trust services

Who is caught

Trust company business is one of the categories of financial service business regulated by the Jersey Financial Services Commission (JFSC) under the Financial Services (Jersey) Law 1998. A person must not carry on trust company business in or from Jersey unless registered under that Law (Article 7), and the JFSC's supervisory and enforcement powers over such businesses are underpinned by the Financial Services Commission (Jersey) Law 1998.

The specific activities that constitute registrable trust company business are set out in the Schedule to the Financial Services (Financial Service Business) (Jersey) Order 2009, which groups them into classes.

• Registrable classes: Classes F to OB cover company formation agents, acting as or providing a 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 limited liability company members or managers.
• Class O: A limited class carrying transitional relief for certain trust company service providers whose services do not, or cease to, meet the class O criteria.
• Registered persons generally: The Financial Services Commission (Jersey) Law 1998 treats registered persons under the 1998 Law (including trust and company administration businesses), together with their principal persons, key persons and money laundering reporting officers, as within the Commission's remit.

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

Key duties

The core duty is registration with the JFSC before carrying on any listed class of trust company business. Registered trust company businesses are then subject to continuing conduct, notification, record-keeping and financial-reporting obligations, several of which carry fixed deadlines.

Registration and notification

• Registration: Persons carrying on a listed trust company business activity must register in the corresponding class under the Financial Services (Jersey) Law 1998.
• Notification of changes: Registered persons must notify the Commission of any change of principal person, key person, shareholding or LLC interest (Article 14), and must display their registration certificate and conditions (Article 11A).
• Codes of Practice: Registered persons must comply with applicable Codes of Practice (Article 19); the Trust Company Business Code of Practice sets binding conduct, governance and prudential requirements built around seven principles.

Governance and conduct

• Span of control: Under the Code, a registered person entitled to control trust company business assets must maintain a regulatory span of control of at least three appropriately skilled, independent individuals, with clearly apportioned responsibilities.
• Compliance function: Firms must maintain a compliance function with an appointed Compliance Officer, Money Laundering Reporting Officer and Money Laundering Compliance Officer, and meet staff competence and continuing professional development standards.
• Financial resources and insurance: Firms must maintain and demonstrate adequate financial resources (including Adjusted Net Liquid Assets calculations) and adequate professional indemnity insurance, including run-off cover on cessation.
• Openness with the JFSC: Registered persons must deal with the Commission openly and notify it in writing of specified matters.

Customer money

• Records and reconciliation: Under the Financial Services (Trust Company Business (Assets - Customer Money)) (Jersey) Order 2000, registered persons must keep adequate records 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 practicable; mixed funds must be separated within 2 days of it becoming possible to do so.
• Pooled accounts: Customer pooled accounts must be held with an approved bank, clearly titled, backed by a bank undertaking not to combine or set off, and not knowingly overdrawn.

Accounts, audit and reporting

• Accounting periods: 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).
• Filing deadline: Financial statements, with declarations, directors' reports and auditor's reports, must be provided to the Commission within 4 months of the period end, extendable to up to 8 months with Commission permission.
• Auditor: Only a Commission-approved auditor may be engaged; on termination the 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.
• Declarations: After each period, registered persons must sign a declaration of compliance with the Law, applicable Orders and Codes and AML/CFT requirements, detailing any material failures.

Fees

• Annual confirmation statement: Entities administered by a trust company business (other than class O business) pay an additional GBP 175 with their annual confirmation statement, and other entities GBP 145, under the Financial Services (Disclosure and Provision of Information) (Jersey) Regulations 2020. Corresponding amounts apply to limited partnerships under the Limited Partnerships (Annual Additional Charge) (Jersey) Regulations 2012.

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 · Limited Partnerships (Annual Additional Charge) (Jersey) Regulations 2012 · Trust Company Business Code of Practice

Exemptions and carve-outs

A series of Orders under the Financial Services (Jersey) Law 1998 exempt defined categories of person from the requirement to register as trust company business. In almost all cases the exemption is limited to the registration requirement under Article 7: exempt persons remain subject to specified conduct, supervisory and enforcement Articles of the Law (Articles 12, 23 to 26, 28, and 32 to 39 and 41) as if they were registered.

• Overseas persons and others: The Exemptions No. 2 Order 2000 exempts overseas persons with no place of business in Jersey (who may not hold out in Jersey except to existing clients), unit-holding nominee companies, electronic communications service providers, and recognised experienced personal advisers.
• Private structures: The Exemptions No. 3 Order 2001 exempts private protector and appointer companies, general partners of limited partnerships, and managers of LLCs, provided they or the relevant structure are administered by a registered trust company business, plus certain sale agents and investment company nominee subsidiaries.
• Connected persons: The Exemptions No. 4 Order 2001 exempts a person providing an Article 2(4) service only to a connected person as defined.
• Fund functionaries: The Exemptions No. 5 Order 2001 exempts functionaries of professional investor regulated schemes and restricted funds; the Exemptions No. 6 Order 2001 provides a now largely historical exemption tied to 2001 application dates.
• Estate and property trustees: The Exemptions No. 7 Order 2001 exempts testamentary trustees administering a deceased estate and advocates or solicitors holding property-occupation shares or LLC interests.
• Listed exempt persons: The Exemptions Order 2000 lists Part 1 limited exemptions (including private trust companies, executors and administrators, pension and share scheme trustees, global custodians, introducers, and directors or managers capped at six companies) and Part 2 unlimited exemptions. Private trust companies must not solicit or serve the public, must be administered by a registered trust company business, and must have their name notified to the Commission.
• Class O transitional relief: Under the Financial Services (Financial Service Business) (Jersey) Order 2009, a class O provider whose service ceases to meet the class O criteria is treated as still meeting them for a limited period (6 months from commencement, or 3 months from discovery of a later shortfall) pending registration in another class.
• Customer money relief: The JFSC may, on application, exempt a registered person from requirements of the Customer Money Order 2000 where customers are not likely to be prejudiced, and may impose conditions.

Sources: 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 of trust company business obligations rests on the Commission's supervisory and intervention powers under the two 1998 Laws, supported by a civil financial penalty regime and Code-based regulatory action.

Civil financial penalties

Articles 21A to 21G of the Financial Services Commission (Jersey) Law 1998 create a civil financial penalty regime applying to registered persons, principal persons, key persons and senior management function holders, with notification, appeal and late-payment surcharge provisions. The Financial Services Commission (Financial Penalties) (Jersey) Order 2015 sets the bands and maximum levels.

• Band 1: Repeated failure to notify a Code-required matter after written warning: up to the lower of 4% of average annual turnover or GBP 100,000 for a registered person, or GBP 10,000 for an individual.
• Band 2: A contravention not in Band 2A or 3 and not rectified in a reasonable timeframe: up to the lower of 6% of turnover or GBP 4,000,000 for a registered person, or GBP 200,000 for an individual.
• Band 2A: A negligent contravention causing or risking specified harms: up to the lower of 7% of turnover or GBP 4,000,000 for a registered person, or GBP 300,000 for an individual.
• Band 3: An intentional or reckless contravention involving those harms: up to 8% of turnover for a registered person, or GBP 400,000 for an individual.
• Turnover basis: Average annual turnover is based on Jersey business activities over the preceding 5 financial years, and for trust company business with an affiliation includes all affiliation members' turnover.

Intervention and other powers

• Court-appointed manager: Under the Financial Services (Appointment of Manager) (Jersey) Order 2008 the Commission may apply to the Royal Court for appointment of a manager over a trust company business in prescribed circumstances, including inadequate management, unregistered activity, asset preservation, and failure to comply with conditions, notices or directions.
• Supervisory powers: The Financial Services (Jersey) Law 1998 gives the Commission powers to issue directions and injunctions, make public statements, exercise intervention powers, and require information and documents; supplying false information or obstructing an investigation is an offence.
• Code breaches: Breach of the Trust Company Business Code of Practice does not itself create civil liability but is grounds for regulatory action, including written directions, financial penalties, public statements, or in serious cases revocation of registration.

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 · Trust Company Business Code of Practice