Global Effort to Uncover Hidden Wealth: Guidance on Beneficial Ownership and Transparency of Legal Arrangements

In a bid to combat tax evasion, money laundering, and other financial crimes, countries are being urged to require trustees to obtain and hold accurate information about the beneficial owners of trusts. This is part of a broader effort to increase transparency in legal arrangements and ensure that those who own or control assets can be identified.

Guidance on Beneficial Ownership

According to guidance issued by international organizations, countries should require trustees to obtain and hold adequate, accurate, and up-to-date beneficial ownership information for all parties involved in a trust, including:

• Beneficiaries
• Settlers
• Other natural persons exercising ultimate effective control over the arrangement

The guidance also emphasizes that where the trustee or any other party to the legal arrangement is a legal person or arrangement, the trustee should obtain and hold beneficial ownership information about that entity. This includes:

• Identifying who is the beneficial owner of the legal person or arrangement
• Taking reasonable measures to verify their identity
• Obtaining sufficient information on the ultimate beneficial owners

Settlor’s Role

A settlor is defined as a natural or legal person who transfers ownership of assets to trustees by means of a trust deed or similar arrangement. This can include individuals who provide property or funds for a trust with the intention of providing some form of benefit, rather than being an independent third party transferring something in exchange for full consideration.

However, it is possible that the settlor named in the trust instrument may not be the real “economic settlor,” and additional consideration may be needed to identify the actual owner of the assets contributed to the trust. In such cases, the beneficial ownership of the legal person or arrangement holding a similar role should also be identified.

Trustee’s Role

A trustee is defined as a natural or legal person who can act in relation to trust assets and has powers over those assets subject to certain obligations. The trustee’s powers and duties are generally derived from the trust instrument, case law, and legislation.

Trustees are directly involved in trust transactions and are responsible for conducting ongoing oversight and scrutiny of others dealing with trust property. As such, they are the central source of information on the trust and parties involved.

All trustees, whether professional or non-professional, must comply with requirements to obtain and hold beneficial ownership information about the parties involved in a trust.

Implementation

Countries are encouraged to implement these guidelines by requiring trustees to obtain and hold accurate beneficial ownership information for all parties involved in a trust. This will help ensure that those who own or control assets can be identified and that tax evasion, money laundering, and other financial crimes can be prevented.

By implementing these measures, countries can work together to increase transparency and combat financial crimes, ultimately protecting the global economy and ensuring the integrity of financial systems.