Trustees MUST now report their status! Find out why

30 March 2023 ,  André van NiekerkJohnny DavisMark le Riche 1104
With major amendments to South Africa’s anti-money laundering framework scheduled to take effect from 1 April 2023 as part of Government’s strategy to remedy South Africa’s grey listing status, all trustees should take careful note of the new disclosure requirements that will apply to them.

The recently passed General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act 22 of 2022 (“Amendment Act”) contains a number of key amendments to the Trust Property Control Act 57 of 1988 (“Trust Act”). One of these amendments which we will highlight in this article, is the responsibility of trustees to disclose their status as trustee.

It is trite in our law that a trustee acts in a representative capacity on behalf of a trust. However, in practice it has become difficult to establish whether a person is acting in his or her personal capacity or as trustee, particularly when the person is not upfront about their position. In this way the true identity of the transactor is purposefully or unintentionally not properly disclosed. And it is this grey area that is used and abused by criminals to hide the true identity of the actors that benefit and control a trust.

Section 1 of the Amendment Act inserts a definition of “accountable institution” which has the same meaning as set out in section 1(1) of Schedule 1 to the Financial Intelligence Centre Act 38 of 2001 (“FICA”). In terms Schedule 1 of FICA an accountable institution includes banks, law firms and real estate agents. What this means is that any person or entity that deals with such accountable institutions must comply with such institution’s FICA requirements, the crux being that the institution must establish the true identity of who it is dealing with.

Section 4 of the Amendment Act aims to address the scenario where an accountable institution is lead to believe it is transaction with an individual when in fact it is a trustee acting on behalf of a trust, by now requiring that trustees must declare their position as trustee to any accountable institution they do business with or where the transaction or business connection has anything to do with trust property. 

This means that a trustee must at the outset of a transaction clearly disclose that he or she is acting as a representative on behalf of trust and not in his/her personal capacity. In this way the Trust Act amendments aims to strengthen FICA by ensuring that such disclosures be made by trustees on penalty of severe fines or even imprisonment. In addition, trustees are also required to disclose the beneficial ownership structure as a further step to increase transparency of the trust, but more about this in our next article on the concept of ‘Beneficial Ownership’ and its impact on trusts, companies and accountable institutions.

Be sure to keep an eye out for our follow up articles in which we explore in more detail other sections of the Amendment Act, as well as our online webinars on these new anti-money laundering amendments and don’t hesitate to get in touch with us for help in ensuring that your trust is compliant with the new Amendment Act changes before 1 April 2023!

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Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s). 
 
Related Sectors: Wealth Management
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