Trust Registration Service (TRS) and AML Compliance

Our corporate and non-corporate tips aim to help members navigate trust registration requirements:

What changed ?

Lawyers should be aware that due to the implementation of the Fifth Money Laundering Directive, many express trusts without UK tax obligations:

Who is concerned ?

Trustees involved

The obligation of registration will rest with the relevant trustees.

This means that law firms and their principals and/or trust companies that have historically acted as trustees will have to investigate their records.

As there is no backstop, this could mean looking back many years to assess whether non-UK tax-paying trusts of which they remain trustees will become registrable in 2023.

This change will also impact their advisory obligations to their clients who act as fiduciaries.

Trustees of trusts that existed on or after October 6, 2020

HMRC has confirmed that trustees of trusts which existed on or after 6 October 2020 and which have since ceased will also be required to:

  • register them on the TRS, and
  • immediately close the trust file

UK trusts not subject to UK tax

This extension of the TRS regime brings all UK trusts which are not subject to UK tax, unless specifically excluded, within the scope of registration and disclosure.

Non-UK express trusts

Non-UK express trusts that acquire real estate in the UK or have at least one UK-resident trustee and enter into a “business relationship” in the UK will become registrable, unless specifically excluded .

Trusts excluded from the registration requirement

Exclusions, now covered by HMRC guidelines, are complex and themselves subject to limitations.

The consequence of the implementation of the Fifth Money Laundering Directive is that many other trusts, including certain testamentary trusts in the context of probate and co-ownership trusts and other trusts used or arising in commercial contexts, will need to be registered with HMRC.

How our advice can help you

The guidance will help corporate lawyers understand when trusts will need to be registered with the authorities.

Lawyers who have historically acted as trustees or advised the creation of trusts will need to know what the changes mean for their practice or they risk not complying with their anti-money laundering obligations.

Law firms may need to conduct an inheritance review of many issues, including transactional issues, to determine where these newly registerable express trusts are, in respect of which they or their clients may act as trustees.