In response to South Africa’s greylisting, the South African government implemented the General Laws (Anti Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 to amend four different acts, one of which was the Trust Property Control Act, 1988.
Amendments to the Trust Property Control Act introduce additional administrative and disclosure duties on trustees when transacting with accountable institutions listed in the Financial Intelligence Centre Act, 2001. Other obligations require trustees to record and disclose prescribed information regarding the trust’s “beneficial ownership”. The requirement to establish and record prescribed information regarding the beneficial ownership of a trust came into effect on 1 April 2023.
The concept of “beneficial ownership” is broader than it would appear from the words themselves. The Beneficial Owner is defined in the Amendment Act to include:
- any natural person who directly or indirectly owns the property of a trust or exercises effective control of the administration of a trust’s arrangements that are established pursuant to the trust instrument (i.e. the trust deed);
- each trustee;
- each founder of a trust; and
- each beneficiary of a trust, if the beneficiary is referred to by name in the trust deed or any other founding instrument in terms of which a trust is created.
If a founder, trustee, or beneficiary is a legal person, partnership, or a person acting in terms of a trust instrument, the beneficial owner will be the natural person who directly or indirectly ultimately owns or exercises effective control over these legal persons. Where the natural person is a minor, the prescribed information of their guardian must be recorded.
The beneficial ownership register must be kept and must be submitted by the trustees to the Master’s Office using a Google Forms link accessible through its website. The trustees are obliged to ensure that (1) the lodged register is kept up to date with the Master’s Office, and (2) is made available to any person and/or entity listed in regulation 3E(1) of the amended regulations to the Trust Property Control Act, for example the South African Revenue Services, the Financial Intelligence Centre, and the National Prosecuting Authority.
Failure to comply with the obligations created by the Amendment Act can result in a penalty of up to R10 million and/or five year’s imprisonment for trustees. As the requirement is recent, it is unclear when the Master’s Office will undergo a review of its trusts database to check for compliance with the obligation. It is, however, anticipated that a review of a trust’s beneficial ownership disclosures would at least be triggered when an application is made to the Master’s Office in relation to a trust. For example, if there is an application to amend a trust’s trust deed or update the letter of authority. To avoid incurring any penalties, it is therefore imperative that trustees take the necessary steps to ensure they understand their obligations and comply with them immediately.