Anti-Money Laundering Vote is Disappointing for UK Families

George Hodgson

It was disappointing to hear of the outcome of last week’s vote in Brussels to introduce new requirements for family trusts to be disclosed on public registers. STEP supported the original draft legislation to enhance anti-money laundering procedures proposed by the EU Commission, but the proposal voted through by the Economic Affairs and the Justice and Home Affairs Committees will also require all trusts, however low risk from an anti-money laundering point of view, to be entered on a public register showing details of all the beneficiaries.

The decision by the Economic Affairs and the Justice and Home Affairs Committees has implications for UK trusts and seems to be based on a complete misconception of how they are used by most people. It will potentially impose bureaucratic burdens on millions of families in the UK and require them to publicly register details of plans they may have put in place to provide for family members.

Far from visions of trusts being used to hide illicit funds, HMRC research confirms that around 25 per cent are used to secure the future of peoples’ families. Unlike Europe, most homes in the UK are owned jointly and are legally held in trust; the same is true of many life insurance policies. Perhaps most importantly, trusts are widely used to provide for vulnerable family members.

While STEP supports efforts to make anti-money laundering rules more effective, most UK trusts are very low risk in money laundering terms. The establishment of public registers will result in little gain for significant cost and loss of privacy for UK families.

I’m sure many eyes will now be on the next vote on the new requirements by the whole European Parliament which is expected on 11 March.

George Hodgson is Deputy Chief Executive of STEP.

Taking stock of STEP Bermuda

David Harvey

Last week, as part of the STEP 2021 consultation process, I had the pleasure of visiting STEP’s Bermuda branch to meet with members, the branch committee and employers. During this time we discussed the major issues in the next STEP business plan, debated STEP’s priorities for the future, and discussed the trust and estate industry in Bermuda and the global regulatory environment. Most importantly, I was able to hear from roughly 70 STEP Bermuda members and local employers about what they want from the Society.

Professional development

The feedback on proposals to ensure that STEP training truly is cradle-to-grave was extremely positive, as was the response to plans to make learning flexible to local differences and needs. Likewise, there was strong support for the move to the new Qualifications Framework with its university-style academic point system, allowing people to earn their TEP through STEP and other recognised qualifications, with much greater accessibility and choice but at the same tough standard. There was also clear demand for academic and theoretical learning to be accompanied by more practically focused courses dealing with the skills of day-to-day business management and strategy. In every sense, the STEP offer must continue to be relevant and to be aligned with member and employer needs.

On delivering professional development, STEP needs to make stronger use of technology to support members, recognising that there are cost pressures. There needs to be greater accessibility and flexibility to make courses viable for those in the more difficult to get to jurisdictions. Our members are also eager to receive regular technical updates via day-to-day online offerings, and through the STEP Journal and lecture circuits.

Public policy

There was strong recognition of the challenges facing the industry due to increased transparency, accompanied by regret that there has been little recognition of the existing high regulatory standards in many offshore jurisdictions. STEP must continue its work in this area.

Development priorities

STEP’s plans to rebalance efforts towards developing existing branches rather than new branches were applauded. We must avoid overstretching the Society’s capacity and ensure we develop more deeply and consistently in our existing jurisdictions.

Members and other stakeholders

STEP’s proposals to work more closely with employers were widely supported. All of the employers I met provided useful input to discussions around these plans and have clear needs. They were supportive of the current offer but felt they were well placed to input on future direction. The importance of understanding regulator demands and how that might drive  education was also a common theme, well understood at STEP.

There was also support for STEP plans to use technology and Special Interest Groups to strengthen global networks across borders so that they could function not just locally, but virtually around the world.

Overall STEP Bermuda is a very healthy branch and faces many of the same challenges as other offshore centres. While insurance leads the finance sector on the island, the future also provides a good prospect for private client work, as Bermuda looks to promote itself as a jurisdiction of choice. Additionally, although there was a strong focus on gearing STEP towards lifelong learning with depth and consistency, it is clear that members want a stronger reflection of their institutional trust work. They are also eager to see STEP continue as an effective voice for trust work and related private client business with regulators and government.

Finally, I must thank STEP Bermuda Chair Jonathan Dunlop and his colleagues for both their hospitality and their efforts in facilitating valuable engagement with members, employers and other stakeholders.

Left to right: Samira Saya, Zoe Hansen, Gaynette Edwards, David Harvey, Jonathan Dunlop, Lyneisha Lightbourne, Keith Robinson, Tammy Clarke and Susan Trott.

Left to right: Samira Saya, Zoe Hansen, Gaynette Edwards, David Harvey, Jonathan Dunlop, Lyneisha Lightbourne, Keith Robinson, Tammy Clarke and Susan Trott.