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Reviews (Periodic reviews (A TSP may implement procedures to conduct…
Reviews
Periodic reviews
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It is the policy of some TSPs to review everything from the start of the business relationship whereas others only review activity that has occurred since the last review took place
The review should be a holistic review of all trust and company documentation, records and activities
Should confirm that any issues raised at the last review have since been resolved and that any unresolved issues raised at the current review are recorded as action points
The review is an important element to confirm that the structure has been administered in accordance with the terms set out in the trust deed and trust and company law
Other benefits of undertaking reviews include minimising risks, altering TSPs of potential problems before they materialise into major issues and evidencing that internal policies and procedures are adhered to
It has become increasingly common for TSPs to take a risk based approach to the frequency of the reviews undertaken. In practice the result of the risk rating is often used to determine the TSPs policy in this regard
A TSP may implement procedures to conduct reviews at appropriate intervals. A typical risk based approach may be
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It is important that periodic reviews are conducted in a timely manner, as a backlog of reviews or a backlog in dealing with any action points arising from period reviews poses a risk to the TSP and may result in the TSP breaching the codes of practice in their jurisdiction
TSPs should have a clear process for ensuring that action points are cleared in a timely manner, according to their priority. it is best practice for the cellaring of action points arising from periodic reviews to be monitored by senior management on a regular basis to ensure that they are dealt with
the review for a trust structure can be complex as there are various aspects to cover, including
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Circumstances surrounding the beneficiaries (have these changed, new beneficiaries, PEPs?)
Activities and decision making of the TSPs when carrying out their powers and duties as required under the trust deed and trust law
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Initial reviews
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Good practice to undertake such a review between 60 and 90 days after the customer entity has been established
Covers important areas such as whether or not the transactions undertaken to date were in line with the expectations for the relationship, as documented at the time that the business was accepted
The review serves as a double check o ensure that all administrative matters have been dealt with correctly
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Exit / closing review
TSPs may cease to provide services in relation to a trust or company for a variety of reasons. For example, the entity may no longer be required, the client may have requested that the TSP resigns in favour for an alternate provider or the TSP may refuse to provide services to a company
The manner in which these entities will close will depend upon the circumstances, a company ay be left to be stuck off from the companies register for the non payment of its return statutory fees or it may be formally dissolved
It is good practice for the TSP to undertake a closing or exit review of the entity. Such a review could identify important matters such as whether the business was lost due to poor customer service or a complaint, whether all of the assets and liabilities have been properly dealt with and that the new providers are fit and proper persons to be appointed
The exit review would also allow the TSP to update their database. If such administrative matters are not addressed before the relationship is terminated, they may not be adequately prioritised or dealt with afterwards as once the client is no longer in contact with the TSP and is no longer paying for their services, work for the more active clients tends to receive priority
The codes of practice in some jurisdictions set out requirements to the closing of business and an exit review and proper procedures surrounding the exit of the business will assist the TSP to meet these requirements
Risk reviews
Most TSPs have built into their procedures the requirement to review the risk assessment of an entity upon the acceptance of the business and on an ongoing, regular basis, for example at the time of take on and periodically
It is also considered best practice for the risk assessment to be reviewed whenever a trigger event occurs
It is important that the risk review is undertaken correctly as if the TSP adopts best practice, the risk score will impact on the administration of the entity, for example higher risk entities may be subject to more frequent periodic reviews
Trigger events
Events that should trigger a review of the risk assessment of the entity as they may impact upon the level of risk that the entity presents to the service provider
May include
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A change in a customer's activity, source of wealth or occupation
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Reviews should ideally be undertaken by an experienced trust and company administrator who has the correct level of knowledge, understanding and experience and who, where possible, is independent from the day to day activities of the trust or company structure x
TSPs can achieve this independence in different ways, for example by having a separate review team, asking the compliance function to undertake the reviews and allowing administrators to review their own cases and having a less detailed independent review
In many offshore jurisdictions it is a regulatory requirement (usually in a jurisdiction's codes of practice) for OSPs to have policies and procedures that require them to undertake regular reviews at appropriate intervals of the trusts and companies that they provide services to
A review could be likened to an internal audit and is part of best practice for the OSP. Periodic reviews should be completed accurately and on a timely and comprehensive basis
It is usual for TSPs to arrange a take on review (often between 60 and 90 days after take on to allow for things to have progressed), periodic reviews (annually or more or less depending on the risk assessed) and closures or exit reviews