Public Consultation – FATF Risk-Based Guidance on Recommendation 25

The FATF has adopted amendments to Recommendation 25 on Transparency and beneficial ownership of legal arrangements. As a result, the FATF has begun updating its guidance on Recommendation 25 in order to support the implementation of these new requirements.
As a reminder, the FATF Risk-Based Guidance on Recommendation 25 focuses on three key areas:
Firstly, it recognizes that express trusts and similar legal arrangements are formed for legitimate purposes but can be abused by criminals who bypass anti-money laundering and counter-terrorist financing measures. Therefore, identifying the beneficial owners of these arrangements is crucial for ensuring their integrity and mitigating abuse.
Secondly, countries should assess the money laundering and terrorist financing risks associated with the misuse of legal arrangements and take preventive measures. This includes ensuring there is accurate information available about express trusts and other similar legal arrangements, including details about settlors, trustees, protectors, beneficiaries or classes of beneficiaries, as well as any individuals exercising ultimate effective control.
Thirdly, this guidance complements previous efforts by the FATF regarding transparency requirements applicable to „legal arrangements,“ which refer to express trusts or other similar legal arrangements. It emphasizes that trusts are not a type of legal entity or corporate vehicle but rather a relationship between principal parties.
The guidance is aimed at all stakeholders involved in regulating, supervising, enforcing, forming managing or administering trusts or similar legal arrangements from both public and private sectors. It specifically addresses trust-specific features and related anti-money laundering/counter-terrorism financing transparency obligations set out in Recommendation 25.
It’s important to note that this guidance is non-binding and does not override national authorities‘ jurisdiction. Instead it serves to complement existing FATF guidance while taking into account relevant research reports from typology studies conducted by the FATF itself as well as work being done by other international bodies focused on beneficial ownership transparency.
The FATF therefore now welcomes comments from various stakeholders such as companies/other legal persons, financial institutions, DNFBPs, non-profit organizations, and other interested parties. Specific issues that the FATF seeks input on include potential purposes of express trusts beyond those outlined in the guidance, scenarios concerning beneficiaries to be included in the guidance, additional mechanisms for accessing beneficial ownership information related to trusts, and approaches to identify/assess/mitigate money laundering/terrorist financing risks associated with different types of legal arrangements including domestic and foreign trusts.
The deadline for submitting comments is 8 December (18h00 CET) via email to FATF.Publicconsultation@fatf-gafi.org with the subject-line “Comments of [author] on the draft Amendments to FATF Guidance on Beneficial Ownership (R.25)“.