Trusts provide an unparalleled degree of secrecy, making them an ideal getaway vehicle for money launderers. While the role of companies in facilitating financial secrecy is well documented, often as a result of action by law enforcement or other authorities, the secrecy trusts provide is a major hurdle to law enforcement. This means that the extent of their use is critically under-reported.
In 2016, the European Commission proposed changes to the Anti-Money Laundering Directive that would increase transparency for trusts, by creating public registers of the beneficial owners of certain kinds of trusts. While these proposals would address some of the money laundering risks posed by trusts, the proposals do not go far enough to make sure trusts are not an easy escape routes for criminals.
Don’t take it on trust examines how trusts connected to the EU are used, and what a more effective system for the registration of trust beneficial ownership would require. This paper shows how:
- A Lichtenstein trust linked to Victor Yanukovych hid who benefitted from the controversial privatisation and secretive multi-million dollar renovation of Ukraine’s presidential palace.
- A Brunei prince who stole billions from his country may have prevented an exclusive London property from being rightfully returned to Brunei using a Jersey trust to hide his ownership.
- European politicians have sought to use trusts to keep their business interests secret from their constituents and the public.
To ensure that the new EU anti-money laundering rules for trusts are effective:
- Trusts should be included in registers where they have a connection to a Member State, not just when they are administered there.
- Proposals for a ‘legitimate interest’ test for access to beneficial ownership information do not work and should not be included.
- Trusts’ beneficial ownership information should be made public to support the work of law enforcement, to deter money laundering, to support non-EU countries in tackling corruption and to improve data quality.
- The identities of all parties to a trust should be disclosed as beneficial owners, including the settlor, trustee, protector and beneficiary or class of beneficiaries.
- Beneficial ownership information should be published as open data.
Photo credit: Terry Johnston
You might also like
Anonymous Company Owners
Paper companies are the getaway cars for the world’s criminal and corrupt – we must take away the keys.
An Idiot's Guide to Money Laundering
Suspect cash to stash? It's easy! Just follow our step by step guide.
The Great Rip Off
Anonymous company owners and the threat to American interests.