Cayman Islands Private Trust Companies - IntroductionIn the realm of wealth structuring for high-net-worth individuals and families, private trust companies (PTCs) have gained significant traction. A rising trend among private clients is the establishment of their own PTCs to act as trustees for trusts, as opposed to entrusting these responsibilities to professional trustee companies provided by offshore service providers. Lets look at Cayman PTCS a bit more closely.
PTC RegulationCentral to the regulation of Cayman's trust company industry is the Banks and Trust Companies Act (BTC Act), which mandates licensing by the Cayman Islands Monetary Authority (CIMA) for any company engaging in "trust business" within or from the Cayman Islands. "Trust business" includes acting as a trustee for express trusts on a professional basis, as well as acting as an executor or administrator. Since 2008, Cayman PTCs that meet specific criteria have been exempted from the licensing requirement under the BTC Act. These PTCs must register with CIMA, demonstrating their eligibility for unlicensed status, as outlined in the Private Trust Companies Regulations (PTC Regs).
Key Requirements for Exemption
- The PTC must be a Cayman-incorporated company under the Companies Act.
- It should exclusively conduct "connected trust business" as defined in the PTC Regs.
- The PTC's registered office must be maintained by a service provider with a full trust license issued by CIMA under the BTC Act.
- The PTC's registered company name must include "Private Trust Company" or the letters "PTC."
- The PTC should not solicit or receive contributions for trusts of which it serves as trustee from the public or non-"connected persons" as defined in the PTC Regs.
Connected trust business?The scope of "connected trust business" hinges on the relationship between the settlors/contributors of the trusts in question. PTCs acting as trustees for family trusts, for instance, typically meet this criterion seamlessly. Unlicensed PTCs are required to maintain certain documents at their registered office in Cayman, including copies of trust terms, trustee and beneficiary details, settlor and protector information, and financial records related to their connected trust business.
Key Points to Note
- PTCs must regularly provide details of their name, directors, shareholders, and registered office service provider to CIMA.
- There is no minimum capitalization requirement or the need for local directors or officers. Audited accounts do not have to be filed with CIMA.
- Anti-money laundering regulations apply, but the due diligence responsibility rests with the registered office service provider.
- A registered PTC can serve as the sole trustee of a STAR Trust.