A Matter Of Trust: New QFC Trust Regulations Impact Uses Of Trusts For Property Ownership In Qatar

In December 2017, the Qatar Financial Center ('QFC') introduced legislative changes to the existing QFC Trust Regulations.

Some of the key changes introduced were:

A registration requirement - no trust is established, valid, and binding unless first registered with the Qatar Financial Centre Authority ('QFCA'); A professional trustee company requirement - a trustee must be a licensed firm, authorised firm, or a QFCA approved foreign person; Charitable trusts are no longer permissible under the QFC; Disclosure requirements have been imposed on trustees to disclose the trustee's status in all business relationships, contracts, and transactions; A retention obligation is imposed upon the trustee - to maintain certain information regarding the identity and beneficial ownership of a settlor, trustee, beneficiary, protector, or any other person with effective control over the trust; A trustee may now seek directions from the QFC Court regarding the management of the trust; Powers have been granted to the QFC court to amend the terms of a trust; The settlor may now reserve certain rights and powers, as are normally performed by the settlor; and The QFCA has been granted powers to impose penalties for contravention of the QFC Trust Regulations. Mandatory use of Professional Trustee Company

One of the central amendments introduced, namely the requirement for the trustee of a QFC Trust to be a professional trustee company, may impact the use and effectiveness of QFC Trusts as a vehicle for holding Qatar real estate.

The QFC Trust Regulations (as amended) stipulate in Part 9, Chapter 1, Article 38(3) of the amended QFC Trust regulations that:

'Subject to such further requirements as may be prescribed by the Rules, a Trustee must be:

Licensed Firm that is a DNFBP*; an Authorised Firm; or a Person approved by the QFC Authority that is duly licensed or authorised in a jurisdiction outside of the QFC and is subject to adequate requirements in respect of anti-money laundering and counter terrorism financing, by the laws applicable to the Person.' *Designated non-financial business or profession under the AML/CFT Rules

Article 38 of the amended QFC Trust regulations further states, by way of a guidance note, that a 'Licensed Firm' or an 'Authorised Firm' that wishes to carry on the provision of the administration of trusts by way of business, must be licensed or authorised to do so. Currently, there are only two active QFC entities listed on the QFC public...

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