New money laundering requirements for pension scheme trustees now in force

Out-Law Analysis | 23 Aug 2017 | 2:49 pm | 2 min. read

ANALYSIS: Trustees of occupational pension schemes must now comply with additional record-keeping and disclosure duties under new money laundering regulations, or risk fines.

Four new requirements, none of which are particularly onerous, came into force on 26 June 2017. Schemes should check that they meet the requirements and record what they are doing to comply. HM Revenue and Customs (HMRC) can impose fines for breaches.

There is a fifth, potentially onerous, requirement to provide certain information in a specified form to HMRC. The deadline is 31 January 2018, and then on each following 31 January. Trustees will need to wait for more clarity from HMRC to find out exactly what is required.

The record-keeping requirement

Trustees must maintain accurate records of their scheme's employers, trustees and members, and other beneficiaries. In the case of potential beneficiaries, for example future recipients of a spouse's pension, the trustees just need to record the types of potential beneficiary under the scheme.

For each individual, such as a member or an individual trustee, the information that the trustees must hold includes his or her name, National Insurance number and date of birth. For each legal entity, such as an employer or corporate trustee, the required information includes the entity's name, taxpayer reference and registered office.

Trustees should check that they have the required records. This should not be a problem for most schemes, particularly as there is no requirement to hold an individual's address as long as the trustees have his or her National Insurance number.

Retention of records by paid professional trustees following the wind-up of a scheme

Paid professional trustees must retain the information referred to in the record-keeping requirement above for five years after a scheme has wound up. They must then delete those records, subject to certain exemptions.

Transaction disclosure requirement

If trustees enter into a transaction with a business or a financial or legal professional, they must inform the relevant person that they are acting as trustees.

In addition, if that business or professional asks the trustees for the identity of the scheme employers, trustees, members and other beneficiaries, the trustees must provide that information - although they need only describe the types of members and beneficiaries without identifying them. If there is a change in the information, the trustees must notify the relevant person of the change within 14 days.

This requirement should not be a problem since pension scheme trustees already make it known as a member of course that they are acting as trustees.

Disclosure to law enforcement authorities

Trustees must provide information about the scheme's employers, trustees, members and other beneficiaries on receipt of a request from a law enforcement authority, such as the police, the Financial Conduct Authority, the National Crime Agency or the Serious Fraud Office.

The requested information must be provided before the end of any reasonable period specified by the law enforcement authority. The trustees will not be in breach of any law restricting disclosure where the disclosure is made in good faith.

Disclosure requirement to HMRC where tax has been paid

Trustees must provide certain information to HMRC in a specified form where they become liable to pay certain taxes, including income tax, inheritance tax and stamp duty. The deadline is 31 January 2018, and then on each 31 January after the tax year in which the tax liability arose.

This requirement is potentially onerous as it could involve the passing on of significant membership data to HMRC. At the moment, there is some uncertainty about how it applies to pension scheme trustees since they are not generally liable for income tax or stamp duty, and what exactly would have to be disclosed.

We hope that HMRC provides clarity well in advance of the 31 January 2018 deadline.

Simon Tyler is a pensions expert at Pinsent Masons, the law firm behind Out-Law.com.