a specified insurance company. These types of financial institution are outlined in detail in paragraph 3.1 of this guidance. They generally require that the entity carries on a particular type of business for customers (such as a bank depository business for customers). However, as explained further below, an entity (such as a – trust) can be a investment entity” even if it does not carry on a business for customers. “managed The following chart provides a high-level summary of the circumstances when a trust will be a financial institution: Step Yes No 1 Does the trust carry on a Go to step 2 Go to step 3 “business” for customers? 2 Is the any of the following financial The trust Go to Step 3 institutions? is an “in business” an business” investment entity “in financial institution that is not excluded from the definition of the entity”; or “investment another type of financial institution? 3 Does the trust meet all of the following: The The trust is a is a NFE is it managed by a financial institution; “managed” investment is its gross income primarily entity financial attributable to investing, reinvesting or institution trading in financial assets; and is it not excluded from the definition of entity”? “investment The type of financial institution that is most likely to apply to trusts is the investment entity category. Therefore, the following guidance focuses on this category. A trust will be an investment entity in the following circumstances:
a specified insurance company. These types of financial institution are outlined in detail in paragraph 3.1 of this guidance. They generally require that the entity carries on a particular type of business for customers (such as a bank – depository business for customers). However, as explained further below, an entity (such as a trust) can be a “managed investment entity” even if it does not carry on a business for customers. The following chart provides a high-level summary of the circumstances when a trust will be a financial institution: Step Yes No 1 Does the trust carry on a “business” for customers? Go to step 2 Go to step 3 2 Is the any of the following financial institutions? an “in business” investment entity that is not excluded from the definition of the “investment entity”; or another type of financial institution? The trust is an “in business” financial institution Go to Step 3 3 Does the trust meet all of the following: is it managed by a financial institution; is its gross income primarily attributable to investing, reinvesting or trading in financial assets; and is it not excluded from the definition of “investment entity”? The is a “managed” investment entity financial institution The trust is a NFE The type of financial institution that is most likely to apply to trusts is the investment entity category. Therefore, the following guidance focuses on this category. A trust will be an investment entity in the following circumstances:
2016-other-aeoi-guidance-draft.docx