New Record Keeping Obligations Placed On Trustee

New Record Keeping Obligations Placed On Trustee

by | Mar 29, 2023

The consequences of South-Africa’s grey-listing by the Financial Action Task Force (“FAFT”) may be subtle but they are far reaching, especially when it comes to the increased record keeping obligations placed on Trustees of South African Trusts.

In an effort to avoid the grey-listing (essentially increased monitoring as a consequence of insufficient protections against money laundering and the financing of terrorism), the South African Government pushed through in December the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act, 2022 (“the Amendment Act”). This was to address concerns raised by FAFT in its 2019 evaluation of the country. The Amendment Act introduced important changes to the Trust Property Control Act, which regulates the administration of Trusts, of which all Trustees should be aware.

Perhaps the most important change to the Trust Property Control Act is the new burden placed on Trustees to maintain a Trust Register of information about each Trust of which they are a Trustee and to upload this information to a register to be maintained by the Master of the High Court. The information to be recorded in the Register includes:

  1. Details of each “beneficial owner” of the Trust (essentially those persons who may benefit from the Trust but also the Founder and all Trustees) including names, identity numbers, addresses, contact details and the basis on which they are beneficial owners (together with documentation confirming identity etc.);
  2. Details of any “accountable institutions” (as defined in the Financial Intelligence Centre Act which includes attorneys, banks, Trust companies, investment advisors and other financial institutions and financial services providers) which transact with the Trust including the name and registration number of each accountable institution, details of the functions it performs and services it provides and the dates on which the relationship was entered into between the Trust and the accountable institution.

The penalties for failing to comply with these obligations are severe and, on conviction, a Trustee is liable to a fine not exceeding R10,000,000, or imprisonment for a period not exceeding five years, or to both such fine and imprisonment.

The Amendment Act also made some other changes to the Trust Property Control Act, confirming that foreign Trustees can only deal with South African assets with the consent and authority of the Master as well as clarifying the circumstances under which a Trustee may be disqualified as such.

There have been threats of legal challenges to these changes and it is unclear how the Master’s Office, which is already unable to properly comply with its duties in law, will be able to cope with the additional obligations placed on it. However, the issue has now become urgent as the effective date of these new obligations placed on Trustees has just been announced as 1 April 2023. We at Legacy will gladly assist our clients with negotiating through these complexities and complying with the ever more onerous burdens placed on Trustees.

Read our other media

Mandela Day 2018

Legacy FS spent their Mandela Day at the Parkwood Feeding Scheme. The team got down to preparing vegetables for a cooked meal which is served to more than 60 children from the surrounding community. Sandwiches were also prepared for the Pensioner Women's Group which...

read more