TRSM70030 - Discrepancy reporting: contents: Requirement to review an excerpt of the register

In accordance with Regulation 30A of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended) (the MLRs), discrepancy checks should be carried out when Relevant Persons intend to either establish a Business Relationship with (see TRSM70020), or undertake ongoing monitoring of, a registrable trust.

A discrepancy check means that:

  • Relevant Persons should request that the trustee provide them with an excerpt of the register (see TRSM70010) in accordance with the MLRs: which the trustee may download from the Trust Registration Service (TRS) in the form of the Proof of Registration document
  • Relevant Persons should carefully check the beneficial ownership details on the excerpt of the register (see TRSM70040)

Relevant Persons are reminded that it is specifically only material differences between the excerpt of the register and information which becomes available to them when carrying out their MLR duties that needs to be reported: other discrepancies must not be reported unless they are included as supporting evidence of a suspicion of Money Laundering or Terrorist Financing (see TRSM70050).

If the Relevant Persons are concerned that the excerpt of the register (see TRSM70010) is not genuine and has been amended / modified in any way, then they are advised to retain a copy of the document and submit a discrepancy report to HMRC.

If Relevant Persons find a material discrepancy when reviewing the excerpt of the register, then they may seek to resolve this directly with the trustee or agent in the first instance. For example, by pointing out the material discrepancy and asking the trustee to update the excerpt of the register and provide an updated version.

Where the trustee or agent subsequently submits a revised excerpt of the register and the material discrepancy has been resolved, Relevant Persons would no longer be required to report the discrepancy to HMRC.

If Relevant Persons cannot resolve the material discrepancy directly with the trustees, they must report it to HMRC. In some cases, the Relevant Persons may prefer to immediately report the discrepancy to HMRC, rather than engaging further with the trustee or agent directly.

Example

Mrs Brown approached a solicitor regarding the trust she has in the name of her sons. As part of the discrepancy checks, the solicitor notes that some of the details are not correct. Mrs Brown examines the documents and realises that she has mixed the details up of two of her sons. She undertakes to correct the details and send the solicitor a corrected version of the Proof of Registration, which she does the next day. There is no need for the solicitor to report this discrepancy. 

Example

Vincent Clarke trust services are approached by Ms Smith with regard to providing services for her trust. During the discrepancy checks the staff note several inconsistencies with the Proof of Registration and other information they have in their possession. Ms Smith does not wish to discuss the inconsistencies and says she will leave and return “another day to sort it out”. After several days Ms Smith has not returned. In this case the Relevant Person is advised to report the discrepancy.

Ongoing Monitoring and a Risk Based Approach (RBA)

Relevant Persons are required under Regulation 28 of the MLRs to carry out ongoing monitoring of their Business Relationships with registrable trusts.

Ongoing monitoring involves the carrying out of due diligence checks at periodic intervals based either on the trust’s risk profile or where the matter being worked on may present a high risk of money laundering or terrorist finance: for instance when unusual or high-risk activities / transactions occur. In line with those due diligence measures Relevant Persons are required to request an up-to-date excerpt of the register (see TRSM70010) and are advised to carry out discrepancy checks in accordance with this guidance, noting the obligation under Regulation 30A to report material discrepancies.

It is not necessary for discrepancy checks to be carried out on every occasion that Relevant Persons may undertake Customer Due Diligence; however discrepancy checks should, as a minimum, be carried out on:

  • any event that would trigger enhanced due diligence checks as per Regulation 33 of the MLRs
  • any change, or reasonable belief that there has been a change, in beneficial ownership including to or within classes of beneficiaries
  • as part of risk based, periodic monitoring, where a registrable trust has not previously been subject to discrepancy checks by that Relevant Person

Relevant Persons should also take a risk-based approach to applying discrepancy checks for all other Customer Due Diligence procedures.

Relevant Persons should check with their supervisory bodies as to any industry relevant timescales for periodic monitoring.

Relevant Persons should consider not maintaining Business Relationships with a trust unless they are subjecting that trust to periodic monitoring and discrepancy checking.