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Will the UK ever escape the EU? Britain to be scrutinised by EU MORE after Brexit

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The move affects billions of pounds held in trusts – a notoriously murky area of the finance industry which guards its privacy fiercely.

Europe has long insisted on full disclosure for all trusts, but David Cameron won a handful of concessions claiming the rules violated trust owners’ right to privacy.

But those concessions were likely to be scrapped as the 28-member bloc plan to toughen legislation as the European Parliament pushes for even stricter transparency rules for trusts.

Panama Papers scandal

The MEPs have voted on draft legislation on money laundering, which would force EU members states to operate fully public registers to disclose the “beneficial ownership” of trusts.

Judith Sargentini, a Dutch Green MEP, said the records would include details of all the main participants in a trust, the settlor, trustees, the beneficiary and any other persons exercising control.

Beneficiaries would only be able to escape the new rules if they could prove their personal safety would be at risk if the information was revealed.

And the move could still affect the UK long after it has quit the Brussels bloc, as national registers on the continent would still include details of trusts set up by UK individuals for an EU citizen.

And Peter Simon, a German member of the parliament’s socialist group who has been working on the draft bill said: “There should be no back door left open for UK companies to do business in the EU without sticking to our rules.”

The bloc could also take Britain’s acceptance of the new rules into account ahead of Brexit negotiations, in which EU chiefs will evaluate what access to markets the UK can have.

European Parliament

But according to Ms Sargentini, the new standard “takes away the possibility for the UK trust to continue as a legal construction that we cannot control.”

And she claims the rules will means that “those that hide something would be traceable”.

The UK has consistently fought against the imposition of public registers, with the Government claiming: “We want to strike the right balance between transparency ad the fundamental rights of the individuals to privacy.”

But the issues plaguing trusts were highlighted again in the 2015 Panama Papers scandal, which shone a light on the trend of tax avoidance from the rich and powerful – many of whom used trusts to shift their money offshore.

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