trust services

Who is caught

Trust services in Jersey are regulated as "trust company business", one of the classes of financial service business supervised by the Jersey Financial Services Commission (JFSC). The Financial Services (Jersey) Law 1998 is the backbone statute: it prohibits carrying on trust company business in or from Jersey unless registered with the Commission (or exempt). The Financial Services Commission (Jersey) Law 1998 establishes the Commission and brings registered persons under its supervisory and civil penalty regime.

• Trust company business: Providers carrying on trust company business under the Financial Services (Jersey) Law 1998 are within scope and must be registered with the Commission.
• 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 to carry on trust company business.
• Registrable classes: The Financial Services (Financial Service Business) (Jersey) Order 2009 lists the trust company business activities requiring registration (classes F to OB), including formation agents, acting as director, partner or secretary, providing registered office or correspondence addresses, acting as trustee of an express trust, nominee shareholding, managing a managed trust company, class O (transitional relief), foundation council members and LLC members or managers.
• Supervisory remit: Under the Financial Services Commission (Jersey) Law 1998, registered trust company businesses, their principal persons, key persons and money laundering reporting officers fall within the Commission's supervisory and enforcement remit.

The Trusts (Jersey) Law 1984 is foundational private law governing trusts, trustees, settlors, beneficiaries and enforcers generally; it is not itself a regulatory licensing regime, but it is the source of the professional trustee definition that ties into the registration requirement.

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 core continuing duties for trust company business flow from the Financial Services (Jersey) Law 1998 and the Orders made under it. Registration is the gateway obligation, followed by ongoing notification, conduct, client-asset, accounting and reporting duties.

Registration and notification

• Registration: A person must not carry on trust company business in or from Jersey unless registered under the Financial Services (Jersey) Law 1998 (or exempt); persons carrying on a listed class activity must register in the corresponding class under the 2009 Order.
• Change notifications: Registered persons must notify the Commission of any change of principal person, key person, shareholding or LLC interest.
• Display of certificate: Registered persons must display their registration certificate and any conditions of registration as required.
• Codes of Practice: Registered persons must comply with applicable Codes of Practice issued under Article 19 of the Law.

Customer money

• Records and reconciliation: Under the Financial Services (Trust Company Business (Assets - Customer Money)) (Jersey) Order 2000, registered persons must keep adequate records identifying and tracing each transaction and customer balance, and promptly reconcile against bank statements.
• Segregation: Customer money must not be mixed with other money so far as possible and practicable; mixed funds must be separated within 2 days of it becoming possible to do so.
• Pooled accounts: Any customer pooled account must be held with an approved bank, clearly titled as holding customer money, backed by a bank undertaking not to combine or set off, and not knowingly overdrawn.
• Interest: Where reasonable and practicable, interest on customer money must be credited to the relevant customer unless the customer agrees otherwise.

Accounts, audit and reporting

• Accounting period: Under the Financial Services (Trust Company and Investment Business (Accounts, Audits and Reports)) (Jersey) Order 2007, registered persons must obtain Commission approval of a first accounting period (up to 18 months) and subsequent periods (normally 12 months).
• Approved auditor: Only an auditor approved by the Commission as independent and suitable may be engaged; a terminated auditor must notify the Commission within 7 days of relevant circumstances.
• Record retention: Accounting records must be kept securely with backups and retained for at least 10 years.
• Filing: Financial statements (with declarations, directors' report and auditor's report) must be provided to the Commission within 4 months of the period end, extendable to up to 8 months with Commission permission in special circumstances.
• Compliance declaration: After each accounting period a signed declaration must confirm compliance with the Law, applicable Orders and Codes of Practice, and AML/CFT requirements, detailing any material failures.
• Material loss reporting: Auditors, accountants and other approved reporting persons must report to the Commission where a registered person or its customer has incurred, or is at significant risk of incurring, a material loss.

Advertising and information

• Advertising: The Financial Services (Advertising) (Jersey) Order 2008 requires financial service advertisements to identify the issuer and provider, be clear, fair and not misleading, not claim Commission approval, and be retained with dissemination records for 10 years after last issued.
• Beneficial ownership information: Under the Financial Services (Disclosure and Provision of Information) (Jersey) Order 2020, entities must provide prescribed beneficial owner, significant person and nominated person information and file an annual confirmation statement.
• Confirmation statement fee: The Financial Services (Disclosure and Provision of Information) (Jersey) Regulations 2020 require an additional payment with the annual confirmation statement of £175 for entities administered by a relevant business (a fund services business or trust company business, subject to a class O carve-out) and £145 for other entities.
• Information and inspection: Under the Financial Services Commission (Jersey) Law 1998, supervised entities must supply information in the required form and times, answer questions, and allow Commission officers to enter their premises for examinations.

Sources: Financial Services (Disclosure and Provision of Information) (Jersey) Regulations 2020 · Financial Services (Disclosure and Provision of Information) (Jersey) Order 2020 · Financial Services (Jersey) Law 1998 · Financial Services (Advertising) (Jersey) Order 2008 · 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 · Financial Services Commission (Jersey) Law 1998

Exemptions and carve-outs

Exemptions from the trust company business registration requirement are set out in Schedule 2 to the Financial Services (Jersey) Law 1998 and in a series of dedicated Trust Company Business Exemptions Orders. In most cases the exemption removes only the registration requirement under Article 7, while a specified list of the Law's conduct, supervisory and enforcement provisions (Articles 12, 23 to 26, 28, and 32 to 39 and 41) continues to apply as if the person were registered.

• Statutory exemptions: Schedule 2 to the Financial Services (Jersey) Law 1998 sets out categories of business and persons exempt from registration across trust company business and other sectors.
• General exemption categories: The Exemptions Order 2000 lists limited exemptions (including employee pension and share scheme trustees, executors and administrators, private trust companies, court-appointed managers, global custodians, address providers, 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).
• Private trust companies: A private trust company must not solicit or serve the public, must be administered by a registered trust company business, and must have its name notified to the Commission.
• Overseas persons: The Exemptions No. 2 Order 2000 exempts a person with no Jersey place of business (and not Jersey-incorporated) carrying on trust company business, provided they do not hold out in Jersey except to existing customers; it also covers unit-holding nominee companies, electronic communications service providers and experienced personal advisers.
• Connected and administered structures: The Exemptions No. 3 Order 2001 exempts private protector or appointer companies, general partners, LLC managers and certain sale agents where administered by a registered person; the Exemptions No. 4 Order 2001 exempts services provided only to a connected person; the Exemptions No. 5, 6 and 7 Orders 2001 exempt functionaries of professional investor regulated schemes and restricted funds.
• Estate and property trustees: The Exemptions No. 7 Order 2001 exempts testamentary trustees administering a deceased's estate and advocates or solicitors holding shares or LLC interests conferring exclusive occupation rights over Jersey immovable property.
• Class O transitional relief: The Financial Services (Financial Service Business) (Jersey) Order 2009 provides transitional relief (6 months pre-commencement, 3 months post-commencement, extended while a registration application is pending) for class O trust company service providers whose service does not or ceases to meet the class O criteria.
• Customer money relief: The Trust Company Business (Assets - Customer Money) Order 2000 allows the Commission to exempt a registered person from any requirement of that Order on application, provided customers are not likely to be prejudiced, subject to conditions.

Sources: 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 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 and civil penalties are drawn from two statutes. The Financial Services (Jersey) Law 1998 supplies the supervisory intervention and offence provisions, while the Financial Services Commission (Jersey) Law 1998 contains the civil financial penalty regime, with amounts set by the Financial Services Commission (Financial Penalties) (Jersey) Order 2015.

Supervisory and intervention powers

• Directions and public statements: Under the Financial Services (Jersey) Law 1998 the Commission may issue directions, injunctions, remedial orders, public statements and powers of intervention, and may investigate, enter and search premises and require information and documents.
• Appointment of a manager: The Financial Services (Appointment of Manager) (Jersey) Order 2008 enables the Commission to apply to the Royal Court to appoint a manager over a financial service business (including trust company business) in prescribed circumstances, such as inadequate management, operating without registration, a business that has apparently ceased without orderly wind-down, or failure to comply with conditions, objections or directions.
• Offences: Under the Financial Services (Jersey) Law 1998 it is an offence to carry on unauthorised financial service business and to supply false information or fail to supply required information.

Civil financial penalties

• Penalty regime: 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 (including money laundering reporting officers) for specified contraventions, with notification, surcharge, appeal and proceeds provisions; an unpaid penalty attracts a late payment surcharge and enforcement action.
• Band 1: Under the Financial Penalties Order 2015, repeated failure (more than once in 2 years) to make a required Code notification after written warning is capped at 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 is capped at 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 is capped at 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 the specified harms is capped at 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