KYT

Definition

Know Your Trust (KYT) is the due diligence process for identifying and verifying a trust or foundation, including its legal status, structure, and the identities of the people who control or benefit from it. KYT is a variant of Know Your Business (KYB), adapted for the specific nature of trusts and foundations.

Why it matters

Trusts and foundations can be used for legitimate asset protection and estate planning, but also risk misuse for money laundering, tax evasion, or concealing beneficial ownership.

In the UK, KYT procedures are required under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 and include checking the UK Trust Registration Service (TRS) or equivalent registries in other jurisdictions.

How KYT works in the UK

1. Verify legal existence – Confirm registration with the UK TRS or relevant overseas registry.
2. Identify controlling parties – Name and verify the settlor(s), trustee(s), protector(s) (if any), and beneficiaries.
3. Document review – Examine trust deeds, letters of wishes, and any governing instruments.
4. Ownership and control analysis – Establish who ultimately controls or benefits from the trust’s assets.
5. Risk assessment – Consider jurisdiction, asset types, and whether the trust has high-risk connections.
6. Ongoing monitoring – Keep details updated and watch for changes in trustees, beneficiaries, or terms.

Examples and use cases

• Law firms – Onboarding a trust client for property or corporate transactions.
• Banks and payment providers – Opening an account for a trust or foundation.
• Wealth managers – Managing investments held within a trust structure.
• Corporate service providers – Acting as trustee or providing administration services.

Mini-FAQ

Q: How is KYT different from KYB?
A: KYB verifies a business entity and its owners; KYT verifies a trust or foundation and its controlling parties. The verification steps are similar but adapted to non-corporate legal structures.

Q: Is KYT mandatory?
A: Yes - for regulated firms and high-value dealers / art market participants dealing with trusts or foundations in the UK, KYT checks are a legal requirement. Even unregulated firms should apply them as part of risk management.