Cambodia: Trust Inspection – Formalities and Procedures
The Law on Trusts promulgated on 2 January 2019 provides the legal framework for the creation, registration and inspection of trusts in Cambodia.
To facilitate the implementation of the Trust Law, the Trust Regulator on 3 November 2022 issued Prakas 051 on the Formalities and Procedure for Inspection of Trusts (“Prakas 051”). Prakas 051 applies to the inspection of activities and operations related to the trust sector in Cambodia.
Types and Scope of Inspection
Prakas 051 sets out two types of trust inspections: (1) inspections for promoting the implementation of the law, and (2) inspections for strengthening the implementation of the law.
Inspections for promoting the implementation of the law can be initiated by an instruction from the Director General of the Trust Regulator or by a pre-determined inspection plan of the Trust Regulator. This inspection is aimed to monitor compliance with applicable trust laws with the objectives to promote implementation of the laws by persons governed by conditions of the registered trust, operations of the trust operators and other related stakeholders in the trust sector.
The second inspection, an inspection for strengthening the implementation of the law, is initiated by the Trust Inspector with the aims to monitor, examine, search and investigate activities or operation suspected of violating the Trust Law and/or applicable trust regulations.
In addition, the Trust Inspector may, on his own, open a preliminary investigation in certain circumstances such as when non-compliance with the Trust Law is suspected or there is a necessity to protect the interest of a registered trust.
It is important to note that the scope of inspection under this Prakas 051 is broad. It covers persons being under? supervision of the trust operation, including holders of licenses/permits/registrations/recognition from the Trust Regulator and those who are suspected of violating the Trust Law and/or applicable trust regulations.
Power of the Trust Inspector
In conducting the investigation, Prakas 051 grants the Trust Inspector with numerous powers, including, among others:
- conducting on-site inspection at the premises of suspected persons (such as at the head office, place of business, document storage room, or residence) and confiscation of evidence (both soft and hard copies), requesting original documents (an any preservation of such document) and setting deadlines for the suspected person to furnish required documents;
- making voice and video recordings during the interview and investigation in accordance with the procedure of the applicable laws;
- summoning a suspected person;
- imposing conditions to ensure confidentiality of the case, and ordering the attestant to do or not to do certain acts;
- requesting support from the trustee, trustor, and beneficiary; and
- issuing public statements, publishing the name and offense of the offender, following approval from the Trust Regulator.
Rights and Obligation of the Person Being under the Inspection
Persons being under inspection can refuse to cooperate with the inspection conducted by the Trust Inspector if the Trust Inspector does not present: (1) a mission letter issued by the Trust Regulator, and (2) the identification card of the Trust Inspector concerned. Further, he or she is entitled to the right to be represented by an attorney or legal representative and appeal against the decision of the Trust Inspector in accordance with the applicable procedures set out in the Trust Law.
Prakas 051 also imposes an obligation on persons being under inspection to cooperate in and facilitate the inspection, and provide records, data and information as requested by the Trust Inspector. Further, the person being under inspection (including a legal representative) must maintain a confidentiality by not publicly interpreting or disclosing information discussed during the interview with the Trust Inspector unless otherwise approved by the Trust Regulator.
Persons being under inspection who violate or fail to comply with the provisions under Prakas 051 (for instance, failure to cooperate with the Trust Inspector) are subject to the following monetary fines:
- from KHR 10,000,000 (approximately USD 2,500) to KHR 50,000,000 (approximately USD 12,500) for natural persons; or
- from KHR 20,000,000 (approximately USD 5,000) to KHR 200,000,000 (approximately USD 50,000) for legal persons.
In the case of repeated offenses, the monetary fines stated above will be doubled.
In addition, such persons may also be subject to one of the following administrative actions:
- corrective directions;
- restriction on disposal, management and/or maintaining of trust property;
- suspension or dismissal of director, senior officer and/or the offender; and
- suspension or revocation of license/permit/registration/recognition.
Should you have any concerns or queries on the matters mentioned above, please feel free to contact us at [email protected].
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
Partner & Deputy Head of Cambodia Corporate and Commercial Practice
The post Cambodia: Trust Inspection – Formalities and Procedures appeared first on DFDL.
Link to article