When the client is a trust, the firm deals with the trustees, but the Money Laundering Regulations 2017 treat the settlor, every trustee, the beneficiaries (or the class of beneficiaries) and anyone else with control as beneficial owners. The firm must identify them, take reasonable measures to verify them, understand how the arrangement is controlled and, for a trust that must be on the Trust Registration Service, collect the proof of registration before the engagement starts. For a charity, the first step is working out its legal form, because that decides which definition of beneficial owner applies.

Who is the beneficial owner of a trust?

Regulation 6(1) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) gives a fixed list. For a trust, each of the following is a beneficial owner:

  • the settlor;
  • the trustees;
  • the beneficiaries;
  • where some or all of the beneficiaries have not yet been determined, the class of persons in whose main interest the trust is set up or operates;
  • any individual who has control over the trust.

Regulation 6(2) defines control as a power, whether exercised alone, jointly or with someone else’s consent, under the trust deed or by law to dispose of, advance, lend, invest, pay or apply trust property; vary or terminate the trust; add or remove beneficiaries; appoint or remove trustees; or direct, withhold consent to or veto any of those powers. That brings a protector or appointor into scope.

Unlike the 25% test for companies, there is no threshold. Foundations follow the same pattern under regulation 6(3).

What must the firm actually do for a trust client?

Under regulation 28 the firm must identify the customer and verify its identity (regulation 28(2)), take reasonable measures to understand the ownership and control structure of a trust (regulation 28(3A)), identify the beneficial owners and take reasonable measures to verify them so that it is satisfied it knows who they are (regulation 28(4)), and, where someone acts for the trust, verify that they are authorised and verify their identity (regulation 28(10)). If a trustee is a company, regulation 28(4)(c) requires its ownership and control to be understood too.

The trustees have matching duties. Under regulation 44(2), a trustee of a relevant trust who forms a business relationship with a firm must tell it that they are acting as trustee and, on request, provide information identifying all the beneficial owners; a class can be described rather than every member named. Regulation 44(3) requires the trustees to notify the firm of any change in that information within 14 days of any trustee becoming aware of it.

In practice the file holds the trust deed and any later deeds of appointment or variation, identity evidence for the trustees and anyone with control, evidence for the settlor and named beneficiaries scaled to risk, a description of any class, and a note of the trust’s purpose and assets.

How far verification goes is risk based. Regulation 28(12) says the extent of the measures must reflect the firm’s own risk assessment and the risk in the particular case, and regulation 28(16) requires the firm to be able to show its supervisor that what it did was appropriate. Verifying individuals is covered in customer due diligence for accountants.

How does the Trust Registration Service fit in?

Regulation 30A(1)(e) requires a firm, before establishing a business relationship with a trust that is subject to registration under Part 5 of MLR 2017, to collect an excerpt of the register showing the trust’s beneficial owners. HMRC’s Trust Registration Service Manual explains that the excerpt is the proof of registration document, which trustees and authorised agents can download from the service (TRSM70040), and that a trustee or agent must give it to a relevant person before entering a business relationship (TRSM93010).

The proof of registration lists each beneficial owner’s name, month and year of birth, country of residence and nationality, plus any classes of beneficiary. With no full date of birth or address, it supports identification but does not verify anyone’s identity. Regulation 30A(2A) also requires a fresh excerpt to be collected when due diligence is updated during the relationship.

If the excerpt does not match what the firm knows, regulation 30A(3)(b) requires a material discrepancy to be reported to HMRC. TRSM70050 gives examples that should be reported if they cannot be resolved with the trustee: a registrable trust that has not been registered, a record that omits a beneficial owner, missing required details, or a beneficial owner shown in the wrong role, such as a settlor recorded as a beneficiary. Minor spelling differences are not material. The equivalent duty for companies is covered in verifying beneficial owners of corporate clients.

Which trusts carry a higher risk?

The UK National Risk Assessment of Money Laundering and Terrorist Financing 2025 assesses the overall risk for UK trusts as low, pointing to the Trust Registration Service, the requirement for professional trustees to register as trust or company service providers and the low level of abuse found by law enforcement. Features that raise the risk include:

  • trusts used to hold UK property, where the trust may conceal the true owner;
  • discretionary trusts and interest in possession trusts, which can give quicker access to assets;
  • overseas trusts, which criminals are assessed as highly likely to favour, with the British Virgin Islands, Gibraltar, Guernsey and Jersey seen frequently in UK investigations;
  • trusts layered with companies, where the settlor seems distant from the assets but keeps control.

Regulation 33(6)(a)(iii) also lists a legal arrangement that is a vehicle for holding personal assets as a risk factor. None of these automatically makes a client high risk, but each belongs in the client risk assessment and, where the risk is high, enhanced due diligence applied.

How do you work out who to verify in a charity?

The Charity Commission’s guidance CC22a describes four main structures in England and Wales: the charitable incorporated organisation (CIO), the charitable company limited by guarantee, the unincorporated association and the trust. Each falls under a different rule.

Structure Rule for beneficial owners Practical starting point
Charitable company Regulation 5 (body corporate) Companies House record and board of trustee directors; there are no shareholders, so look at who exercises ultimate control over management
CIO Regulation 5 (body corporate) Charity register entry, constitution and trustee list
Charitable trust Regulation 6(1) Trust deed or scheme and trustee list
Unincorporated association Regulation 6(7) or 6(9) Constitution and the committee that controls the property

For other entities and arrangements, regulation 6(7) treats as beneficial owners anyone who benefits from the property, the class of beneficiaries where not yet determined, and anyone who controls the property. Where a corporate charity has genuinely no identifiable beneficial owner after all possible means have been exhausted, regulation 28(6) to (8) allows the senior person responsible for managing it to be treated as the beneficial owner, but only with written records of every step taken.

The register of charities for England and Wales shows each registered charity’s trustees, aims and finances; Scotland and Northern Ireland have separate registers. Charities with income below £5,000, excepted charities and exempt charities may not appear. ICAEW guidance suggests verifying, for a normal risk charity, the key trustees and contacts, typically the chair and those in charge of finance, widening this for higher risk clients and verifying new trustees as they join.

Charitable trusts registered as charities (and, in England and Wales, those not required to register under section 30(2)(a) to (d) of the Charities Act 2011) are excluded trusts under Schedule 3A to MLR 2017, so there will be no Trust Registration Service excerpt to collect for them.

What risks are specific to charity clients?

The National Risk Assessment 2025 rates money laundering risk in the non profit sector as low, though risen within that band, and terrorist financing risk as low but significantly greater for charities near conflict zones. Vulnerabilities it highlights include:

  • interest free loans from the community received in cash and repaid by bank transfer;
  • close connections with businesses and companies;
  • anonymous donations and online giving;
  • independent school charities receiving criminal funds through fees.

Watch for these in ongoing monitoring; see also money laundering red flags for accountants.

What does this look like for a family trust?

Illustration only. A practice is asked to prepare trust tax returns for a discretionary trust settled by a grandmother. There are two individual trustees, her son and a family friend, and the beneficiaries are described as her grandchildren and remoter issue. The son can appoint new trustees.

  1. The practice obtains the trust deed and proof of registration and checks both show the same parties.
  2. It verifies both trustees and the settlor, and records the son as also having control through his power to appoint trustees.
  3. The beneficiaries are recorded as a class; a grandchild who later receives a distribution is identified then.
  4. It notes the assets (a portfolio funded from the sale of the settlor’s home) and rates the client normal risk.
  5. When the family friend retires, the trustees tell the practice within 14 days; it verifies the replacement and collects an updated proof of registration.

What are the common mistakes?

  • Verifying only the trustee who signs the engagement letter and ignoring the settlor and anyone with control.
  • Treating the proof of registration as identity verification.
  • Assuming a registered charity needs no due diligence.
  • Not updating the file when trustees change.
  • Not looking through a corporate trustee to the individuals behind it. Firms acting as trustees should also read trust and company service providers.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.