Source: https://www.guernseylegalresources.gg/CHttpHandler.ashx?documentid=86100
Trust Dispute: FIU’s No-Consent Orders Lead to Court Battle
In a complex legal battle, R. Loero (RTL), the settlor and beneficiary of the Fraternite Trust, has taken Credit Suisse Limited (CST) to court after repeated refusals by Guernsey’s Financial Intelligence Unit (FIU) to consent to the release of trust funds.
Background: RTL established the Fraternite Trust on July 23, 2010. On May 26, 2021, RTL sought to revoke the trust entirely through a Deed of Revocation. However, CST, the trustee regulated by the Guernsey Financial Services Commission, declined the request on July 12, 2022, citing legal and regulatory reasons and advised RTL to seek legal counsel.
Legal Proceedings: RTL initiated legal proceedings on October 21, 2022, after CST’s refusal. The defense, filed on November 16, 2022, revealed that CST had reported the trust to the FIU under its statutory obligations, suspecting suspicious activity.
Suspicious Activity Report (SAR): CST’s SAR indicated that RTL’s income was disproportionately high for his role, raising suspicions. The trust’s association with Venezuela, a high-risk jurisdiction, and adverse media reports further supported CST’s concerns. RTL’s past involvement in criminal investigations, although dismissed, and a recent incident involving a falsified arrest warrant in Venezuela added to the suspicion.
FIU’s Response: On October 25, 2021, the FIU confirmed it did not consent to the release of the trust funds, leaving RTL with no choice but to pursue legal action.
Court Findings: The court acknowledged that CST had reasonable grounds for suspicion. Following legal precedent, RTL was required to prove that the funds were legitimate and not proceeds of criminal conduct.
This case highlights the challenges faced by trustees and beneficiaries in high-risk jurisdictions and the stringent regulatory environment governing financial transactions.
