We have already seen many of the more prudent crypto exchanges seeking to hold proof of identity, and indeed some may have deemed themselves as financial institutions and possibly have already reported clients to the authorities by way of the Common Reporting Standard (CRS), the Standard for Automatic Exchange of Financial Account Information brought in by OECD member countries from September 2017.
HMRC has also started to raise tax enquiries into those holding crypto-assets and it is expected more will follow in the months ahead.
UK trust register
Another interesting development is the extensions being proposed to the UK Trust Register.
The Trust Register was introduced in 2017, again as part of the UK’s commitment to counter Money Laundering and Terrorist Financing, and the associated EU Directive.
Currently the trust register requires the registration of all trusts with a UK tax liability.
This includes UK trusts, but also some overseas trusts, for example where there is UK income and UK resident beneficiaries.
Where required to register, the trustees need to provide details of settlors and beneficiaries.
The register is currently not available to the public, although, the writer would not rule out that happening at some time in the future.
It is proposed that the register could be made public where there is a “legitimate interest” but the government has stated it will link this quite tightly to those who have an active involvement in anti-money laundering or counter terrorist financing activity.
It seems therefore, this will be largely government agencies.
However, it will be interesting to watch government public policy on such matters in the years to come.
Other changes being proposed are for all UK trusts to be registered, whether they have a tax liability or not.
For existing trusts, it is proposed that there will be a deadline of 31 March 2021 to register, and for any new trusts created on or after 1 April 2020, there will be a requirement to register within 30 days of creation.
Non-EU resident trusts acquiring UK land or property on or after 10 March 2020, are being proposed to require registration, as are other non-EU resident trusts where they enter a “new business arrangement” on or after the same date.
The definition of a “business relationship” was already defined within the earlier 4th Money Laundering Directive as “a business, professional or commercial relationship that is connected with the professional activities of an obliged entity and which is expected, at the time when the contract is established, to have an element of duration.”
This suggests that non-EU resident trusts receiving services such as banking, accountancy or legal advice on an ongoing basis will fall within the net.
