MFSA Issues Circular about Rules for Trustees of Family Trusts

Act no. XI of 2014 brought into force amendments to the Trusts and Trustees Act on the 25^th of April 2014. Among these amendments, one finds the introduction of the concept of family trusts in Article 43B of this Act. Family trusts are those created by the settlor to hold settled property for the future needs of family members or family dependants who are definite or can be ascertained.

It is good to know that the definition of ‘family member’ and ‘family dependants’ has been slightly amended. The degrees of relation in the collateral line up to the fifth degree inclusively, have been widened. In addition, trustee companies satisfying the conditions outlined in Article 43B do not need to obtain authorisation, however they are required to be registered.

Through and amendment to Article 52, the Authority is empowered to issue rules regulating trustees that are subject to the registration procedure beneath Article 43B. Draft rules with respect to Article 52 were issued by the MFSA for consultation.

Trustees of family trusts do not need to include a professional trustee on their board of directors, however, proposed directors are required to undergo an assessment as per the Rules and one of the directors must have what is deemed to be sufficient knowledge and experience in the administration of trusts. Furthermore, one of the directors or senior officer within the company must assume the role of Money Laundering Reporting Officer (MLRO). This is in line with the terms of the Prevention of Money Laundering and Funding of Terrorism Regulations (SL.373.01, Laws of Malta) and the FIAU’s implementing procedures.

The aim of the new Rules is for companies acting as trustees for family trusts to act in accordance with the private trustee regulations applicable to individuals in relation to Article 43A of the same Act.