Guidance Note: Managed Trust Company Business

Summary

This JFSC guidance note explains the regulatory expectations for a Managed Trust Company (MTC), a trust company business that is registered in its own right under Article 9 of the Financial Services (Jersey) Law 1998 but is managed by another licensed trust company business (the Manager). It clarifies how an MTC differs from a Participating Member within an Affiliation and sets out how the two structures interact with the Trust Company Business Code, Licensing Policy and TCB Fees Notice.

• Governance: The MTC Board retains responsibility for governance; management and control must be in or from within Jersey, and the Board should ordinarily include Directors from the Manager while remaining majority Jersey-resident.
• Compliance function: An MTC is expected to share its Manager's compliance function, with Key Persons (Compliance Officer, MLRO, MLCO) usually employed by the Manager, subject to case-by-case JFSC approval of alternative arrangements.
• Policies and staffing: MTC and Manager should share policies, procedures, systems and controls, with documented rationale for any variances; the Manager must ensure adequate staffing for both businesses since the MTC is not expected to employ its own staff.
• Contracts and outsourcing: A formal written agreement must govern the Manager's services to the MTC, reviewed periodically; outsourced activity consistent with this guidance is not caught by the Outsourcing Policy.
• Conflicts and finances: Both parties must identify and manage conflicts of interest, and the MTC must meet financial resource requirements independently, including treating the management fee paid to the Manager as an expense in its net liquid asset calculation.
• Termination and supervision: The MTC must notify the JFSC in writing within a reasonable time of a decision to terminate the Manager services agreement, and remains subject to the same ongoing regulatory supervision as any other registered person.

The note also includes a comparison table distinguishing MTCs from Participating Members and invites Managers, affiliation leaders, participating members and MTCs to contact the JFSC where uncertainty remains.

Key obligations

• An MTC's management and control must be in or from within Jersey, with the Board maintaining proper records including minutes and papers considered.
• An MTC cannot act as Manager of another MTC.
• An MTC must share the same compliance function as its Manager and generally have Key Persons (Compliance Officer, MLRO, MLCO) employed by the Manager, unless the JFSC approves an alternative Jersey-resident, fit-and-proper appointee.
• The Manager and MTC are expected to share the same policies, procedures, systems and controls, with any variances agreed and documented by both boards along with a risk assessment.
• The Manager must ensure it has adequate staff resources to manage both its own business and that of the MTC.
• There must be a formal written agreement between Manager and MTC specifying terms of engagement and service levels, reviewed periodically.
• The MTC and Manager must identify and address conflicts of interest and implement adequate procedures to manage them.
• The MTC must meet financial resource requirements independently of its Manager, including the management fee as an expense in its adjusted net liquid asset calculation.
• The MTC must notify the JFSC in writing within a reasonable time of resolving to terminate the services agreement with its Manager.

Applies to

Managed Trust Companies (MTCs), Managers (class N trust company business registrants), Participating Members, Affiliation Leaders, Trust company business registered persons

Deadlines

• within a reasonable time: An MTC must notify the JFSC in writing within a reasonable time of resolving to terminate the services agreement between the MTC and its Manager.