August 8, 2022
The Financial Action Task Force (FATF), the global anti-money laundering and anti-terrorist financing governing body, recently held public consultations concerning its guidance on trusts. In Recommendation 25 (R25) of the FATF guidelines for members, the FATF calls upon countries to “ensure that there is adequate, accurate and timely information on express trusts, including information on the settlor, trustee and beneficiaries that can be obtained or accessed in a timely fashion by competent authorities”.
Transparency International (TI) submitted a response, which TI Canada signed onto, that includes the following recommendations:
To end reliance on the private sector for information on trusts, all trusts in a country should be required to be listed in a national register, which would include adequate, accurate, and up-to-date information on all parties in the trust;
Competent authorities should have access to all trust information;
Governments should expand the information that financial authorities collect on trusts and allow them to have a complete overview of trusts within their jurisdiction;
Assets connected to the trust should also be registered;
Beneficial owners of all parties to the trust should be identified including settlors, trustees, protectors, and beneficiaries.
Only natural persons should be considered beneficial owners of trusts.
All trustees should be regulated and licensed and thus by default be professionals.
Governments should clearly communicate the process for a trustee to obtain a license and follow regulations;
Trustees should retain client records for a minimum of 5 years, but ideally 25 years to facilitate investigations.
No threshold be applied to any beneficial owner involved in a trust;
R25 be more precise in its language in order to reduce the potential for abuse of loopholes.
Although R25 offers useful strategies with which to tackle corruption, it still has a long way to go before it is truly effective. However, countries who implement these recommendations will mitigate the opacity of laws which obscure trusts, rendering them more transparent and easier to investigate.
You can read TI’s full response here.
For media inquiries, please contact:
James Cohen
Executive Director
Transparency International Canada
Phone: 416-488-3939
Email: ti-can@transparencycanada.ca