trustees or location where the trusts are administered? Compared to the current obligation incumbent on countries that have trusts governed under their law, do you see pros and cons from such a change, (e.g., would there be a difference in terms of efforts to collect the information in cases where a trust may have trustees that are resident in more than one jurisdiction, and where a trust may be administered in a country in which a trustee is not resident)?Ħ. What are the pros and cons of expanding the extent of information which trustees should hold to include the objects of power in the context of discretionary trusts? Is the concept of “objects of power” sufficiently clear and reasonable? Are there any other terms that you would recommend FATF use instead of “objects of power”?ĥ. Also, the FATF is considering to bring professional and non-professional trustees under the same set of requirements by extending the requirement for records to be kept for at least 5 years to such non-professional trustees.Ĥ. Specifically, the FATF is considering to set the nexus of such obligations to countries where the trustees reside and/or where the trusts are administered. This requirement does not extend to objects of powers of discretionary trusts, who may derive a benefit from a trust in the future, notwithstanding that there is a likelihood that such an object will become entitled, e.g., they are named in a letter of wishes, or they may present a higher ML/TF risk. Inter alia, R.25 currently requires trustees to obtain and hold information on beneficiaries (defined to cover persons entitled to benefit from any trust arrangement) or classes of beneficiaries. Obligations of trustees under R.25 – FATF is considering how to further clarify obligations on trustees (and persons holding an equivalent position in a similar arrangement) to obtain and hold adequate, accurate and up-to-date information, related to parties to a trust. Are there any other considerations with respect to scope of legal arrangements or risks posed by legal arrangements that FATF should factor into its review of R.25? residence of trustee, location of asset etc.) for the purpose of risk assessment?ģ. What could be the pros and cons associated with the new suggested risk assessment? What could be the potential “sufficient links” for foreign-created legal arrangements (e.g. In this context, are the following concepts sufficiently clear? If not, how could they be improved?ĭ “similar legal arrangements” (as compared with express trust).Ģ. For other legal arrangements, the FATF is considering to limit the scope of risk assessment and mitigation obligations to such legal arrangements that have sufficient links with the countries.ġ. Scope of Legal Arrangements, risk assessment and foreign trusts– To clarify the scope of legal arrangements (other than express trust) which should be subject to R.25 requirements, the FATF is considering to revise the definition of legal arrangements by referring to Article 2 of the Hague Convention on the law applicable to trusts and their recognition so that jurisdictions can use this as a basis of whether legal arrangements have a similar structure or perform a similar function to an express trust.įurther, in light of the variation of legal arrangements across countries and similar to the R.24 requirements, FATF is considering whether countries should apply measures to understand the risk posed by trusts and similar legal arrangements governed under their law or which are administered in their jurisdictions or whose trustees are residing in their jurisdictions, and to take appropriate steps to manage and mitigate these risks. The FATF would welcome comments in particular on the questions highlighted below: FATF’s work in this area is ongoing, and will benefit from hearing views from stakeholders, including trustees, financial institutions, designated non-financial businesses and professions (DNFBPs), and non-profit organisations. The FATF’s objective is to improve R.25 and its Interpretive Note to better meet its stated objective to prevent the misuse of legal arrangements for money laundering or terrorist financing. The Financial Action Task Force (FATF) is conducting a review of Recommendation 25 (R.25) on the transparency and beneficial ownership (BO) of legal arrangements.
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