Trust Account

HOW DOES PIDM PROTECT MY TRUST ACCOUNT?

1. WHAT IS A TRUST ACCOUNT?
A.  A trust account is a deposit account held by a depositor acting as trustee for the benefit of one or more beneficiaries.

B. Example of trust account:

• One beneficiary in a single trust account: A mother (the account holder as trustee) deposits money in trust for her minor son.

 

• Two or more beneficiaries in a single trust account:
  • A law firm (the account holder as trustee) holding funds in trust for multiple clients pending completion of a number of real estate transactions, or
  • A trustee holding customer funds in trust for an approved e-money issuer in respect of an e-money scheme. 

 

2. HOW ARE TRUST ACCOUNTS HELD IN PIDM MEMBER BANKS PROTECTED BY PIDM?

• Deposits in trust accounts are protected separately from deposits in other types of accounts.
• Each beneficiary of a trust account is also protected separately from deposits held in their names.

 

 

3. WHAT IF THERE ARE SEVERAL TRUSTEES WHO HOLD ACCOUNTS FOR THE SAME BENEFICIARY IN THE SAME MEMBER BANK?

The beneficiary will receive separate protection up to RM250,000 for each trust account.

 

4. WHAT IF A TRUSTEE HOLDS SEVERAL ACCOUNTS FOR THE SAME BENEFICIARY IN THE SAME MEMBER BANK?

All deposits will be combined and protected up to RM250,000.

 

5. WHAT IF A TRUSTEE HOLDS SEVERAL ACCOUNTS FOR DIFFERENT BENEFICIARIES IN THE SAME MEMBER BANK?

Each account is protected separately up to RM250,000.

 

WHAT DO I NEED TO DO TO ENJOY THE SEPARATE PROTECTION?

6. WHAT INFORMATION AND DOCUMENT MUST BE SUBMITTED BY A TRUSTEE TO THE MEMBER BANK, EFFECTIVE FROM 1 JULY 2022?

ON THE OPENING OF AN INSURED TRUST ACCOUNT
A trustee opening an insured trust account is responsible to submit the following information and document directly to the member bank:

(A) If you are a trustee opening a trust account (other than for the purpose of an approved e-money scheme)

• A statement that the deposit in trust account is held in trust by the trustee;
• The name, address and identity card number or passport number or any other identification of the trustee which is acceptable to the member bank;
• The name and address of each beneficiary; and
• The amount or percentage of each beneficiary’s interest in the trust account.

 (B) If you are a trustee opening a trust account for the purpose of an approved e-money scheme

• A statement that the deposit in trust account is held in trust by the trustee;
• The name, address and identity card number or passport number or any other identification of the trustee which is acceptable to the member bank; and
• Any supporting documentation that is acceptable to the member bank that evidences that -
  • the deposit in the trust account is held in trust by the trustee for the purposes of the e-money scheme; and
  • the issuer of the electronic money is an approved issuer by Bank Negara Malaysia.

 
On the opening of an insured trust account, you will also be informed by your bank on your obligations as a trustee under the PIDM’s Regulations.

7. MUST A TRUSTEE DISCLOSE HIS OR HER CLIENT'S NAME TO THE MEMBER BANK?

NO. Pursuant to PIDM’s Regulations, the trustee need not disclose the name and address of each client (“beneficiary of the trust account”) to the member bank. Instead, the trustee has the flexibility to use a separate alphanumeric code or other identifier to represent each beneficiary on the records of the trustee. There should be only one code or identifier for the same beneficiary if a trustee holds several accounts in the same bank.

8. IS A TRUSTEE STILL REQUIRED TO SUBMIT THE UPDATED TRUST ACCOUNT INFORMATION TO THE MEMBER BANK BY 31 MARCH ANNUALLY?

NO. From 2023 onwards, a trustee acting for two (2) or more beneficiaries in a single trust account, is no longer required to submit the updated trust account information and beneficiary’s details to the member bank on an annual basis.

Notwithstanding, a trustee is obligated to maintain detailed records of the beneficiary’s details, comprising the name and address of each beneficiary, and the amount or percentage of each beneficiary’s interest in the trust account. The detailed records of the beneficiary’s details are to be updated from time to time, for submission to either PIDM or the member bank, as and when required by PIDM.
 

9. WHAT WILL HAPPEN IF A TRUSTEE FAILS TO SUBMIT THE TRUST ACCOUNT INFORMATION, AS REQUIRED BY PIDM?

A trustee who fails to comply with the submission requirements commits an offence under Section 195 of the Malaysia Deposit Insurance Corporation Act 2011 and may be liable to a fine, or to imprisonment, or to both.

*For more information, please refer to the Malaysia Deposit Insurance Corporation  (Disclosure requirements for Trust Accounts and Joint Accounts) Regulations 2012 and Malaysia Deposit Insurance Corporation  (Disclosure requirements for Trust Accounts and Joint Accounts) (Amendment) Regulations 2022.