As examined in our insight of 24 July 2024, geopolitical tensions continue to escalate and rising tensions involving China have become a focal point for international relations.
In addition to measures that we have already considered in the above-mentioned insight, trust planning can also be a useful tool for Chinese businesses looking to mitigate the risk of sanctions. By carefully structuring trusts, businesses can protect assets and ensure continuity of operations.
The list below presents some strategies in this respect:
- Establish Trusts in Stable Jurisdictions
- Select Safe Jurisdictions: Choose jurisdictions with reliable legal frameworks, stable political environments, and favourable trust laws (or equivalent). Examples include Switzerland, Singapore and Jersey.
- Diversify Trust Structures
- Multiple Trusts: Consider setting up multiple trusts in different jurisdictions to spread risk and protect assets.
- Types of Trusts: Utilise various types of trusts, such as discretionary trusts, irrevocable trusts, and asset protection trusts, each offering different levels of control and protection.
- Use Professional Trustees and Legal Professionals
- Professional Management: Employ professional trustees and legal professionals with expertise in trust law and experience in managing assets under varying legal and regulatory conditions.
- Reputable Institutions: Choose trustees from reputable financial institutions to ensure credibility and compliance with international standards.
- Clear and Legal Documentation
- Comprehensive Trust Deeds: Ensure trust deeds are comprehensive and compliant with the laws of the jurisdictions where the trusts are established.
- Legal Counsel: Work with experienced legal counsel to draft and review all trust documentation to prevent legal loopholes that could be exploited under sanctions.
- Ensure Compliance and Reporting
- Regulatory Compliance: Ensure all trust activities comply with international and local regulations.
- Transparent Reporting: Maintain transparent and accurate reporting of trust activities to build credibility and avoid accusations of misconduct.
- Beneficiary Planning
- Beneficiary Selection: Carefully select beneficiaries to avoid those who might be at risk of sanctions.
- Contingent Beneficiaries: Designate contingent beneficiaries to ensure that assets can be redistributed smoothly if primary beneficiaries are sanctioned.
Linkilaw offers comprehensive legal guidance in navigating the complex landscape of international sanctions to clients, including from China, who face potential risks.
With an understanding of global regulatory environments, we can provide tailored strategies to mitigate exposure to sanctions, ensuring compliance with the relevant regulatory framework.
Our expert team conducts risk assessments, advises on due diligence processes, and helps implement compliance programs. By staying abreast of evolving sanctions regimes, we proactively support our clients in maintaining smooth business operations, ultimately safeguarding their interests in a highly dynamic global market.
