Regulation governing TCSPs

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REGULATORY DIGEST ON THE REGULATION N° 52/2022 OF 01/09/2022 GOVERNING TRUST AND COMPANY SERVICE PROVIDERS

Introduction 

In International Financial Centers, investors are supported by professionals in different services such as incorporation of companies or legal arrangements, directorship and secretarial services, domiciliation, trustship/trustees and nominee shareholder. The professionals that perform the above activities are called Trust and Company Services Providers (TCSPS) and have been placed under the supervision of the National Bank of Rwanda as per 2021 amendment to the Law governing the National Bank of Rwanda. It is in that framework that NBR has issued the regulation governing the TCSPs.

Regulatory Key Highlights

The National Bank of Rwanda (NBR) for the first time issued a regulation no 52/2022 of 01/09/2022 to govern trust and company service providers (“TCSPs”) published in Official Gazette n° 38 Bis of 19/09/2022 which provides for all necessary requirements and process of applying for a license as a trust and company service provider in Rwanda.

This new regulation requires that any person who intends to provide trust and company services obtain a license from the NBR except for trustees exempted as per article 3 of this regulation.

Under the regulation, trust and company service provider is a sole proprietor or a legal person undertaking any of the following activities:

  •  acting as a corporate or partnership formation agent;

  •  or arranging for another person to act as a director, secretary or senior manager of a company or a partner of a partnership or as a foundation senior manager;

  •  providing administration or management of a trust, company, partnership, foundation or for any other legal person or legal arrangement;

  •  providing registered office, business address or accommodation, correspondence or administrative address for a company, partnership, foundation or for another person;

  •  acting as a resident agent for the purposes of meeting requirements to hold beneficial ownership or interest information;

  •  acting as or arranging for another person to act as a trustee of an express trust; and

  •  acting as or arranging for another person to act as a nominee shareholder for another legal person.

The regulation stipulates criteria for licensing a TCSP that NBR shall assess which include business registration, compliance systems, business plan, management structure, internal policies and procedures; being fit and proper and maintaining a standalone professional indemnity insurance policy that is commensurate with the level of risk.

In line with these criteria, an application for TCSP shall be accompanied by a proof of payment of a non-refundable application fee of one hundred thousand Rwandan Francs (FRW 100,000); a filled application form as provided in the appendix 1 of this regulation; name. registered office address, date and place of registration of the entity; certified true copy of registration certificate; proforma of professional indemnity insurance policy; business plan with details provided in article 6; organizational structure; filled personal declaration of significant shareholder or partners, board of directors as well as senior managers as per appendix 2 to this regulation; information about outsourced functions, details about a parent company in case of a subsidiary or a branch of foreign TCSP; and any other information that NBR may deem necessary.

Important deadlines

The Regulation provides for a moratorium of one year for entities such as law firms and accounting firms, that have been providing trust and corporate services prior to its entry into force before they can be required to apply for a TCSP license.

Implications for concerned stakeholders

The holder of a TCSP license shall be required to pay an annual license fee of one million Rwandan francs (FRW 1,000,000) to the National Bank of Rwanda upon completion of three years from the issuance of the license.

Among other things, the regulation provides circumstances under which the license can be revoked or suspended (Article 10).

TCSP licensees are also required to adhere to the applicable Anti-Money Laundering and Counter Financing of Terrorism (AML & CFT) laws and regulations. Further, TCSPs are subject to quarterly regulatory reporting of financials of a trust under management and other activities and besides NBR shall, in the exercise of its regulatory and supervisory power, request for such data or information or carry out inspection as it deems necessary.

CLICK HERE FOR MORE DETAILS:

https://www.bnr.rw/laws-and-regulations/financial-consumer-protection/laws-and-regulations/