Edited by Fabrizio Vedana

There is no prohibition on a trust being a shareholder, even a significant one, in a bank, an investment firm, an insurance company, or an asset management company.

The Bank of Italy clarified this in its provision of October 27, which established the information and documents required in the application for authorization to acquire a less risky qualifying shareholding.

If the purchase of a qualifying shareholding is carried out through a trust, the following must be transmitted to it:

a) information relating to the trust, such as name, registered office, applicable law and purpose for which the trust is established;

b) information relating to the settlor:

• in case the settlor is a natural person: name, date and place of birth, citizenship and tax code;
• in the case where the settlor is a legal person: name and registered office, identity of the directors, identity of the natural person who controls the settlor, or, in the case of a legal person, identity of the company's directors;

c) additional information relating to the trustee:

• powers and areas of discretion of the trustee in the exercise of powers relating to the assets transferred to the trust;
• distribution shares of the trust's income reserved for trustees, or alternative methods of remuneration;
• assets and sources of funding subject to the control of the trustee;

d) information relating to beneficiaries:

• identity of beneficiaries; if beneficiaries are not identified, describe the criteria for identification and the characteristics of the class from which beneficiaries are selected;
• where applicable, powers to request the dissolution of the trust;
• distribution shares of the proceeds and assets transferred to the trust;

e) information relating to protectors:

• in the case of a natural person: name, surname, place and date of birth;
• In the case of a legal entity: name and registered office; identity of the directors; identity of the natural person who controls the protector, or, in the case of a legal entity, identity of the company's directors.
• protector's powers.

These provisions are of significant importance for all banks and intermediaries who find themselves having to carry out anti-money laundering due diligence on a trust for at least two reasons.

First, they further confirm the legal validity of the trust instrument, which is still sometimes questioned even today in the banking and financial world: if, in fact, the Bank of Italy itself, the authority that supervises banks, recognizes and admits that a trust (whether Italian or foreign) can be a shareholder of a bank, it can no longer be disputed that the same trust can also be the holder of a bank account if the relevant deed of establishment allows it.

Secondly, with its provision issued last October, the Bank of Italy almost seemed to want to define the procedures for carrying out due diligence on the trust and the parties involved in its various capacities (settlors, trustees, beneficiaries, and protectors).

Anti-money laundering officials and compliance offices may therefore consider referring to these provisions when defining their own anti-money laundering procedures.