South Africa's removal from the Financial Action Task Force (“FATF”) greylist in October 2025 marked an important milestone in strengthening the country's regulatory environment. However, this achievement represents only one step in South Africa's ongoing commitment to improving transparency, accountability, and governance within the trust sector.

As part of these efforts, the Cabinet has approved the publication of the Draft Regulation of Trusts Bill 2026 (the "Trusts Bill"), which aims to address existing shortcomings in trust administration and compliance. The proposed legislation seeks to strengthen beneficial ownership reporting, improve record-keeping requirements, and enhance the supervisory powers of the Master of the High Court.

For nearly four decades, trusts in South Africa have been governed by the Trust Property Control Act 57 of 1988 (the "Trust Act"). While the Trust Act has provided the foundation for trust regulation, developments in anti-money laundering standards, governance principles, and international compliance requirements have highlighted the need for a more comprehensive legislative framework.

The Trusts Bill proposes the complete repeal and replacement of the current Trust Act. Its objective is to modernise trust regulation by introducing enhanced compliance measures and reinforcing accountability among trustees and beneficiaries. The Bill is currently available for public comment until 11 September 2026.

A notable feature of the proposed legislation is the incorporation of principles that have emerged over time through Chief Master's Directives, legislative amendments, and significant court decisions. Overall, the Bill reflects a clear policy direction toward stricter oversight, improved transparency, and more effective trust administration.

Should the Trusts Bill be enacted in its current form, trustees and other stakeholders can expect substantial changes to the governance and day-to-day administration of trusts. Some of the most significant proposed changes include:

• Expansion of Beneficial Ownership requirements. Identifiable beneficiaries will need to be recorded in the trust's beneficial ownership register, broadening the scope of beneficial ownership disclosure requirements.
• Any change affecting the beneficial ownership information of a trust must be recorded and reported within 10 days of the change occurring.
• The Bill makes provision for the appointment of independent trustees and provides greater clarity regarding the instances where an independent trustee may be appointed and the criteria required for independence.
• The Bill requires that a trustee must cause annual financial statements of a trust to be prepared each year. Trusts that have not previously maintained such records will be granted a six-month transitional period from the Act's commencement to become compliant.
• Trustees will be required to file annual returns with the Master of the High Court, introducing an additional layer of regulatory oversight.
• Proper trust records and documentation must be kept. This includes annual financial statements, amendments relating to the trust deed, trustee appointments and resignations, contracts entered into on behalf of the trust, trustee resolutions, and other relevant governance documentation.
• A trustee may resign by giving signed written notice has been provided to the remaining trustees, beneficiaries, and the Master of the High Court. The Bill clarifies that a trustee’s resignation becomes effective when the trustee receives the Master’s written acknowledgement of the trustee’s resignation documents.
• Under the proposed framework, a trust will only be regarded as terminated once the Master of the High Court has officially removed the trust from the trust's register.
• The Bill introduces a comprehensive system of administrative sanctions and penalties for non-compliance. A wide range of contraventions may result in financial penalties or other enforcement measures.
• The Master of the High Court will be empowered to conduct money laundering and terrorist financing risk assessments and assign risk ratings to trusts, further strengthening oversight and regulatory monitoring.

The Trusts Bill represents a significant step towards stronger trust governance, greater transparency, and enhanced regulatory oversight in South Africa. While the proposed changes will increase compliance and administrative obligations for trustees, they aim to promote accountability and align South Africa's trust framework with international best practices. In our next article, we will examine these proposed changes in greater detail and discuss their practical implications for trust administration and governance.

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