Trust and Company Service Providers

The Group issued in 2002 a Best Practice Statement in respect of trust and company service providers.

This was produced by an ad-hoc group set up by the Group on which sat representatives from the FATF, the OECD, the IMF and France, Italy, the Netherlands and the UK. 

Allied to the work on the Best Practice Statement on trust and company service providers the Group encouraged the FATF at the time to undertake work on the misuse of corporate vehicles. The Chairman of the Group led an FATF typologies project on the misuse of corporate vehicles, the report on which was published in October 2006. That report identified a number of next steps which it was recommended the FATF should take, which included what more can be done to ensure that adequate, accurate and timely information on the beneficial ownership and control of legal persons/legal arrangements may be obtained or accessed in a timely fashion by competent authorities.

In October 2014 the GIFCS issued a new Standard on the Regulation of Trust and Company Service Providers (“TCSPs”). In May 2017 this was supplemented by technical appendices addressing Client MoneyData Security and Data Protection, and Outsourcing. A paper on the Role of Corporate Directors followed in May 2020. The Standard, the first of its type, introduced a minimum benchmark for the supervision of businesses administering international trusts and companies to follow.

The Standard promotes and reinforces high standards in the sector among GIFCS membership, many of whom already regulate TCSP activity.  The Standard addresses matters of both prudential and conduct regulation, and is designed to complement the international supervisory standards of the Basel Committee, FATF, IAIS and IOSCO.  In this way the Standard can also be enforced through the financial services legislation of individual jurisdictions.

Those parts of the Standard that address financial crime are underpinned by the Recommendations of the FATF on the prevention of money laundering and the countering of terrorism financing, especially those requiring intermediaries to know who are the ultimate beneficial owners behind the companies, and the beneficiaries and key functionaries behind the trusts, which they administer.

The Standard is being applied to GIFCS members.  A process of mutual evaluations of compliance has commenced for which a high-level Methodology has been prepared, together with a note on effectivness.  Reports of these evaluations will be published.  It is hoped that larger jurisdictions which are hosting TCSP activity, many of whom do not yet have formal oversight arrangements of their own, will also embrace the Standard and assessment process there under.  

In order to develop the supervisory process and to facilitate co-operation and the exchange of supervisory information, a Multilateral Memorandum of Understanding has been agreed between member regulators.  A total of 14 GIFCS members have signed the MMOU, 4 members are completing arrangements to enable them to sign within a three year period, and one member does not undertake or have a supervisory regime for TCSP activity.

Protocol for establishing colleges of TCSP supervisors among GIFCS members has been agreed.  Its use commenced in 2017, and members will co-ordinate and decide internally on those TCSP groups where it is felt that greater supervisory co-ordination and communication could assist oversight.

The Group arranges training workshops for TCSP supervision.