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BVI introduces criminal offence of failing to keep trust records

Thursday, 23 April, 2015

STEP Lead

Trustees of British Virgin Islands trusts must now maintain records and underlying documentation for each trust for at least five years.

The new requirement came into force on 30 March under the Trustee (Amendment) Act 2015. The records do not have to be kept in the BVI but need to be 'sufficient to show and explain the trust's transactions' and 'enable the financial position of the trust to be determined with reasonable accuracy'.

Failure to comply without reasonable excuse is a criminal offence, possibly resulting in a USD100,000 fine or a five-year prison sentence.

According to law firm Maples and Calder, however, some of the new law's requirements are unclear. The legislation does not state when the five-year clock starts, nor whether its scope is dependent on the governing law of the trust or the residence, incorporation or place of business of the trustee.

Maples and Calder emphasises that the new law applies to VISTA trusts as well as conventional trusts. 'In the past, some trustees may have formed the view that they did not need to obtain detailed information about the business of the underlying company held under the VISTA regime', the firm comments. 'We believe that has always exposed them to a risk of claims from beneficiaries, and now there is the added risk of criminal sanctions.'

  • A similar duty was placed on BVI companies and limited partnerships in late 2012, through an amendment to BVI company law demanded by the OECD Global Forum.

Sources