FATF PUBLIC CONSULTATION

Revision of R25 and its Interpretive Note

The Financial Action Task Force (FATF) is conducting a review of Recommendation 25 and its
Interpretive Note (R.25/INR.25) on the transparency and beneficial ownership (BO) of legal
arrangements. The FATF is also considering amendment of the definition of beneficial ownership in
the glossary, to provide more clarity regarding legal arrangements.

The FATF’s objective is to improve R.25 and its Interpretive Note to better meet its stated objective
to prevent the misuse of legal arrangements for money laundering or terrorist financing.

In June 2022, FATF carried out a high-level white paper consultation on key policy questions. Based
on consultation response proposals for amendment to R.25/INR.25 have been further revised. The
FATF’s work in this area is ongoing and will benefit from contributions from all stakeholders,
including trustees, financial institutions, designated non-financial businesses and professions
(DNFBPs), and non-profit organisations.
In particular, the FATF would welcome comments on the following:
1. Are FATF proposals adequate to mitigate the risk of misuse of legal arrangements and to
ensure access to BO information?
2. Are proposals clear and are there any issues which need further clarification or that should
be addressed in guidance?
3. What is the expected impact of the proposals on legitimate activity? In particular, what are
the challenges for implementation?
The draft proposals can be found below.

Please provide your response, including any drafting proposals to FATF.Publicconsultation@fatf-

gafi.org with the subject-line “Comments of [author] on the draft Amendments to Recommendation
25”, by 6 December 2022 (18h00 CEST). 
While submitting your response, please indicate the name of your organization, the nature of your
business, and your contact details. We will use your contact information only for the purpose of this
public consultation and for further engagement with you on this issue. Your comments will also be
shared with the FATF delegations in the course of further consideration of the amendments, unless
you indicate otherwise. The FATF will, however, not share this information with third parties without
your consent.
At this stage, the FATF has not approved any draft amendments to R.25/INR.25. The FATF will
consider the submissions received and proposals for revisions at its February 2023 meetings.
We thank you for your contribution and interest in FATF’s work.
 Full Draft Amendment Text of R.25 and INR.25

Note on formatting:
The current text of the Recommendation and Interpretive Note are shown in normal
black text. All proposed amendments are coloured in red, with additions underlined
and deletions struck-out.

Recommendation 25. Transparency and beneficial ownership of legal arrangements

Countries should assess the risks of take measures to prevent the misuse of legal
arrangements for money laundering or terrorist financing and take measures to prevent
their misuse. In particular, countries should ensure that there is adequate, accurate and
up-to-date timely information on express trusts and other similar legal arrangements,
including information on the settlor(s), trustee(s) and beneficiary(ies), that can be
obtained or accessed in a timely fashion efficiently and in a timely manner by
competent authorities. Countries should consider measures to facilitateing access to
beneficial ownership and control information by financial institutions and DNFBPs
undertaking the requirements set out in Recommendations 10 and 22.

Interpretive Note to Recommendation 25 (Transparency and Beneficial Ownership of

Legal Arrangements)

1. Countries should require trustees of any express trust governed under their law,
and persons holding an equivalent position in a similar legal arrangement, that are
residents in their country or that administer any express trusts or similar legal
arrangements in their country, to obtain and hold adequate, accurate and current up-to-
date beneficial ownership information1 regarding the trust or other similar legal
arrangements. This should include information on the identity of: (i) the settlor(s); (ii),
the trustee(s); (iii), the protector(s) (if any); (iv), the each beneficiaryies or, where
applicable, the class of beneficiaries2 or objects of a power; and (v) , any other natural
person(s) exercising ultimate effective control over the trust. For a similar legal
arrangement, this should include persons holding equivalent positions. Where the
parties to the trusts or other similar legal arrangements are legal persons or
arrangements, countries should require trustees and persons holding an equivalent
position in a similar legal arrangement to also obtain and hold adequate, accurate, and
up-to-date basic and beneficial ownership information of the legal persons or
arrangements. Countries should also require trustees and persons holding an
equivalent position in a similar legal arrangement that are residents in their country or
of trusts administered in their country of any trust governed under their law to hold
basic information on other regulated agents of, and service providers to, the trust and
similar legal arrangements, including investment advisors or managers, accountants,
and tax advisors.
1*. Countries with express trusts and other similar legal arrangements governed under
their law should have mechanisms that:

1
Beneficial ownership information for legal arrangements is the information referred to in the interpretive
note to Recommendation 10, paragraph 5(b)(ii).
2
Where there are no ascertainable beneficiaries at the time of setting up the trust, the trustee should obtain
and hold information on the class of beneficiaries and its characteristics, or object of a power. Following a risk-
based approach, countries may decide that it is not necessary to identify the individual beneficiaries of certain
charitable or statutory permitted non-charitable trusts.
 (a) identify the different types, forms and basic features of express trusts and/or
other similar legal arrangements.
(b) identify and describe the processes for: (i) the setting up of those legal
arrangements; and (ii) the obtaining of basic 3 and beneficial ownership
information;
(c) make the above information referred to in (a) and (b) publicly available.
1**. Countries should assess the money laundering and terrorist financing risks
associated with different types of trusts and other similar legal arrangements:
(a) governed under their law;
(b) which are administered in their country or for which the trustee or equivalent
resides in their country; and
(c) types of foreign legal arrangements that have sufficient links 4 with their
country
and take appropriate steps to manage and mitigate the risks that they identify 5.

2. All cCountries should take measures to ensure that trustees or persons holding
equivalent positions in similar legal arrangements disclose their status to financial
institutions and DNFBPs when, in their function, as a trustee, forming a business
relationship or carrying out an occasional transaction above the threshold. Trustees or
persons holding equivalent positions in similar legal arrangements should cooperate to
the fullest extent possible with, and not be prevented by law or enforceable means
from providing, competent authorities with any necessary information relating to the
trust or other similar legal arrangements6. Countries should also ensure that trustees or
persons holding equivalent positions in similar legal arrangements should not be
prevented by law or enforceable means from; or from providing financial institutions
and DNFBPs, upon request, with information on the beneficial ownership and the
assets of the trust or legal arrangement to be held or managed under the terms of the
business relationship.

3
In relation to a legal arrangement, basic information means the identifier of the legal arrangement trust (e.g.
the name, the unique identifier such as a tax identification number or equivalent, where this exists), the trust
deed (or equivalent), the residence of the trustee/equivalent or of the place from where the legal arrangement
is administered.
4
Countries may determine what is considered a sufficient link on the basis of risk. Examples of sufficiency tests
may include, but are not limited to, when the trust/similar legal arrangement or a trustee or a person holding
an equivalent position in a similar legal arrangement has significant and ongoing business relations with
financial institutions or DNFBPs, has significant real estate/other local investment, or is a tax resident, in the
country.
5
This could be done through national and/or supranational measures. These could include requiring beneficial
ownership information on some types of foreign legal arrangements to be held as set out under paragraph 3.
6
Domestic competent authorities or the relevant competent authorities of another country pursuant to an
appropriate international cooperation request.
 3. In order to ensure that adequate, accurate and up-to-date information on the basic
and beneficial ownership of the trusts or other similar legal arrangements , trustees and
trust assets, is accessible efficiently and in a timely manner by competent authorities,
other than trustees or persons holding an equivalent position in a similar legal
arrangement, on the basis of risk, context and materiality, countries should consider
using any of the following Countries are encouraged to ensure that other relevant
authorities, persons and entities hold information on all trusts with which they have a
relationship. Potential sources of information as necessary on trusts, trustees, and trust
assets are:

(a) Registries (e.g. a central registry of trusts or trust assets), or asset registries for
land, property, vehicles, shares or other assets
(a) A public authority or body holding information on the beneficial ownership of
trusts or other similar arrangements (e.g. in a central registry of trusts; or in asset
registries for land, property, vehicles, shares or other assets that hold information
on the beneficial ownership of trusts and other similar legal arrangements which
own such assets). Information need not be held by a single body only. 7
(b) Other competent authorities that hold or obtain information on trusts/similar
legal arrangements and trustees/their equivalents (e.g. tax authorities which
collect information on assets and income relating to trusts and other similar legal
arrangements).
(c) Other agents andor service providers including trust and company service
providers, to the trust, including investment advisors or managers, accountants,
or lawyers, or financial institutions, or trust and company service providers.
3* Countries should have mechanisms that ensure that information on trusts and other
similar legal arrangements, including information provided in accordance with
paragraphs 2 and 3, is adequate, accurate and up-to-date 8. In the context of legal
arrangements:
Adequate information is information that is sufficient to identify the natural
persons who are the beneficial owner(s), and their role in the trust 9 .
Accurate information is information, which has been verified to confirm its
accuracy by verifying the identity and status of the beneficial owner using
reliable documents, data or information. The extent of verification measures may
vary according to the specific level of risk.
Up-to-date information is information which is as current and up-to-date as
possible, and is updated within a reasonable period following any change.
4. Countries should ensure that Ccompetent authorities, and in particular law
enforcement authorities and FIUs, should have all the powers necessary to obtain
timely access to the information held by trustees, persons holding equivalent positions
in similar legal arrangements, and other parties, in particular information held by
7
A body could record beneficial ownership information alongside other information (e.g. tax information), or
the source of information could take the form of multiple registries (e.g. for provinces or districts, for sectors,
or for specific types of legal arrangements), or of a private body entrusted with this task by the public
authority.
8
For beneficiary(ies) of trusts/similar legal arrangement that are designated by characteristics or by class,
trustees/equivalent are not expected to obtain adequate and accurate information until the person becomes
entitled as beneficiary at the time of the payout or when the beneficiary intends to exercise vested rights.
9
Settlor(s), trustee(s), protector(s) (if any), beneficiary(ies) or class of beneficiaries, and any other person
exercising ultimate effective control over the trusts. For a similar legal arrangement, this should include
persons holding equivalent positions. Where the trustee and any other party to the legal arrangement is a
legal person, the beneficial owner of that legal person should be identified.
financial institutions and DNFBPs on: (a) the basic and beneficial ownership of the
legal arrangement; (b) the residence of the trustees and their equivalents; and (c) any
assets held or managed by the financial institution or DNFBP, in relation to any
trustees or their equivalents with which they have a business relationship, or for which
they undertake an occasional transaction.
5. Professional tTrustees and persons holding equivalent positions in similar legal
arrangements should be required to maintain the information referred to in paragraph
1 for at least five years after their involvement with the trust or similar legal
arrangement ceases. Countries are encouraged to require non-professional trustees and
the other authorities, persons and entities mentioned in paragraph 3 above to maintain
the information for at least five years.
6. Countries should require that any information held pursuant to paragraph 1 above
should be kept accurate and be as current andup-to-date as possible, and the
information should be updated within a reasonable period following any change.
7. Countries should consider measures to facilitate access to any trust information
on trusts that is held by the other authorities, persons and entities referred to in
paragraph 3, by financial institutions and DNFBPs undertaking the requirements set
out in Recommendations 10 and 22.
8. In the context of the Recommendation, countries are not required to give legal
recognition to trusts. Countries need not include the requirements of paragraphs 1, 2,
5, and 6 and 11 in legislation, provided that appropriate obligations to such effect
exist for trustees (e.g. through common law or case law).

[Other Legal Arrangements

9. As regards other types of legal arrangement with a similar structure or function,
countries should take similar measures to those required for trusts, with a view to
achieving similar levels of transparency. At a minimum, countries should ensure that
information similar to that specified above in respect of trust should be recorded and
kept accurate and current, and that such information is accessible in a timely way by
competent authorities.]

International Cooperation
10. Countries should rapidly, constructively and effectively provide international
cooperation in relation to information, including beneficial ownership information, on
trusts and other legal arrangements on the basis set out in Recommendations 37 and
40. This should include (a) facilitating access by foreign competent authorities to any
information held by registries or other domestic authorities; (b) exchanging
domestically available information on the trusts or other legal arrangement; and (c)
using their competent authorities’ powers, in accordance with domestic law, in order
to obtain beneficial ownership information on behalf of foreign counterparts.
Consistent with Recommendations 37 and 40, countries should not place unduly
restrictive conditions on the exchange of information or assistance e.g., refuse a
request on the grounds that it involves a fiscal, including tax, matters, bank secrecy,
etc. In order to facilitate rapid, constructive and effective international cooperation,
where possible, countries should designate and make publicly known the agency(ies)
responsible for responding to all international requests for BO information, consistent
with countries’ approach to access to beneficial ownership information. To this end,
countries should consider keeping information held or obtained for the purpose of
identifying beneficial ownership in a readily accessible manner.
 Liability and Sanctions
11. Countries should ensure that there are clear responsibilities to comply with the
requirements in this Interpretative Note; and that trustees or persons holding
equivalent positions in similar legal arrangements are either legally liable for any
failure to perform the duties relevant to meeting the obligations in paragraphs 1, 2, 5
and 6 and (where applicable) 5; or that there are effective, proportionate and
dissuasive sanctions, whether criminal, civil or administrative, for failing to comply. 10
Countries should ensure that there are effective, proportionate and dissuasive
sanctions, whether criminal, civil or administrative, for failing to grant to competent
authorities timely access to information regarding the trust referred to in paragraphs 1
and 5.

10
This does not affect the requirements for effective, proportionate, and dissuasive sanctions for failure to
comply with requirements elsewhere in the Recommendations.