Understanding Private Trust Companies (PTCs) in Guernsey: a guide to Regulatory Requirements
Private Trust Companies (PTCs) can be a highly effective vehicle for managing trusts for families or connected groups. In this article, we explore the key aspects of PTC regulation in Guernsey, including limited permissions, fiduciary licensing and record-keeping requirements.
What is a Private Trust Company (PTC)?
A PTC is a ‘special purpose’ company that is formed for the purpose of acting as a a trustee of a specific trust or a group of connected trusts. These are usually a trust or trusts set up for one family, or unit trusts that do not fall under the remit of the Protection of Investors (Bailiwick of Guernsey) Law 2020.
There is no dedicated PTC legislation in Guernsey. Most PTCs are formed as companies limited by shares and are incorporated in the same way as any other Guernsey company.
Acting as trustee is a regulated activity in Guernsey under the Fiduciaries Law. However, PTCs are generally exempt from the full licensing requirements that apply to companies carrying on trust business in Guernsey if they are granted permission by the Guernsey Financial Services Commission (GFSC) to operate with ‘limited permission’.
The GFSC provides clear guidance on the regulatory framework for PTCs under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law 2020.
Limited Permission for PTCs
PTCs fall within the scope of the Fiduciaries Law and therefore must either apply for a fiduciary licence under section 6 of the Law or seek limited permission under section 3(1)(ac) to operate without a licence. Limited permission will depend on the facts and circumstances of each individual case but may be granted based on the following criteria:
- The PTC will act only as a trustee to specific trust or a group of connected trusts with common interest, such as trusts for one family.
- The PTC will not advertise or market its services to the public.
- The PTC will be administered by a licensed fiduciary under the Guernsey Fiduciaries Law.
- The licensed fiduciary confirms to the GFSC that it will retain sufficient knowledge and information about the PTC’s ownership and control structure and about its activities to be satisfied that:
- The PTC is effectively administered and governed.
- The PTC complies with relevant laws and regulatory requirements.
The licensed fiduciary can demonstrate an appropriate level of oversight of the PTC by any, or a combination of, providing a director to the board of the PTC, or providing a company secretary or authorised signatory to the PTC.
As the licensed fiduciary is facilitating the carrying on of a regulated fiduciary activity by the PTC, the GFSC regards this as a higher risk activity under the Proceeds of Crime Law, which should be subject to enhanced monitoring and oversight that is commensurate with the Money Laundering, Terrorist Financing and Proliferation Financing (AML/CFT/CPF) risks involved.
Applications can be submitted via the GFSC Application Portal, accompanied by applicable fees. Permissions are typically granted for three years and can be renewed if no changes occur in the information submitted at application.
Full Fiduciary Licensing for PTCs
Some PTCs may prefer to apply for a full fiduciary licence, especially if they have sufficient expertise and robust AML/CFT/CPF frameworks in place. Holding a full licence can provide reassurance to beneficiaries and third parties, such as banks or insurers, that the PTC is under GFSC supervision. Such licences may be subject to conditions limiting the scope of the PTC’s activities.
Private Trust Foundations (PTFs)
The GFSC also considers applications for limited permissions for Private Trust Foundations (PTFs). Similar criteria apply to PTFs as those for PTCs, and applications can be submitted through the GFSC Application Portal.
Record-Keeping Requirements for Licensed Fiduciaries
Licensed fiduciaries should ensure that they maintain detailed records of the PTCs or PTFs they administer, which should be available for inspection by the GFSC on request. This should include:
- Each trust’s activities.
- Any beneficial ownership information regarding the PTC, its directors/ councillors and its controllers.
- Any information regarding the settlors, beneficiaries and, if applicable, protectors of the trust or trusts.
Advantages of a PTC
PTCs offer a range of benefits to families with complex assets or family succession issues who are seeking to move away from direct ownership to a structure designed to offer coherency for the future but are concerned that a traditional family trust will not allow them sufficient control.
This may be an issue either because they want to retain a degree of control over the management of their assets or are unable to find a suitable service provider to act as trustee because the assets placed in trust, such as a family business, are seen as too complex or high risk for an independent trustee to manage.
PTCs offer a tailored solution for families and connected groups to manage their trusts. They can serve to unite a family’s business interests and thereby strengthen control whilst at the same time achieving segregation between different assets.
They allow family members to retain an element of influence over the management of the trust assets, through the board of the PTC, without compromising the validity of the family trusts. And they can facilitate the devolution of control to future generations.
Licensed fiduciaries, like Sovereign, play a crucial role in overseeing PTCs and maintaining compliance with Guernsey’s laws.
