Trustees are being forced out of mainstream banking as institutions impose more restrictive eligibility requirements, warned membership and accreditation body the Society of Trust and Estate Practitioners (STEP).
The problem extends across international trust jurisdictions and is affecting legitimate trusts seeking access to ordinary banking services, the professional body says.
STEP has created a banking due-diligence toolkit to help bridge the gap between trustees and mainstream banks.
Emily Deane TEP, head of government affairs at STEP, said: “Trusts are legitimate and widely used legal arrangements, yet trustees are increasingly struggling to access the banking services they need simply to administer them.
“Banks have an important responsibility to prevent financial crime, and nobody is arguing that those safeguards should be weakened. But legitimate customers should be assessed on the risks they actually present rather than being excluded because they fall into a particular category.
“Our aim is to make that assessment easier by giving trustees a consistent way to present information about ownership, control, source of wealth, source of funds and expected account activity, we hope to reduce unnecessary friction for trustees and banks alike.”
Through guidance and templates, the Trust Banking Due-Diligence Toolkit aims to help trustees anticipate the information banks are likely to require and present it in a structured, consistent and readily verifiable form, while not replacing the banks own onboarding forms and regulatory procedures.
Trustees are also experiencing existing accounts being closed, sometimes with little notice or explanation, STEP reveals.
Banks generally have considerable discretion over whether to begin or continue customer relationships, meaning trustees may have limited practical remedies once a decision to close an account has been made, the body says.
The problem is being driven not by trusts being legally unsuitable for banking, but by the compliance burden associated with them, STEP suggests, stating that banks must identify and verify trustees as well as understand the wider structure of ownership, benefit and control, potentially including settlors, beneficiaries, protectors and others exercising control.
This can make trust onboarding considerably more complex, it explains.
Yet, it argues, blanket de-risking sits uneasily with the risk-based approach advocated by regulators.
The UK’s 2025 National Risk Assessment assesses the overall risk presented by UK trusts as low, recording low levels of identified misuse.
However, it acknowledges that some higher-value, complex or international structures carry greater risks.
The Financial Conduct Authority has also emphasised that a risk-based approach should not result in wholesale de-risking or the exclusion of entire categories of customer.
STEP’s new toolkit covers trust structures and beneficial ownership; customer due diligence; source of wealth and funds; expected account activity; changes in beneficiaries, trustees and other relevant parties; ongoing monitoring; and contingency planning if a bank account is closed.
It also provides practical resources including a bank-facing trustee banking memorandum, beneficial ownership diagram, source-of-wealth narrative pack, beneficial ownership register compliance pack and trustee authority and mandate pack.
The professional body says “clearer and more reusable information” could help banks conduct “proportionate risk assessments while maintaining appropriate anti-money laundering and counter-terrorist financing safeguards”.
It intends to continue to engage with banks, regulators and governments to seek proportionate changes to rules and practice without weakening financial crime safeguards or creating additional risk.
