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Trustees classed as money laundering 'low risk'

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  • Trustees classed as money laundering 'low risk'

UK - Professional trustees may avoid having to register as a Trust or Company Service Provider under new money laundering regulations, as occupational pension schemes have been classified as "low risk".

Final guidance published by the UK government department HM Revenue & Customs (HMRC) confirmed that "some trustees" and directors of a company that acts exclusively as a trustee for a "low risk trust" will not be classed as TCSPs.

As a result, the updated guidance said "sole practitioners and firms who only provide professional trustee services" to certain low risk trusts including "occupational pension schemes and employee share schemes" would be exempt.

The guidance follows almost five months of delays since concerns were raised by pension lawyers in February, over the interpretation of the previous guidance and whether it applied to professional pension trustees. (See earlier IPE.com article: Trustees warned over money-laundering rules)

The money-laundering regulations were introduced in December 2007 and originally required a "firm or sole practitioner who by way of business" acts as a professional trustee to register as a TCSP by April 1, 2008.

In March, HMRC confirmed it would update the guidance to address the lack of clarity about the meaning of "by way of business", but the publication of the final guidance and the deadline for registering as a TCSP was delayed twice as the government department wanted to ensure "the right businesses register with us". (See earlier IPE.com article: HMRC extends TCSP deadline over guidance delay)

However, HMRC warned while the final guidance - which also includes an update on the position for accountancy service providers (ASPs) - is designed to "assist you in deciding whether you need to register your business, we will not give you written assurance".

In addition, the law firm Sackers admitted "the guidance could be clearer", although it added "the upshot is that occupational pension scheme trustees are generally excluded from the need to register", as HMRC "specifically recognises" occupational pension schemes are low risk.

Following the delay in issuing the guidance, some trustees have already registered with HMRC as a TCSP and paid a registration fee, so Sackers is advising those who need not have registered to "wait for a letter from HMRC" which should arrive by August 19, 2008.

HMRC has told the firm "this letter will explain what you need to do", however Sackers warned any trustees affected should still be prepared to confirm whether they still need to register by the new deadline of September 30, 2008.

That said, Sackers suggested if trustees registered as a TCSP in error, they should be entitled to a full refund of the any fees paid to HMRC.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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