trust services

Who is caught

Trust company business is a class of financial service business regulated by the Jersey Financial Services Commission (JFSC) under the Financial Services (Jersey) Law 1998. Anyone carrying on trust company business in or from Jersey is caught by the registration regime unless a specific exemption applies. The Financial Services Commission (Jersey) Law 1998 establishes the Commission and confirms trust company businesses among the registered persons it supervises.

Registrable activities

The Financial Services (Financial Service Business) (Jersey) Order 2009 lists the specific activities that fall within trust company business and groups them into classes.

• Trust company classes: Classes F to OB cover company formation agents, acting as director, partner or secretary, providing a registered office or correspondence address, acting as trustee of an express trust, nominee shareholding, managing a managed trust company, foundation council members and LLC members or managers, plus a transitional class O.
• Professional trustees: The Trusts (Jersey) Law 1984 defines a professional trustee as a person registered under Article 9 of the Financial Services (Jersey) Law 1998 with the JFSC to carry on trust company business.

Underlying trust law

The Trusts (Jersey) Law 1984 is the core private law statute governing trusts, trustees, settlors, beneficiaries and enforcers, applying to Jersey trusts and to foreign trusts with a Jersey connection. It is distinct from the regulatory registration regime but defines the trustee role that trust company businesses perform.

Sources: Financial Services (Jersey) Law 1998 · Financial Services (Financial Service Business) (Jersey) Order 2009 · Financial Services Commission (Jersey) Law 1998 · Trusts (Jersey) Law 1984

Key duties

The central duty is registration: a person must not carry on trust company business in or from Jersey unless registered under Article 7 of the Financial Services (Jersey) Law 1998. Registered persons then face continuing notification, conduct, client-asset, accounting and audit obligations, several of which carry deadlines.

Registration and notification

• Registration: Register with the JFSC before carrying on financial service business (Article 7) and comply with any conditions of registration.
• Notify changes: Notify the Commission of any change of principal person, key person (compliance officer, money laundering compliance officer, money laundering reporting officer), shareholding or LLC interest (Article 14).
• Display certificate: Display the registration certificate and any conditions of registration (Article 11A).
• Codes of Practice: Comply with applicable Codes of Practice issued by the Commission (Article 19).

Customer money

The Financial Services (Trust Company Business (Assets - Customer Money)) (Jersey) Order 2000 sets detailed handling rules for customer money held by registered trust company businesses.

• Records and reconciliation: Keep adequate records tracing each transaction and each customer's balance, and promptly reconcile those records against bank statements.
• Segregation: Keep customer money unmixed so far as practicable, and separate any mixed funds within 2 days of it becoming possible to do so.
• Pooled accounts: Hold customer pooled accounts with an approved bank, clearly titled, backed by a bank undertaking not to combine or set off, and not knowingly overdrawn.
• Interest: Where reasonable and practicable, credit interest on customer money to the customer unless the customer agrees otherwise.

Accounts, audit and reporting

The Financial Services (Trust Company and Investment Business (Accounts, Audits and Reports)) (Jersey) Order 2007 governs accounting periods, auditors and filings for registered trust company businesses.

• Accounting period: Apply to the Commission to approve a first accounting period (up to 18 months) and subsequent periods (normally 12 months), and do not change an approved period without approval.
• Approved auditor: Engage only an auditor approved by the Commission as independent and suitable; a terminated auditor must notify the Commission of relevant circumstances within 7 days.
• Records retention: Keep accounting records securely with backups and retain them for at least 10 years.
• Filing deadline: Provide financial statements to the Commission within 4 months of the period end, extendable to up to 8 months with Commission permission in special circumstances.
• Declaration and report: Sign a declaration confirming compliance with the Law, applicable Orders, Codes of Practice and AML/CFT requirements, and (for companies and partnerships) prepare a directors' report.
• Material loss reporting: Auditors, accountants and other approved reporting persons must report to the Commission any material loss, or significant risk of material loss, to a registered person or its customer or client.

Confirmation statement fees

Under the Financial Services (Disclosure and Provision of Information) (Jersey) Regulations 2020, an entity administered by a trust company business (other than class O business) pays an additional £175 when filing its annual confirmation statement, while other entities pay £145.

Sources: Financial Services (Disclosure and Provision of Information) (Jersey) Regulations 2020 · Financial Services (Jersey) Law 1998 · Financial Services (Financial Service Business) (Jersey) Order 2009 · Financial Services (Trust Company Business (Assets – Customer Money)) (Jersey) Order 2000 · Financial Services (Trust Company and Investment Business (Accounts, Audits and Reports)) (Jersey) Order 2007

Exemptions and carve-outs

A series of Orders under the Financial Services (Jersey) Law 1998 exempt specified persons from the requirement to register for trust company business. In most cases the exemption is limited to Article 7 (the registration requirement): the exempt person remains subject to specified conduct and enforcement Articles of the Law (Articles 12, 23 to 26, 28, and 32 to 39 and 41) as if registered. Part 2 unlimited exemptions carry no such continuing conduct provisions.

Principal exemption categories

• General exemptions Order 2000: The Exemptions Order 2000 lists limited exemptions (including private trust companies, employee pension and share scheme trustees, executors and administrators, court-appointed managers, global custodians, introducers, and directors or managers capped at 6 companies) and unlimited exemptions (including persons already registered under banking, insurance, investment or fund services law when acting within that registration, and guardians of a foundation).
• Private trust company conditions: A private trust company must not solicit or serve the public, must be administered by a registered trust company business, and must notify its name to the Commission.
• Overseas persons (No. 2): A person with no place of business in Jersey and not a Jersey company or LLC is exempt, but must not hold out in Jersey as willing to undertake trust company business except for existing customers; the Order also exempts unit holding nominee companies, electronic communications service providers and recognised experienced personal advisers.
• Connected structures (No. 3): Private protector or appointer companies, general partners, LLC managers, sale agents and investment company nominee subsidiaries are exempt where they (or the relevant trust, partnership, LLC or foundation) are administered by a registered person and do not serve the public.
• Connected persons (No. 4): A person providing an Article 2(4) service solely to a connected person (as defined) is exempt from the Article 7 registration requirement.
• Scheme functionaries (No. 5): Functionaries of professional investor regulated schemes and of restricted funds, and the schemes or funds themselves, are exempt when providing Article 2(4) services to the scheme or fund.
• Transitional (No. 6): An exemption for persons servicing functionaries of professional investor regulated schemes, now largely historical, which continued after 1 August 2001 only where a registration application made before that date remained undetermined.
• Estates and property vehicles (No. 7): Testamentary trustees administering a deceased's estate, and advocates or solicitors holding shares or LLC interests conferring exclusive occupation of Jersey immovable property, are exempt when providing the relevant service.

Customer money relief

Under the Customer Money Order 2000, the JFSC may on application exempt a registered person from any requirement of that Order where customers are not likely to be prejudiced, and may impose conditions on the exemption.

Sources: Financial Services (Trust Company Business (Assets – Customer Money)) (Jersey) Order 2000 · Financial Services (Trust Company Business (Exemptions)) (Jersey) Order 2000 · Financial Services (Trust Company Business (Exemptions No. 2)) (Jersey) Order 2000 · Financial Services (Trust Company Business (Exemptions No. 3)) (Jersey) Order 2001 · Financial Services (Trust Company Business (Exemptions No. 4)) (Jersey) Order 2001 · Financial Services (Trust Company Business (Exemptions No. 5)) (Jersey) Order 2001 · Financial Services (Trust Company Business (Exemptions No. 6)) (Jersey) Order 2001 · Financial Services (Trust Company Business (Exemptions No. 7)) (Jersey) Order 2001

Enforcement and penalties

Enforcement powers over trust company businesses are split between the two 1998 Laws. The Financial Services (Jersey) Law 1998 provides the supervisory and intervention powers, while the civil financial penalty regime sits in the Financial Services Commission (Jersey) Law 1998.

Supervisory and intervention powers

• Directions and public statements: Under the Financial Services (Jersey) Law 1998 the Commission may issue directions and injunctions, make public statements, exercise powers of intervention, direct how trust company business assets are held, and require information and documents through investigations and entry or search of premises.
• Appointment of a manager: Under the Financial Services (Appointment of Manager) (Jersey) Order 2008 the Commission may apply to the Royal Court to appoint a manager over a trust company business in prescribed circumstances, including inadequate management, unregistered activity, a business that has ceased without orderly wind-down, or failure to comply with conditions, notices or directions.
• Information offences: Supplying false information, failing to supply required information, or obstructing an investigation are offences under the Financial Services (Jersey) Law 1998 (Articles 28 and 32 to 35).

Civil financial penalties

Articles 21A to 21G of the Financial Services Commission (Jersey) Law 1998 allow the Commission to impose civil financial penalties on registered persons, principal persons and key persons, with notification, appeal and late-payment surcharge provisions. The maximum penalties are set by the Financial Services Commission (Financial Penalties) (Jersey) Order 2015 in bands.

• Band 1: Repeated failure to make a required Code of Practice notification after written warning: the lower of 4% of average annual turnover or £100,000 for a registered person, £5,000 for a principal person, and nil for a key person.
• Band 2: A contravention not rectified within a reasonable Commission-set timeframe: the lower of 6% of average annual turnover or £4,000,000 for a registered person, £100,000 for a principal person, and nil for a key person.
• Band 2A: A negligent contravention causing or risking specified harms: the lower of 7% of average annual turnover or £4,000,000 for a registered person, £150,000 for a principal person, and £100,000 for a key person.
• Band 3: An intentional or reckless contravention causing or risking those harms: 8% of average annual turnover for a registered person, £250,000 for a principal person, and £200,000 for a key person.

Sources: Financial Services (Jersey) Law 1998 · Financial Services (Appointment of Manager) (Jersey) Order 2008 · Financial Services Commission (Jersey) Law 1998 · Financial Services Commission (Financial Penalties) (Jersey) Order 2015