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Brussels Moving On Ownership Registries, Says STEP

Wednesday, November 26, 2014

The Society of Trust and Estate Practitioners (STEP) has noted that a proposal to require EU member states to maintain public registers of information on entities' beneficial owners is progressing quickly in Brussels.

Earlier, the European Commission had produced a draft Directive that closely followed both the Financial Action Task Force (FATF) recommendations and the recent Group of Twenty nations (G-20) statement of principles intended to improve the transparency of beneficial ownership of companies and trusts.

The EU Parliament, however, continues to press for the text incorporated in its report, which it adopted earlier this spring, STEP said. This alternative proposal calls for freely accessible public registers of the beneficial owners of companies, trusts, and all other similar legal entities, such as foundations.

STEP reported that the debate in Brussels has now entered the so-called "trialogue" process, where the Commission attempts to find a compromise position between the EU Parliament and member states (who generally remain opposed to public registers). So far, however, Parliament has refused to shift on its demands for free public access to the trust (and foundation) register and the listing of all beneficiaries, STEP said.

The Society said it remains opposed to a public register, arguing that the proposals are unnecessarily intrusive into the financial affairs of families and pose unacceptable risks given that many families create such structures to protect the interests of vulnerable family members.

The negotiations are scheduled to conclude shortly, with the Directive due to be finalized by the end of the year.

STEP said that if the proposal for publicly accessible registers is adopted, the EU would likely press for similar registers to be introduced in neighboring countries next. Non-EU international financial centers have already been urged to follow the EU's lead.