The Government Gazette published on the 29th of December 2022 contained various amendments to The General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act, 2022 (Amendment Act), including important amendments to the Trust Property Control Act, 1988 (“the Act”).
The published amendments aim to combat money laundering and provide an additional layer of security and diligence to be undertaken given South Africa’s grey-listing by the Financial Action Task Force. The Act places a greater burden on trustees to exercise more control over trust activities, including:
1. Expansion of the maintenance of trust property records
Section 11 of the Act lists how a trustee must go about to keep a register of trust property. In the amendments and additions to section 11, it is now required of trustees to also record the precise details relating to the accountable institutions that are used as agents to perform any of the trustee’s functions relating to trust property and from which the trustee obtains services.
Accountable institutions are defined under the Financial Intelligence Centre Act 38 of 2001 as:
attorneys, a board of executors or a trust company or any other person that invests, keeps in safe custody, controls or administers trust property within the meaning of the Trust Property Control Act, estate agents, banks, insurance brokers, investment brokers, among others.
2. Maintaining records of and reporting on beneficial owners of the trust
The definition of beneficial ownership of a trust has been realigned with the definition contained in the Financial Intelligence Centre Act 38 of 2001. The definition covers “anyone who directly or indirectly ultimately owns the relevant trust property or exercises effective control of the administration of the trust”, this specifically includes:
A reporting structure to the Master of the High Court will be put in place by the amended legislation to enable the Master to keep track of the ultimate beneficial owners of trust assets. The intention of the amendments is to prevent the misuse of trusts and ensure that there is adequate, accurate, and timely information on the control of trusts available to the authorities.
Effect on current status
It is clear that the new legislation will place a much bigger onus on trustees to keep proper record which will result in more accurate/ up to date administration and record. We foresee that this will unfortunately have a negative impact on the cost of administration of a trust.
What are the implications of not adhering to the amendments?
Trustees who fail to comply with the disclosure requirements introduced by the Amendment Act will have committed a criminal offence and on conviction can be imprisoned for up to five years’ or be liable to a fine up to R10 million.
It is important to ensure that you and your fellow trustees are aware of the amendments and responsibilities applicable to the office of trustee.
Please reach out to Jacques Potgieter at email@example.com should you wish to discuss this amendment in more detail.