The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.
- Express trusts and similar legal arrangements are generally formed for essential and legitimate purposes. However, to prevent cases where these legal arrangements may be abused by criminals that manage to circumvent anti-money laundering and counter-terrorist financing (AML/CFT) measures, the ability adequately and effectively identify the beneficial owners of these arrangements is key.
- Countries should assess the money laundering and terrorist financing (ML/TF) risks of misuse of legal arrangements and take preventive measures. In particular, countries should ensure that there is adequate, accurate, and up-to-date information on express trusts and other similar legal arrangements. This includes information on the settlor(s), trustee(s), protector(s) and beneficiary(ies), or class(es) of beneficiaries, and any other person exercising ultimate effective control, that can be obtained or accessed efficiently and in a timely manner by competent authorities. Countries should consider facilitating access to beneficial ownership and control information by financial institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) that are undertaking the requirements set out in Recommendation 10 (R.10) and Recommendation 22 (R.22).
- This Guidance on Recommendation 25 (R.25) complements previous FATF work on strengthening the transparency of legal persons, by focusing on transparency requirements applicable to “legal arrangements”, which refers to express trusts or other similar legal arrangements. It is important to bear in mind that trusts are not a type of legal entity or corporate vehicle but a relationship between the principal parties to such arrangement.
- This Guidance is aimed at all stakeholders from public and private sectors that regulate, supervise, enforce, form, manage or administer trusts or similar legal arrangements. It focuses on R.25 requirements and addresses the trust-specific features and related AML/CFT transparency obligations. It complements the Guidance published on Recommendation 24 (R.24) in view of certain overlapping elements and aims to assist in the implementation of the requirements of R.25, adopted in February 2023. Guidance on R.24 and R.25 should be read in parallel as equally informing countries’ approaches to the implementation of the FATF Standards on beneficial ownership.
- This Guidance is non-binding and does not override the purview of national authorities. It is intended to complement existing FATF guidance and other ongoing work by building upon the available research, including relevant FATF typologies reports, and the experiences of countries. It also takes into account work being undertaken by other international bodies, which are focusing on ensuring transparency of beneficial ownership information.
March 12, 2024 Published by The Financial Action Task Force. (Download PDF Report)
