Speaker 1: News this week, there's now a bit to tighten our laws around trust to stop money laundering. Among the other requirements, there'll be a reassessment of the trust every three years to examine the risks that the trust or category of trust might pose. Stephen Powell is the head of the forensics practice at n Stephen Good Evening. This proposal would see trustees having to prepare financial statements every year. There'll be a couple of other things. How onerous would these new rules be?
00:00:29
Speaker 2: I Stephen good Evenin and Good Evening listeners. The reforms are going to create extra extra administration, make no doubt you know so. So I think a lot of administrators in the trust environment are not going to be terribly teased by the overall that is currently being planned. But what we have to understand is this reform is really about transpancy, accountability and preventing the abuse of trust for financial crime. And if we just look at all the details coming out of the mud Longer Commission, it's quite clear that the Mamlo Syndicate and some of the other parties that have appeared at much Longer have used trusts to conceal that they are ultimate beneficial owners. We have to remember trusts are legitimate and widely used for estate planning, family wealth, commercial structures, and public benefit purposes. But like companies and other legal arrangements, they can easily be abused when the real human beings behind the structure choose to remain hidden.
00:01:30
Speaker 1: Thanks Steven, Okay, So, I mean the whole point of this is you want to know who the money is flowing from and where it's going to. You want to know the identity of that person of those people, right, and part of this then, as you point to in the Mdlunger Commission, we've seen all sorts of evidence around trusts. Do you believe that these proposed changes would fix that problem? Would they then fix the problem that they're trying that is trying to be that the authorities are trying to solve here.
00:01:58
Speaker 2: I think that it's going to make a real difference student, and it's going to give the master a number of powers to actually penalize the provision of false information, and the penalties are tactic. The provision is made in the bill for penalty of up to ten million rand or five years jail time if you supply false information when you create less trust. So I think it's going to have real stick, and it's going to also provide the Master's Office with supervisory powers and also further admin for the Master's Office. Where I'm a little worried is whether the Master's Office will have the capacity to actually deal with all of these new changes.
00:02:37
Speaker 1: Well, that was going to be my next question. I mean, is the Master's Office really going to be able to do all of this? Are the Master's officers or the Master's Office a fulfilling the function it's supposed to fulfill with regard to trusts Now, I.
00:02:51
Speaker 2: Think it's going to be a challenge, but I'm sure that government is acutely aware of the deficiencies, and like they did with the think where they authorize the re treatment of extra bodies, extra resources to cope with the heavier workflows going from the General Laws Amendment Act, I'm sure that government will make the necessary dispensation to improve and a lot of the right resources to the Master's Office. So hopefully we'll have that challenge addressed as well.
00:03:21
Speaker 1: We're in a kind of space where whenever there's some kind of tightening up around a financial law, someone in government will say we're doing this to stay off the gray list of the Financial Action Task Force. And that's fine, I get it. Would we be doing this without that incentive. It doesn't feel like it that this is all coming from one place.
00:03:38
Speaker 2: I think we've got to go back to the twenty one fart Of Report, which actually put us into the dog box and identified that there were serious flaws and deficiencies and weaknesses in the anti money laundry control regime. And what we did in twenty twenty two is we passed the General Laws Amendment Act, and that was based that anti money ordering and combating terrorism financing. The Amendment Act came in in twenty two and it affected five pieces of legislations, one of them being the Trust Property Control Act of nineteen eighty eight, the NPO Act of nineteen seven, as well as the IFICEE Act of two thousand and one and the Companies Act. And the last one was the Financial Sector Regulation Act of twenty seventeen. But Stephen, all we really did at that stage was introduced the concept of beneficial ownership into that legislation. So there was a piecemeal change to the Trust Property Control Act. What the current of envisages is a complete overall of the structure, and I think that overall is well overdue because the Trust Property Control Act has been in place since nineteen eighty eight, so I think it is due for a major shakeup and rejig and I just hope that we administer the intentions of government that it is read truthfully.
00:05:01
Speaker 1: In an era of cryptocurrencies, is it still important to manage legislation around trusts? I mean, are we doing the right thing here? Is really going to stop people, you know, bad actors from transferring money or value or crypto, whatever you want to call it, from one person to another.
00:05:20
Speaker 2: I think, Stephen, the authorities are acutely aware of the abuses that have taken place in terms of crypt and there has been a radical introduction of supervision globally in terms of the abuses with crypto. So that is being addressed and it could be an area where the criminals moved to in greater numbers. But we do have the current weaknesses and we have to understand the current weaknesses or not just at addressing money launterry, we also have susceptibility to terrorism. And the practical risk is that you know, terrorist financing it's likely different to ordinary money laundering because with money laudering, you disguising the origin of criminal proceeds. But with terrorist financing you can receive funds from lawful or unlawful sour for sources. But the key concern then is destination, purpose and ultimate control of funds. So the overall is a second bid at fixing a requirement that the fartef have imposed. So in a way, yes, we are responding to FIGHTTEF and I'm not sure without the fart of pressure and whether we would have got into this possession at all. But it is a positive change because it's going to make it harder for terrorists to use trusts, and it's going to make it harder for the drug syndicates and the cartels to also in these thoughtsters like them are mala syndicate to abuse trusts. It has to be seen as an overall part of a bigger plan, and the bigger plan is really to stop the leakages that happened with NPO's trusteeds. We've beefed up the thick, We've beefed up the Companies Act, we've beefed up the Financial Sector Regulation Act, and we are getting through the fight if peer review that started in the first half of this year and will end in October next year. And I think this is another area where we need to demonstrate to the fight if that we've now passed a radical law that is going to improve the control and supervision and an administration of trusts. But more importantly, we'll have to demonstrate that these new amendments work and that they are effective.
00:07:29
Speaker 1: Stephen Palm, thank you so much. Ahead of the forensic practice at n