Is use of a trust bank account rather than a normal bank account necessary and, if so, why? Surely transferring the funds into an account in the trustees joint names is equally sufficient as the money is then held in the trustees legal names but for the benefit of the beneficiaries.
When opening a bank account, I believe it is necessary to prove not just the identity of the account holders, but also the source of the monies, enabling the bank/financial institution top satisfy its “Know your client” and AML responsibilities.
When opening a personal account, you confirm the monies are yours. If the bank then discovers the trustees mis-lead it when opening the account, it could summarily close the account (giving problems in quickly finding another provider) or freeze the account and submit a suspicious activity report (in accordance with its legal obligations), making life for the trustees somewhat complicated. Any perceived loss to the trust fund would potentially fall upon the trustees.
Whilst it must be for each set of trustees to decide upon the perceived level of risk they might be willing to adopt, personally I would be very wary of opening other than a designated trustee account, despite the difficulties that are currently being encountered.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
That is an extremely sensible explanation. Thank you for clarifying something that I could never explain the legal justification for.
Isn’t there another issue, which predates and is perhaps more fundamental than the anti-money laundering regulations. If trustees invest trust money purporting that it is their own, then surely the bank could be expected to offset that money against the personal indebtedness of the trustee to the bank. Or indeed for that money to be attached by other personal creditors of the trustee.
I am not a trust expert, but I believe there may also be FSCS differences as well.
“However, eligible deposits in an account to which two or more persons are entitled as members of a business partnership, association or grouping of asimilar nature, without legal personality, are aggregated and treated as if made by a single depositor for the purpose of calculating the limit of £85,000.”
Possible Exclusion from compensation
“The holder and any beneficial owner of the deposit have never been identified in accordance with money laundering requirements.For further information, contact your bank, building society or credit union”
Thank you, Neil. That’s very useful further information.