New Rules on Beneficial Ownership Disclosure in South Africa: Enhancing Transparency in Trusts
South Africa has implemented new regulations aimed at enhancing transparency in trust ownership as part of its efforts to combat money laundering and terrorism financing. These rules, which came into effect on April 1, 2023, require trustees to disclose beneficial ownership information and maintain accurate records. It is crucial for trustees of all types of trusts to understand and to comply with these rules to fulfil their obligations effectively in asset management.
Although there is no decisive definition of beneficial ownership in South Africa, the Trust Property Control Act provides a comprehensive definition that includes natural persons who directly or indirectly own the trust property, those who exercise effective control over trust administration, founders of the trust, trustees, and beneficiaries named in the trust's founding documents. This of course is subject to permutations where the founder, trustee, or beneficiary is a legal entity or a partnership.
Trustees are responsible for maintaining detailed information on beneficial owners including their full name, date of birth, nationality, official identity document or passport number, citizenship, residential address, address for notices, contact information, and tax number (if applicable), as well as specification as to the class or category of beneficial ownership, the dates when a person became or ceased to be a beneficial owner. For minor beneficiaries, the same information for their legal guardians must be attained and retained. The Trustees are now required to submit certain information of the beneficial owners on an electronic register online with the Master of the High Court (the ‘Master”) and always ensure the accuracy of that information. This must be uploaded manually on the portal followed by the attachment of an Excel sheet per trust, with information captured.
Access to the beneficial ownership information is intended to be restricted to persons or entities named in the regulations, but access is also granted to individuals or designated officials entitled to receive such information under national legislation, on written request whilst providing qualifying proof, and without notification to the trustees.
Independent trustee companies are required ensure registration as accountable institutions where they carry out trust-related functions concerning trust property.
Non-compliance can result in up to R10 million in fines or 5 year’s imprisonment for any trustee who fails to submit the required information.
What does this mean for clients?
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