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Trust and Company Service Providers (Fit and proper trust (where…
Trust and Company Service Providers
OSPs usually require a licence to conduct trust company business from their local regulator, unless the particular activity that they wish to conduct is an exempt activity.
There may be different categories of licence depending upon the type of trust and/or company business services that the OSP wishes to offer, some of which are subject to a 'lighter touch' regulation
Authorisation is usually only granted to 'fit and proper' applicants. The directors, controllers and managers must also be considered to be fit and proper
Fit and proper trust
where appropriate be authorised to undertake regulated activities
act with integrity
act with skill, care and diligence that must be evidenced by those (firms and individuals) involved in regulated activities
act so as not to mislead
carry on their business with prudence, professional skill and honesty
protect and enhance the name of the jurisdiction as a financial centre
deal openly and honestly with the local regulator and other regulatory authorities
comply with capital adequacy, professional indemnity cover and financial liquidity rules
abide by the rules on due diligence and anti-money laundering regulations
provide accurate and full information to their customers
OSPs have the obligation to ensure that employees conform to regulatory rules and follow various standards of care
Supervisors and managers should be able to demonstrate and evidence that they have the necessary competence and expertise to carry out their role within their organisation. This may be proved by the OSP implementing a robust continuing professional development scheme
As well as meeting the requirements of the fit and proper test, OSPs are likely to be required to maintain a minimum capital base. Professional indemnity insurance in respect of the firm and employees within the firm should be in place. A minimum level of cover may be prescribed by the regulator but other considerations such as the nature and scope of the business will also be taken into account to ensure as far as is practicable that the cover is sufficient to safeguard the client's interest
It is likely that the regulator would require regulated OSPs to bear in mind continent future liabilities, depreciation, solvency and any diminution in the valuation of assets held
Competence must also be evidenced by individuals and / or firms. This can be shown through an audit trail demonstrating a favourable track record in their dealings with clients and proof that they have an adequate knowledge and the necessary skills to fulfil their duties efficiently and effectively
New OSPs wishing to set up their business within a particular jurisdiction may be required to meet additional requirements to ensure that there is
an enhancement to the offshore jurisdiction's economy and its reputation by way of geographical and other diversity
an acceptable economic benefit to the offshore jurisdiction
the maintenance, within the offshore jurisdiction, of an office but if originating from or operating within another regulated area, a similar standard as regulation and licence is being implemented
usually the right to prohibit, restrict or impose limitations on licence holders
Licensed TSPs are usually subject to ongoing supervision by the regulation. This may include
On site examinations conducted at the trust company's premises and regular meetings with the bank
Off site supervision which may include a desk based analysis for example of the TSPs financial records and other information
The requirement for the TSP to submit information such as audited financial statements and declarations confirming their compliance with the regulations
A requirement for the principal persons (eg directors and shareholders) and key persons (eg MLRO and compliance officer) to be in receipt of an approval by the regulator or in some cases a no object letter before they may be appointed to act on behalf of the business
A requirement to notify the regulator of significant events or changes within the business
A requirement to participate in thematic studies where requested to do so by the regulator