INTRODUCTION Contributed by: Basil Zirinis, Elizabeth Kubanik and Megan Eitel, Sullivan & Cromwell LLP
trusts. Beginning in 2020, trusts’ beneficial ownership information was required to be made available to: • professionals and institutions subject to anti- money laundering rules, including attorneys and financial institutions acting within the framework of customer due diligence; • persons who can demonstrate a “legitimate interest” in the information, as determined under national law; and • the public, in the case of any trust that holds cer - tain interests in a company outside the EU. However, in November 2022 the European Court of Justice declared this amendment invalid, balancing the public interest objective of the amendment against the right to privacy under the European Union Charter. Information on beneficial ownership must now only be accessible to persons and organisations that are able to demonstrate a “legitimate interest” in such information. In May 2024, the Anti-Money Laundering Regulation and the sixth Anti-Money Laundering Directive were adopted. This new package of laws aims to harmonise existing anti-money laundering rules, providing guid - ance on the type of information that should be held in EU member states’ beneficial ownership registers, and aiming to ensure that those with a “legitimate interest” (very broadly defined to include authorities, journalists, civil society organisations and similar) have access to registers of ownership information. Prior to the adoption of 5AMLD, the United Kingdom had already enacted similar legislation in the context of shareholders of corporations, which requires the disclosure of persons with significant control. Since 2016, all UK-incorporated companies and limited liability partnerships (LLPs) have been required to maintain a register of natural persons with significant control, held open for public inspection. Further - more, since 2018, UK-resident trusts and trusts with UK assets or income have been required to provide information for inclusion in the UK register of trusts. In response to 5AMLD, the UK expanded the register of trusts to include additional categories of non-UK trusts with connections to the UK, such as trusts that
enter into a business relationship with a business that is subject to the UK’s anti-money laundering regime. Such trusts were required to be registered by Sep - tember 2022. In line with EU regulations, the register – which was previously available only to government institutions – is now available to persons with a “legiti - mate interest”. The EU has also indirectly imposed transparency obli - gations on offshore jurisdictions through the publica - tion of a list of non-co-operative tax jurisdictions. In February 2025, the “blacklist” contained ten non-co- operative jurisdictions, including several US territo - ries. Numerous offshore jurisdictions have adopted (or have announced plans to adopt) local laws and regulations that implement the provisions of DAC6 and 5AMLD. These developments coincide with the increas - ing criminalisation of tax and compliance advice. In recent years, the UK Criminal Finances Act, the US Foreign Corrupt Practices Act and similar laws have threatened private client advisers with criminal penal - ties for their clients’ misconduct, effectively co-opting them into the oversight of client behaviour. Under the UK Criminal Finances Act, a corporate body (eg, a law firm or a financial institution) that fails to insti - tute policies designed to prevent the facilitation of tax offences or money laundering by its employees could itself be subject to substantial fines or the termination of licences. In the USA, new reporting requirements under the Corporate Transparency Act came into effect in Janu - ary 2024, as part of the Anti-Money Laundering Act of 2020, requiring corporations, limited liability compa - nies and similar entities to disclose beneficial owner - ship information to the US Department of the Treas - ury Financial Crimes Enforcement Network (FinCEN). Under the regulations, a beneficial owner includes any individual who, directly or indirectly, either exercises substantial control over a reporting company, or owns or controls at least 25% of the ownership interests of a reporting company. The information reported to FinCEN would not be publicly available but would be accessible by certain law enforcement agencies, reg - ulatory agencies, financial institutions (in certain cir - cumstances) and Department of Treasury personnel.
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