Following South Africa's grey-listing by the Financial Action Task Force, trustees within South Africa are finding themselves navigating an increasingly complex legal landscape.
Some trustees are now accountable institutions under the Financial Intelligence Centre Act, 2001. Additionally, with the latest amendments to the Trust Property Control Act, 1988 and its Regulations, introducing hefty fines and potential criminal sanctions for non-compliance with new reporting requirements relating to "beneficial ownership" and the authorities including the Reserve Bank, SA Revenue Service, Financial Intelligence Centre ("FIC") and the like, being on high-alert for any form of non-compliance, it is imperative for trustees to fully understand the host of new obligations.
What are the major amendments?
Trust Property Control Act, 1988 ("TPCA") - the introduction of beneficial ownership which is divided into five main categories. The prescribed information about each identified beneficial owner must be recorded and submitted in the prescribed format. Further changes relate to grounds for disqualification of trustees, and information to be recorded by trustees in their dealings with accountable institutions.
Financial Intelligence Centre Act, 2001 ("FICA") - a person who carries on the business of preparing for or carrying out financial transactions (including as a trustee) related to investments, their safekeeping, control or administering of trust property within the meaning of the TPCA is now an accountable institution in terms of Schedule 1, and accordingly, has to comply with various obligations imposed by the FIC on accountable institutions.
Why is this important?
By failing to comply with the obligations, a trustee commits an offence and on conviction is liable to a fine up to ZAR10 million or imprisonment for up to five years, or both.
Who must be aware?
All trustees serving office under the TPCA and practitioners providing any trust advisory or administrative services.
Who do the amendments apply to?
Trustees acting on various trusts, including:
- Family trusts
- Trading trusts
- Employee incentive trusts
- B-BBEE trusts
- Socio-economic development trusts
- Charitable trusts
- Securitisation trusts
- Community trusts
- Testamentary trusts
When does this apply?
The Regulations to the TPCA were published on 31 March 2023 and the amendments became law on 1 April 2023 with no indication of a grace period for compliance. The recent amendments to FICA took effect on 19 December 2022 with no grace period for compliance.
For more information on the amendments to the TPCA, FICA and the Companies Act, 2008, watch our live webinar recording here held by our panel of experts on 22 May 2023.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.