Partner Article

Privacy or Secrecy?

Privacy or secrecy – is there a difference? Over the past decade, in particular, there has been a heightened need to end the secrecy of funds held by financial institutions in the interest of anti-money laundering. But should anti-secrecy rules mean anti-privacy?

Last week MEPs voted to approve new rules which will mean an EU register with not only all beneficial owners of companies and foundations, but also private trusts. This register would be available publically.

Furthermore, the rules treat anyone in the EU involved in ‘disguising’ the nature, source and ownership of property, whether through an EU or non-EU arrangement, as involved in money laundering. That would include financial institutions, accountants and lawyers.

There is little arguing with the anti-money laundering requirement, but there is arguably enough regulation imposed on financial institutions requiring an understanding of any source of funds they hold and for Government authorities to receive information for tax purposes.

Is there a need for a register of private arrangements? If monies held personally do not appear on a public register, then why should monies held in trust?

The primary purpose of trusts is to provide protection from assets. It can be key that beneficiaries themselves don’t know how much money they might be entitled to, just as much as providing protection to vulnerable beneficiaries from those who might subject them to unnecessary demands if they knew they had access to wealth.

There are plenty of other reasons for privacy, and there is good reason why the addresses of famous people, politicians, and affluent individuals shouldn’t be made public.

Anti-money laundering regulations are fine – but allowing this to expose those who are vulnerable to mass public awareness and possibly compromising their safety, is a dangerous move…

This was posted in Bdaily's Members' News section by Baker Tilly .