12. TRUST SERVICE PROVIDERS
12.1. Application
COB 12 applies to a Trust Service Provider that is licensed to Provide Trust Services by the AFSA. Guidance: Examples of Clients of a Trust Service Provider The Client of a Trust Service Provider may be a settlor, trustee or named beneficiary of a trust.
12.2. Obligations of the Trust Service Provider
A Trust Service Provider must maintain proper standards of governance and professionalism and must comply with all applicable AIFC laws, Rules and Regulations relevant to Providing Trust Services.
12.3. Exercise of discretion
Where a Trust Service Provider is responsible for exercising discretion for, or in relation to, its Clients, it must exercise its discretion or other powers in a proper manner and for a proper purpose.
12.4. Delegation of duties or powers
Any delegation of duties or powers by a Trust Service Provider must be for a proper purpose, subject to appropriate oversight, and comply with all applicable AIFC laws, Rules and Regulations.
12.5. Professional indemnity insurance
A Trust Service Provider must at all times hold adequate professional indemnity insurance appropriate to the nature and size of its business. It must:
- (a) provide the AFSA with a copy of its professional indemnity insurance cover; and
- (b) notify the AFSA of:
(i) any changes to the cover including termination and renewal;
(ii) any claims in excess of USD 10,000.
12.6. Internal reporting
A Trust Service Provider must have arrangements for internal reporting to ensure that the directors or the partners receive sufficient information on the running of the business and the treatment of Clients.
12.7. Use of third parties
Where the Trust Service Provider appoints a third party in connection with a Client’s affairs, for example to advise on or manage investments, the Trust Service Provider must carry out due diligence on that third party and continue to monitor its performance on an ongoing basis.
12.8. Qualification and experience
Staff employed or Persons recommended by the Trust Service Provider must have appropriate qualifications and experience.
12.9. Books and records
The books and records of a Trust Service Provider must be sufficient to demonstrate adequate and orderly management of Clients’ affairs.
12.10. Due diligence
A Trust Service Provider must, at all times, have verified documentary evidence of the settlors, trustees (in addition to the Trust Service Provider itself) and principal named beneficiaries of trusts for which it Provides Trust Services.
In the case of discretionary trusts with the capacity for the trustee to add further beneficiaries, a Trust Service Provider must also have verified, where reasonably possible, documentary evidence of any Person who receives a distribution from the trust and any other Person who is named in a memorandum or letter of wishes as being a likely recipient of a distribution from a trust.
A Trust Service Provider must demonstrate that it has knowledge of the source of funds that have been settled into trusts or have been used to provide capital to companies, or have been used in transactions with which the Trust Service Provider has an involvement.
12.11. Fitness and Propriety of Persons acting as trustees
Where a Trust Service Provider arranges for a Person who is not an employee of the Trust Service Provider to act as trustee for a Client of the Trust Service Provider, the Trust Service Provider must ensure that such Person is fit and proper. A Trust Service Provider must notify the AFSA: