Economic Crime (Transparency and Enforcement) Bill

Committee

Clauses 1 to 3 agreed.

Clause 4: Application for registration

Amendment 1

1: Clause 4, page 2, line 19, at end insert “and, where applicable, the statement and information mentioned in subsection (2A)” Member’s explanatory statement This amendment requires an application for registration as an overseas entity to include the information and statement required by subsection (2A) (information about trusts).

My Lords, we start with a group of government amendments to collect more information about trusts and overseas trust-like arrangements. These amendments address both the concerns raised in the other place by noble Lords on Second Reading in this House. I pay particular tribute to my noble and learned friend Lord Garnier, the noble Lords, Lord Vaux of Harrowden, Lord Faulks and Lord Fox, and the noble Baroness, Lady Jones of Moulsecoomb, all of whom drew attention to this important issue in their speeches.

As highlighted by those noble Lords, there is a particular difficulty with the availability of information about some trusts, including so-called discretionary trusts. This is where the assets are held in trusts to be used at the discretion of the trustees, because the beneficiaries can change. So we need to have some further information captured on trusts in this register, over and above what Her Majesty’s Revenue & Customs already captures on the TRS—trust registration service.

Both Houses can rest assured that this issue was not overlooked by the Government. Officials had already been working on amendments to the Bill, but it was important to table amendments only when we were sure that proposals were workable in practice and that the drafting fully achieved the policy intent. I have had a number of discussions with noble Lords, so I think everybody appreciates this is a complicated technical area.

These amendments set out that where a trustee of a trust—or of an equivalent arrangement that under the law of a country or territory outside the United Kingdom is of a similar character to a trust—is a registrable beneficial owner, the overseas entity must give them an information notice. That notice requires the recipient to provide information about the settlor, beneficiaries and other persons who have rights to appoint or remove trustees or rights over the exercise of the trustees’ functions—sometimes referred to as protectors.

The trustee must also provide other information about the trust—for example, the date of creation and about other trustees. It is an offence for the trustees to fail to comply with the notice without a reasonable excuse. The entity must then disclose this information to the registrar. Although this information will be unavailable for inspection on the public register, it may be disclosed to Her Majesty’s Revenue & Customs, law enforcement agencies and other specified persons with a public function for use in the execution of their functions. HMRC will also be able to disclose information to allow the registrar and the Secretary of State to take action in connection with offences.

While the abuse of trusts to prevent disclosure of beneficial ownership for high-end money laundering and tax crime has been well documented, it is important to remember when considering these amendments that trusts can be established for legitimate and highly personal reasons, such as protecting assets for children or vulnerable adults. So let me reassure noble Lords—the noble Lord, Lord Coaker, in particular, has raised with me directly—that this is the intention behind Amendments 45 and 46. I reiterate once again that this information will be available to law enforcement and other agencies.

Amendments 6 and 10 require overseas entities to disclose to the registrar where an individual or an entity which is a registerable beneficial owner of the overseas entity is a trustee. Amendments 1 and 2 require the overseas entity to provide to the registrar, on application under Clause 4, information about trusts where a trustee is a registerable beneficial owner. Amendments 21, 22, 25, 28, 29 and 30 provide for the same when overseas entities comply with their updating duty or apply for removal from the register under Clauses 7 and 9. Amendment 4 is an insertion of clause cross-references in part consequential on changes to Clauses 4, 7 and 9, which brings the trust information that I have just described within scope.

Amendment 15 sets out the required information about trusts within Schedule 1. This includes the name or, if it does not have a name, a description, the date of the trust’s creation, further information about trustees and information about the beneficiaries, settlors and other interested persons who have rights in respect of the appointment or removal of trustees or the exercise by the trustees of their functions.

Amendment 89 extends the provisions of Part 1 of the Bill in relation to trusts so that they apply to arrangements of a similar character outside the United Kingdom. It also allows the Secretary of State to specify descriptions of arrangements outside the UK that are, or are not, to be treated as of a similar character to a trust.

Amendment 16 allows for the Secretary of State to make further provisions about the required information about trusts. Amendments 38 and 39 provide that overseas entities must take reasonable steps to obtain information about trusts, including sending trustees information notices requiring them to confirm, correct or provide the required information. This will, of course, mean that Clause 15 will make it an offence for a trustee to fail to comply with the information notice without a reasonable excuse.

Amendments 45 and 46 provide that the required information about trusts will be unavailable on the public register. Amendment 46 removes protection of date of birth and residential address information because Amendment 47 creates different provisions governing the disclosure of information about trusts. Amendment 47 generally prevents the registrar from disclosing the required information about trusts. It also includes a new power to disclose information about trusts to HMRC or other specified persons with public functions. Amendment 48 is consequential on Amendment 47, ensuring that the new power to disclose information about trusts cannot be used in a way that would contravene data protection legislation.

Amendment 85 permits HMRC to disclose information to allow the registrar and the Secretary of State to take action in connection with offences.

Amendments 16, 26, 27, 31 and 32 are consequential on other amendments to ensure that the new amendments are consistent. I hope that is helpful to noble Lords. I beg to move.