Identification of the Beneficiaries of Trusts

Under an extension of the anti-money laundering laws and to conform to the Third E.C. Money Laundering Directive, trustees are now required to identify, not only persons who contribute to trusts and the beneficiaries to whom they make payments, but also all other beneficiaries.

The Directive recognises that although it may be possible to identify a class of beneficiaries, it may not be possible to identify the individual members. In such cases presumably the identification of a particular beneficiary will only be required when a distribution is to be made.

An interesting situation may occur where it is possible to identify all the members of a class of beneficiaries, but they are not aware of their interests, or where a member of the class, whom it is not currently intended to benefit, declines to supply identification. What is the trustee to do? Unless the various Government Regulators permit the Trust Service Provider to make use of the scope for flexibility in the Directive, and the trustee takes advantage of the opportunity, gridlock may occur. The trustee may be prevented from effectively administering the trust for non-compliance, but be liable in trust law for any consequent losses.

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