100800 – Financial Institutions: Investment Entities: Trusts

Trusts are treated as entities by all of the agreements for automatic exchange of information. A trust can be either a financial institution or an NFE. Where a trust meets one of the definitions of being a financial institution it is most likely to be an investment entity but it may, alternatively, meet the requirements to be a Custodial Institution. A trust is unlikely to be regarded as an investment entity by virtue of investing as a business because trusts generally do not carry on businesses for or on behalf of customers unless they are collective investment schemes. A trust may be an investment entity however where its gross income is primarily derived from investing, reinvesting or trading in Financial Assets and it is managed by a financial institution. 

The test of being managed by a financial institution will be met where the trust or its activities are being managed by a Financial Institution. A trust is managed by a Financial Institution where either one or more of the trustees is a financial institution, or the trustees have appointed a discretionary fund manager who is a financial institution to manage the trust’s assets. For a more detailed description of what constitutes management by a financial institution, please see the guidance at. 

If the trust is not managed by a Financial Institution in this way and does not meet any of the other definitions of a financial institution, it will be a non-financial entity. For example, where the trustees of a trust are individuals (and therefore not financial institutions) and the trust holds only a Depository Account or other investments with a financial institution, and that financial institution does not have discretion to manage the account or the assets in the account, then the trust will not be an investment entity.