II. Obligations of trustees under R.25
4. What are the pros and cons of expanding the extent of information which trustees should hold to include the objects of power in the context of discretionary trusts? Is the concept of “objects of power” sufficiently clear and reasonable? Are there any other terms that you would recommend FATF use instead of “objects of power”?
It is essential that trustees hold information on all beneficiaries and classes of beneficiaries, as otherwise discretionary trusts would constitute a substantial loophole in the visibility of the BO of trusts by competent authorities. The concept of “objects of power” is unclear. The term “discretionary beneficiaries” may be clearer. In any case, it should be accompanied by sufficient guidance and a clear explanation, supported by examples.
5. Do you agree with the proposed nexus of such obligations based on residence of trustees or location where the trusts are administered? Compared to the current obligation incumbent on countries that have trusts governed under their law, do you see pros and cons from such a change, (e.g., would there be a difference in terms of efforts to collect the information in cases where a trust may have trustees that are resident in more than one jurisdiction, and where a trust may be administered in a country in which a trustee is not resident)?
Obligations should extend to all jurisdictions to which the trust has a “sufficient link” as outlined in the answer to question 2. Making the legal validity of the trust in each jurisdiction is contingent upon trustees meeting their obligations would provide an incentive for trustees to do so, and would address challenges in information collection in cases where a trust may have trustees that are resident in more than one jurisdiction, and where a trust may be administered in a country in which a trustee is not resident.
6. Do you see challenges in respect of record-keeping obligations for non-professional trustees noting that all other obligations under R.25 apply to such trustees?
All trustees, whether professional or non-professional, have fiduciary duties. As part of these duties, it is reasonable to expect they hold up-to-date and adequate information on all parties to the trust as well as the trust assets and activities. Alternatively, trustees could be regulated and licensed, making all trustees professional by default.