The Trust Companies Act, or TCA, regulates financial institutions in Singapore that provide various trust services for the purposes of managing wealth. Once these types of businesses have finished company registration, they are regulated by the TCA to ensure professionalism and proper business conduct as well as to prevent fraudulent activity such as money laundering.

What Kinds of Business Activities Are Regulated?

Banks and other financial institutions or service providers will have their activities monitored by the TCA if they provide trust administration services, if they act as a trustee in relation to a trust, if they arrange for an individual to act as a trustee in respect to a trust, and if they provide services involving the creation of a trust, whether directly or indirectly. Exclusions include will advisors, executors, and estate administrators for the deceased as well as managers and trustees of business trusts since these are not used for the purpose of planning wealth.

Differences between Trustees Act and TCA

The TCA actually provides the framework for companies (following company registration) that provide various trust services in Singapore and this is true even if the trusts are established in a different country or location. The framework sets up the licensing requirements for people who are conducting business involving trusts in Singapore. It also lays out requirements for managers, shareholders and directors. Finally, it lines out obligations with regard to the prevention of money laundering and terrorism financing. The goal of the Trustees Act, conversely, is to provide the basic legislation for the trustees themselves. It lines out minimum standards of quality and a duty of care.

Exemptions: Those Who Do Not Need a Trust Business License

After having completed company registration procedures, there are some groups and persons exempt from holding a trust business license. These include banks that are regulated by MAS; lawyers and accountants; anyone who carries out introductory activities; those living overseas; anyone who has a capital market services license or those who are exempt from holding that license; people who engage in trust business that is related to the issuance of debentures; private trust companies; and trustees of collective implementation programs that are approved under the SFA.

Requirements for Charitable and Private Trusts

In a charitable trust situation, businesses are regulated by the ambit of the Trustees Act that is administered by the Singaporean Ministry of Law following company registration. Following company incorporation or company registration, private trusts are exempted under the TCA from holding a business license, but they are still required to engage with a licensed company for the purpose of conducting checks regarding the avoidance of terrorism financing or money laundering. This information is available in more detail at the MAS website.

What is the Approach to the Supervision of These Companies?

Overall, the idea is to regulate and supervise these businesses following their company registration to ensure safe, sound, and fair dealings. The MAS does this in many ways which include conducting company visits and inspections on-site and by conducting reviews off-site. In terms of on-site activity, it is possible for the MAS to perform a simple audit or a full-scope inspection that covers a company’s complete compliance with the legislation. Conversely, a thematic inspection or audit will only cover a certain part of that legislation.

Getting a License

Following company registration, the MAS considers many factors prior to the provision of licensure. These include the management expertise of the applicant as well as his or her physical presence within the country, the financial soundness or credibility of the applicant and the parent company, the ability of the applicant to meet minimum financial, insurability and indemnity requirements, the functionality of the internal compliance systems, and the overall integrity, competence and ability of the applicant.

How Long Does It Take?

Overall, while there are several different things that those involved in trust management must do in order to comply with the law, the Ministry of Law has worked hard to simplify the process and provide plenty of resources to those who need them.

Sandhurst Consultancy is well versed in the mechanics of setting up a private trust

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