Capital movements. Due Diligence obligations for trust

According to the data of the balance of payments registry of the Bank of Spain, the investment of foreign capital in Spain has been increasing exponentially since 2017, reflecting a chilling figure in 2018 of 47,000 million Euros of investment, which represents a 71% increase compared to 2018.

Beyond what is reflected in numerical data, what is certain is that the index of business confidence in our country reaches levels never seen, however, there are obstacles to solve that many prevent consolidating some businesses, for example, the movement of capital to close operations.

The problem is aggravated when the SPV or vehicle of the investment receives the funds of a trust, a very common juridical figure within the international legal traffic, not so much in the Spanish legal system. 

The Trust is a figure by virtue of which a person - trustee - controls goods or rights for a determined purpose for the benefit of a third party. The problem that derives from this structure is opacity in terms of its beneficiaries, which often makes it suitable for abuse and its use in corporate money laundering schemes. 

We will analyse, in a cursory manner, the four (4) obligations of due diligence established by the Spanish legislation on the prevention of money laundering and that we must necessarily complete when using these corporate configurations.

1)     Formal Identification.

2)     Real holder identification.

3)     Information about the purpose of the nature of the business relationship.

4)     Monitoring the relationship.

Formal Identification

In the case of trusts, it will be necessary for the obliged subjects to provide the deed trust (art 6.3 RPBC), a constitutive document of the legal figure; normally formalised through a contract between the parties duly legalised.

In addition, the identification and verification of the person acting on behalf of the beneficiaries must be carried out by means of a reliable document, that is, identity document, passport or similar.

Identification of the actual owners

It must be accredited who are the final beneficiaries of the trust, it can be done through a responsible declaration or what in Spain we know as the "act of real ownership".

In the case of the Trust, the following persons will be considered as real owners (Art. 4.2.3 LPBC):

-    The Trustor or the person who constitutes the trust.

-    The Trustee, the person who controls the assets and rights on behalf of the beneficiary.

-    The protector, if there is one, the person designated by a trust with powers of control.

-    The ultimate beneficiaries or final owners of the goods or rights.

All those persons who exercise or have a control term either directly or indirectly on the structure are also considered as real owners.

Information about the purpose of the business.

In relation to the TRUST, the obligated parties must determine the origin of the endowment funds and the powers attributed to the trustee. It is essential to unequivocally prove the origin of the investment funds.

In relation to the trustor, information must be obtained about his professional or business activity and the origin of the funds contributed to the trust; highlighting, if the trustor has been, is or could be considered a character with public exposure.

In relation to the fiduciary, the scope of his powers and remuneration must be determined.

With respect to the beneficiaries, you must obtain information about your professional or business activity and prove the origin of your income.

Monitoring of the business relationship.

The obligated parties are committed to reviewing the transactions to verify that they coincide with the trust profile, as well as guaranteeing that the documents, data and information provided are true and up-to-date.

In principle, and even considering the arduous task of collecting all the required information, complying with all the requirements regarding due diligence obligations, it would be sufficient to carry out the investment, despite the foregoing, in many cases the compliance departments of the different institutions or financial entities discourage the operation, without the existence of legal reasons, simply the existence of risk indicators or could derive a reputational risk for the entity.