Introduction
In today’s global financial landscape, trusts serve as essential tools for wealth management, estate planning, and asset protection. However, ensuring the integrity and compliance of a trust, particularly when it holds shares in a Maltese company, requires a high level of regulatory oversight. This is where the role of a Qualified Person becomes indispensable.
A Qualified Person is a regulated professional, such as a lawyer, accountant, or corporate service provider, who is authorised to provide trustee or fiduciary services under Malta’s Trusts and Trustees Act, Chapter 331. While not all trustees are necessarily Qualified Persons, the law mandates their appointment in case of a Trustee not duly authorised by the Malta Financial Services Authority (“MFSA“)holding securities in Maltese Companies or immovable properties in Malta to ensure proper governance, fiscal compliance, and adherence to anti-money laundering (“AML”) obligations. Their expertise is particularly crucial when a trust registered abroad holds shares in a Maltese company, as it introduces complex cross-border regulatory and taxation challenges.
Understanding the role of a Qualified Person is vital for anyone involved in trust and company structuring. From compliance and risk management to regulatory reporting and trust administration, these professionals ensure that trusts operate within legal parameters while safeguarding the interests of beneficiaries.
The Duties and Responsibilities of a Qualified Person
The primary duty of a Qualified Person is to ensure that a trust complies with all relevant laws, regulations, and financial obligations. This includes overseeing fiscal responsibilities, preventing financial crime, and managing potential conflicts of interest. The Trusts and Trustees Act requires a Qualified Person to act with prudence, diligence, and integrity, ensuring that trust assets are managed responsibly and transparently.
One of the key aspects of this role is ongoing compliance monitoring. This involves conducting due diligence on the settlor, beneficiaries, trustee, and any connected parties to ensure that no illicit activity is taking place within the trust structure. Additionally, a Qualified Person must ensure that the trust meets its tax obligations, maintains accurate records, and provides financial transparency to both beneficiaries and regulatory bodies.
Another critical responsibility is risk management. Given the increasing scrutiny on financial transactions, especially those involving offshore entities, a Qualified Person must continuously assess potential risks and take proactive steps to mitigate them. This includes advising the trustee and Board of Directors on the implementation of AML procedures, identifying beneficial ownership structures, and ensuring that trust assets are not misused.
Beyond financial and regulatory oversight, a Qualified Person plays an important role in trust administration. They must ensure that trust property remains separate from personal or corporate assets, protecting the integrity of the structure. They are also responsible for notifying the Malta Financial Services Authority of any significant changes, such as modifications to the trust structure or their own resignation from the role.
Regulatory Reporting and Compliance Obligations
A Qualified Person is subject to extensive reporting requirements, which ensure that trust activities remain transparent and in line with legal standards. Upon appointment, they must notify the MFSA and confirm their ability to fulfill the role. If at any point they resign, are dismissed, or encounter obstacles in performing their duties, they are legally required to report this to the regulator.
Furthermore, trusts are subject to AML compliance and financial crime prevention regulations. A Qualified Person must ensure that all transactions are legitimate and file Suspicious Transaction Reports (“STRs”) if any irregularities are detected. Tax compliance is another crucial aspect, requiring accurate reporting of trust income, distributions, and financial statements to the relevant authorities.
Financial record-keeping is another fundamental duty. Under Maltese law, trust-related accounts and records must be maintained for a minimum of ten years. These records should be readily accessible for audit purposes and must be disclosed to beneficiaries upon request. Such stringent record-keeping and transparency measures are in place to prevent fraud, money laundering, and financial mismanagement within trusts.
Complexities of a Foreign-Registered Trust Holding Shares in a Maltese Company
International clients frequently opt to register their trusts in foreign jurisdictions while holding shares in a Maltese company. While this structure can provide strategic tax benefits and asset protection, it introduces multiple legal and regulatory complexities. Ensuring compliance across different jurisdictions requires a Qualified Person with expertise in cross-border trust administration.
One of the primary challenges is navigating dual regulatory frameworks. A trust must comply with the laws of both its country of registration and Malta, which can create potential conflicts in reporting obligations. A Qualified Person plays a key role in aligning these requirements, ensuring that the trust remains fully compliant in both jurisdictions.
Taxation is another major consideration. Depending on the structure, a foreign trust holding shares in a Maltese company may be subject to corporate tax, capital gains tax, and withholding tax in Malta. A Qualified Person ensures that the trust meets all economic substance requirements, preventing potential legal disputes or tax liabilities.
Additionally, financial institutions often impose stringent Know Your Customer (“KYC”) and AML procedures when dealing with offshore trusts. Banks may scrutinise transactions more closely, delaying financial operations. A Qualified Person helps facilitate smooth banking relationships, ensuring that all required documentation is in place and that the trust’s legitimacy is clearly established.
Conclusion
The role of a Qualified Person is essential in ensuring that trusts, particularly those with cross-border elements, remain compliant, transparent, and effectively managed. By overseeing legal, fiscal, and regulatory obligations, these professionals help prevent financial crime, protect beneficiaries’ interests, and uphold the integrity of trust structures.
At Zerafa Trustees Ltd, we specialise in providing expert Qualified Person services, ensuring full regulatory compliance and seamless trust administration. Whether you are establishing a trust in Malta, managing a foreign trust that holds shares in a local company, or seeking expert guidance on risk management and reporting obligations, we are here to help.
With a deep understanding of Maltese trust law, international regulatory frameworks, and cross-border structuring, our team ensures that your trust is managed with the highest level of professionalism and legal precision. If you require a Qualified Person for your trust or need assistance with trust and company structuring, contact us today to learn how we can support you.
