‘Managed’ in this context means (a) some of the trust’s funds are managed on a discretionary basis or (b) there is a corporate trustee that performs administration and management activities on a commercial basis for the trust.
The issue here does not relate to opening accounts. The issue is that if either of these criteria applies, the trust will be viewed as an FI, which means the trustees themselves will be responsible for conducting due diligence on anyone deemed to be an ‘account holder’ in respect of the trust (such as they exist).
A failure to file reports can lead to penalties.
A corporate trustee is likely to be on top of the FATCA and CRS requirements. If you are advising on a trust where funds are being managed on a discretionary basis by you or by a DFM, it might be worth the trustees seeking specialist advice about their reporting requirements.
This can also apply to charities. Charities are exempt under FATCA but not under CRS. If a charity receives the majority of its income from investment returns rather than donations and any of the funds are discretionary managed, the charity may be viewed as an FI, despite not being considered a financial organisation in the traditional sense.
Charity trustees might find they have reporting requirements they weren’t expecting. Specialist advice here will again be important.
Martin Jones is technical team leader at AJ Bell
