Part of the attempt by government to avoid grey listing earlier this year was the passing of an amendment to the anti-money laundering act on 29^th December 2022.

The amendment has not yet been signed into law by the President, and the authorities are still establishing the regulations and reporting requirements. Parts of the amendment should have taken effect from 1^st April.

What we do know is that there will be additional requirements by trustees to disclose their position as trustee and that they are dealing with trust property to any accountable institution. We expect that our service providers will require more information regarding trustees of a trust invested with them.

We also know that trustees outside of South Africa will only be able to administer or dispose of trust property once authorised by the Master of the High Court. This could lead to the Master requesting a bond of security, insurance should an offshore trustee act unlawfully and not return for prosecution, or the trustee being denied.

Trustees who are disqualified by being declared delinquent, unrehabilitated insolvents, on grounds of misconduct involving dishonesty or convicted of a criminal offence are also likely to be prohibited for acting as trustees.

The Master’s office currently has a large backlog, so correcting for any changes to trustees is likely to be very slow.

Our advice in the meantime is to identify trustees who fall into the above categories and consider what changes you should make. The removal of trustees can be acted on immediately and changes to foreign trustees can be handled by appointing trustees in South Africa or making changes once the full requirements are known.

Are Trusts still worth the effort? We think so, as they serve some important purposes:

• Estate planning tool for passing wealth on to future generations free of tax and estate duty
• Acting as a custodian for a beneficiary who needs their finances protected or does not have the capacity to act for themselves
• Protection from creditors

Whilst there is a nuisance factor in amending a trust, it will be necessary to comply with latest anti-money laundering requirements, which may enable South Africa to come off the grey list of countries subject to additional scrutiny.