Trustees: Your New Duty to Report Beneficial Owners
“National Treasury, therefore, expects that if South Africa continues to make significant improvements in effectiveness and swiftly exits grey listing, it will have a limited impact on financial stability and costs of doing business with South Africa, particularly if South Africa moves speedily to get out of grey listing.” (National Treasury)
South Africa’s grey listing by the Financial Action Task Force, the global financial watchdog, has led government to hurriedly introduce new “Anti-Money Laundering and Combating Terrorism Financing” measures to combat financial crimes. One of those measure is a new requirement for trustees to disclose all “beneficial owners” of trusts.
In what was unfortunately no April Fool’s Joke, new requirements effective from 1 April 2023 were gazetted without notice and after business hours only on 31 March 2023. They came in the form of amendments to the Trust Property Control Act Regulations, requiring all trustees to establish and record the beneficial ownership of the trust, to keep a record of prescribed information relating to beneficial owners, to lodge same with the Master’s Office, and to keep all information up to date on an ongoing basis.
“Beneficial owner” has a wide definition
The definition of “beneficial owner” includes (logically) all beneficiaries, “a natural person who directly or indirectly owns ultimately owns the relevant trust property”, and “a natural person who exercises effective control of the administration of the trust arrangements…”. It also includes all trustees and the founder – those inclusions seem a lot less logical but that’s the law.
So, what should you do now?
Media reports have highlighted both the heavy penalties for failure to comply with these obligations (a R10 million fine, imprisonment for five years, or both) and the impossibility of trustees complying with those obligations on 1 April as a result of both the timing of the gazette and delays in establishing the requisite Master’s online electronic register.
But the practical issue now is that all trustees must take steps to comply – go to the Master’s “Trust Beneficial Ownership Register” page and follow the instructions there (note – you must be signed into Google to access that link).
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