COBS 5. COBS 5. ADDITIONAL RULES — PROVIDING TRUST SERVICES
COBS 5.1 COBS 5.1 Application
This chapter applies to a Trust Service Provider with respect to the conduct of Providing Trust Services.
COBS 5.2 COBS 5.2 General
For the purposes of this chapter, a settlor, a trustee or a named beneficiary of a trust in respect of which the Trust Service Provider is engaged in Providing Trust Services may be treated as a Client of the Authorised Person.
A Trust Service Provider must maintain adequate knowledge of, and comply with, all applicable Abu Dhabi Global Market laws, Rules and Regulations relevant to Providing Trust Services.
A Trust Service Provider must be able to demonstrate that it is in compliance with appropriate standards of corporate governance.
A Trust Service Provider must transact its business (including the establishing, transferring or closing of business relationships with its Clients) in an expeditious manner where appropriate unless there are reasonable grounds to do otherwise.
COBS 5.3 COBS 5.3 Exercise of Discretion
Where a Trust Service Provider is responsible for exercising discretion for, or in relation to, its Clients, it must take all reasonable steps to obtain sufficient information in order to exercise its discretion or other powers in a proper manner and for a proper purpose.
The Trust Service Provider must ensure that its understanding of a Client's business is refreshed by means of regular reviews.
The Trust Service Provider must ensure that any trustee exercises his discretion in accordance with his fiduciary and other duties under the laws governing the trust of which he is a trustee.
COBS 5.4 COBS 5.4 Delegation of Duties or Powers
Any delegation of duties or powers by a Trust Service Provider, whether by Power of Attorney or otherwise, must only be entered into for a proper purpose, permissible by law and limited and monitored as appropriate.
COBS 5.5 COBS 5.5 Reviews
A Trust Service Provider must ensure that adequate procedures are implemented to ensure that regular reviews at appropriate intervals are conducted in respect of Providing Trust Services to its Clients.
COBS 5.6 COBS 5.6 Professional Indemnity Insurance Cover
A Trust Service Provider must maintain professional indemnity insurance cover appropriate to the nature and size of the Trust Service Provider's business.
A Trust Service Provider must:(a) provide the Regulator with a copy of its professional indemnity insurance cover; and(b) notify the Regulator of any changes to the cover including termination and renewal.
A Trust Service Provider must provide the Regulator on a yearly basis, with the details of the arrangements in force together with evidence of the cover. Any claims in excess of US$10,000 or changes to the arrangements previously notified to the Regulator under this Rule must be notified to the Regulator as they arise.
COBS 5.7 COBS 5.7 Dual Control
The Trust Service Provider must have adequate internal controls, including having two Persons with appropriate skills and experience managing the business.
While a Trust Service Provider may have a single Person with overall responsibility, at least another Person must have the skills and experience to be able to run the business of the Trust Service Provider in the absence of the senior Person and must be in a position to challenge the actions of the senior Person where they consider that those actions may be contrary to the provisions of Abu Dhabi Global Market Laws, Rules or Regulations or any other applicable legislation, may not be in the interests of the Client, or may be contrary to sound business principles.
COBS 5.8 Internal Reporting
A Trust Service Provider must have arrangements for internal reporting to ensure that the directors or the partners can satisfy themselves that:(a) the requirements of the relevant legislation are being met on an on-going basis;(b) the Trust Service Provider's business is being managed according to sound business principles and, in particular, that it can meet its financial commitments as they fall due;(c) the affairs of its Clients are being managed in accordance with the service agreements;(d) the trustees are acting in accordance with their fiduciary and other duties;(e) the affairs of its Clients are being properly monitored and in particular that the Client is not using the trust structure to hide assets from legitimate enquiry, to avoid proper obligations in other jurisdictions or to engage in illegal activities in other jurisdictions;(f) the assets of its Clients are properly managed and safeguarded; and(g) the recruitment, training and motivation of staff is sufficient to meet the obligations of the business.
COBS 5.9 COBS 5.9 Recording of Selection Criteria
Where the Trust Service Provider seeks the advice of a third party in connection with a Client's affairs, for example to advise on or manage investments, the Trust Service Provider must record the criteria for selection of the adviser and the reasons for the selection made.
The Trust Service Provider must monitor the performance of the adviser and ensure that it is in a position to change advisers if it is in the interests of the Client.
COBS 5.10 COBS 5.10 Qualification and Experience of Trust Service Provider Staff
Staff employed or Persons recommended by the Trust Service Provider must have appropriate qualifications and experience.
A Trust Service Provider must ensure that all transactions or decisions entered into, taken by or on behalf of Clients are properly authorised and handled by Persons with an appropriate level of knowledge, experience, qualifications and status according to the nature and status of the transactions or decisions involved (this applies also to decisions taken by trustees who are recommended by, but not employed by, a Trust Service Provider).
A Trust Service Provider must ensure that, each of its officers and employees, agents, Persons acting with its instructions and Persons it recommends to act as trustees have an appropriate understanding of the fiduciary and other duties of a trustee and any duties arising under the laws relevant to the administration and affairs of Clients for which they are acting in the jurisdictions in which they are carrying on business and in which the assets being managed are held.
A Trust Service Provider must ensure that staff competence is kept up to date through training and continuous professional development as appropriate.
COBS 5.11 COBS 5.11 Books and Records
The books and records of a Trust Service Provider must be sufficient to demonstrate adequate and orderly management of Clients' affairs.
A Trust Service Provider must prepare proper accounts, at appropriately regular intervals on the trusts and underlying companies administered for its Clients.
Where trusts and underlying companies are governed by the laws of a jurisdiction that require accounts to be kept in a particular form, the Trust Service Provider must meet those requirements.
The Trust Service Provider's books and records must be sufficient to allow the recreation of the transactions of the business and its Clients and to demonstrate what assets are due to each Client and what liabilities are attributable to each Client.
COBS 5.12 COBS 5.12 Due Diligence
A Trust Service Provider must, at all times, have verified documentary evidence of the settlors, trustees (in addition to the Trust Service Provider itself) and principal named beneficiaries of trusts for which it Provides Trust Services. In the case of discretionary trusts with the capacity for the trustee to add further beneficiaries, a Trust Service Provider must also have verified, where reasonably possible, documentary evidence of any Person who receives a distribution from the trust and any other Person who is named in a memorandum or letter of wishes as being a likely recipient of a distribution from a trust.
A Trust Service Provider must demonstrate that it has knowledge of the source of funds that have been settled into trusts or have been used to provide capital to companies, or have been used in transactions with which the Trust Service Provider has an involvement.
COBS 5.13 COBS 5.13 Fitness and Propriety of Persons Acting as Trustees
Where a Trust Service Provider arranges for a Person who is not an employee of the Trust Service Provider to act as trustee for a Client of the Trust Service Provider, the Trust Service Provider must ensure that such Person is fit and proper.
A Trust Service Provider must notify the Regulator of the appointment of a Person under Rule 5.13.1, including the name and business address if applicable and the date of commencement of the appointment.
Prior to the appointment of such a Person to act as a trustee, the Trust Service Provider must take reasonable steps to ensure that the Person has the required skills, experience and resources to act as a trustee for a Client of the Trust Service Provider.
A Trust Service Provider must notify the Regulator immediately if the appointment of such a Person is or is about to be terminated, or on the resignation of such Person, giving the reasons for the resignation and the measures which have been taken to ensure that a new trustee has been appointed.
A Person appointed to act as trustee for a Client of a Trust Service Provider who is not an Employee of the Trust Service Provider, must agree in writing to be bound by and comply with the same legal and regulatory requirements as if he were an Employee of the Trust Service Provider.