Cook Islands Trustee Regulation vs. Other Jurisdictions

The strength of an offshore trust depends not only on the statutes governing the trust itself but also on the regulatory infrastructure that governs the companies administering it. A trust is only as reliable as the trustee managing its assets, and a trustee is only as accountable as the regulatory framework overseeing its operations.

This article compares how trustee companies are regulated in the Cook Islands, Nevis, Belize, the Cayman Islands, the Bahamas, and Panama. The focus is on the regulatory bodies, licensing requirements, and supervisory mechanisms that govern trustee operations in each jurisdiction — not on the trust structures themselves, which are addressed in the jurisdiction comparison articles.

Cook Islands: Financial Supervisory Commission

The Cook Islands regulates trustee companies through the Financial Supervisory Commission (FSC) under the Trustee Companies Act 2014. This legislation replaced earlier, more fragmented oversight with a consolidated framework that gives the FSC broad authority over the licensing, supervision, and discipline of all entities conducting trustee business.

Under the Act, it is a criminal offense for any unlicensed entity to carry on trustee company business in the Cook Islands. The FSC currently licenses seven trustee companies, each of which must satisfy capitalization requirements, maintain professional indemnity insurance, and submit to ongoing financial reporting and compliance audits. The 2014 Act eliminated the right to self-insure, requiring all licensed companies to obtain independent professional indemnity coverage. Senior management at each firm must pass a “fit and proper person” assessment, which includes comprehensive background checks and ongoing suitability monitoring.

The regulatory model is deliberately restrictive. Rather than licensing dozens of service providers and relying on market competition to maintain quality, the Cook Islands limits the number of licensed trustees and subjects each to close supervision. This approach produces a smaller but more tightly controlled market. For additional detail on how each licensed company operates, see the Cook Islands trustee companies overview.

The practical effect of this regulatory structure is that every trustee a client might engage has been vetted through the same licensing process and is subject to the same supervisory standards. The FSC can suspend or revoke licenses for noncompliance, and all licensed companies must maintain client asset segregation — meaning a trustee’s own financial difficulties cannot directly compromise trust assets. The licensing requirements article explains this process in greater detail.

Nevis: Financial Services Regulatory Commission

Nevis regulates trust and corporate service providers through the Nevis Financial Services Regulatory Commission (NFSRC), primarily under the Nevis Trust and Corporate Service Providers Ordinance of 2021. The regulatory framework uses a tiered licensing system with different classes of license depending on the scope of services provided. A Class I license permits the holder to act as a formation agent and provide registered agent and registered office services for corporations, LLCs, and foundations. A Class II license, which may be restricted or unrestricted, covers trust registration and the provision of trustee services.

Applicants must demonstrate minimum paid-in capital of at least $50,000 and submit to fit and proper assessments covering principals, shareholders, beneficial owners, and directors. Licensed providers must submit annual audited financial statements within three months of their financial year-end and are subject to AML/CFT compliance audits under the Anti-Money Laundering Regulations of 2011.

The Nevis system differs from the Cook Islands model in one important respect: it is more permissive about who can serve as trustee. Under the Nevis International Exempt Trust Ordinance, a trust must have at least one trustee that is a Nevis corporation, LLC, licensed trust company, licensed attorney-at-law, or a multiform foundation. This means a locally incorporated company — including a private trust company formed by the client’s own family — can serve as trustee without holding a full trust company license. The regulatory burden on such entities is lighter than what the Cook Islands imposes on its licensed trustee companies.

This flexibility is a design choice, not a regulatory failure. Nevis intentionally accommodates private trust companies and attorney-trustees to attract clients who want more direct control over trust administration. The tradeoff is that not every entity serving as trustee in Nevis is subject to the same level of ongoing regulatory oversight as a licensed Cook Islands trustee company.

Belize: International Financial Services Commission

Belize regulates its offshore trust industry through the International Financial Services Commission (IFSC), which was established in 1999 and expanded significantly with amendments in 2007. The IFSC’s mandate covers the licensing and supervision of entities providing international financial services, including trust formation and management. A Type II license is required for trust formation, management of offshore trusts, and the provision of trustee services.

In 2007, Belize made registration of international trusts compulsory through the Trusts Amendment Act, establishing an International Trusts Registry within the IFSC’s offices. Annual license fees range from US$2,500 to US$5,000, and minimum capital requirements range from US$5,000 to US$100,000 depending on the license type.

The IFSC also requires licensed service providers to comply with a Code of Conduct that sets standards for integrity, competence, corporate governance, and client asset management. Breach of the Code constitutes professional misconduct and is punishable by the Commission.

Where Belize differs most from the Cook Islands is in the depth and intensity of its supervision. Belize has historically positioned itself as a lower-cost, lower-barrier jurisdiction. The IFSC regulates a broader range of financial services — including forex brokers, insurance companies, and investment schemes — and its supervisory resources are spread across all of these sectors. The trust industry does not receive the same concentrated regulatory attention that the Cook Islands FSC devotes to its seven licensed companies.

This matters in practice. When a trustee faces pressure from a foreign court to comply with an asset turnover order, the regulatory infrastructure supporting that trustee — the capitalization requirements, the insurance mandates, the supervisory track record — affects how credibly the trustee can resist. A jurisdiction where the regulator has deep familiarity with each licensed company’s operations, finances, and management is better positioned to support trustees acting under legal pressure than one where oversight is spread more thinly.

Cayman Islands: Monetary Authority

The Cayman Islands has what is arguably the most comprehensive trustee regulatory framework among the jurisdictions commonly discussed in the asset protection context. The Cayman Islands Monetary Authority (CIMA) regulates trust business under the Banks and Trust Companies Act (2025 Revision), which requires any entity carrying on trust business from within the Cayman Islands to hold a valid trust license.

CIMA issues several categories of trust licenses. A full trust license authorizes the holder to carry on trust business without restriction. A restricted trust license permits trust business only for specifically identified clients. The Cayman Islands also provides for registered private trust companies under separate regulations, allowing family-controlled entities to operate as trustees without a full license, provided they meet certain conditions — including maintaining their registered office with a CIMA-licensed trust company.

All licensed entities must have a minimum of two directors who are natural persons. Directors, senior officers, and shareholders holding more than ten percent of issued shares must be individually approved by CIMA following a fitness and propriety assessment. Licensed companies must submit audited financial statements within three months of their financial year-end and are subject to CIMA’s ongoing supervisory program, including periodic on-site inspections.

For clients primarily interested in asset protection, the Cayman Islands presents an apparent contradiction. The jurisdiction has some of the strongest trustee regulation in the offshore world, yet its trust law is not designed primarily for creditor protection. Cayman’s trust statutes lack the short limitation periods, heightened burden of proof requirements, and explicit non-recognition of foreign judgments that characterize Cook Islands trust law. The regulatory quality of Cayman’s trustee industry is excellent, but the statutory framework protecting trust assets from creditors is considerably weaker.

This is not a criticism of the Cayman Islands. It reflects the fact that Cayman’s trust industry was built primarily to serve institutional finance, fund administration, and estate planning — not judgment-proofing. The regulatory architecture serves those purposes well.

Bahamas: Central Bank

The Bahamas regulates trust companies through the Central Bank of The Bahamas under the Banks and Trust Companies Regulation Act of 2000. The Central Bank is responsible for the licensing, regulation, and supervision of all banks and trust companies operating in and from the Bahamas. As of recent reporting, the jurisdiction’s offshore sector includes over 200 banks and trust companies, including a significant number of nominee trust companies.

The Bahamas also provides for private trust companies under separate regulations, and the Executive Entities Act of 2011 allows specialized structures that can perform executive functions including trustee duties and asset management. Recent amendments in 2025 brought Executive Entities more firmly under the Central Bank’s regulatory oversight, requiring registration fees of $5,250 and annual fees of $3,750, with the same AML/CFT compliance standards applied to other licensed trust entities.

The Bahamas has invested substantially in its international compliance credentials. The jurisdiction has achieved “largely compliant” status with all 40 Financial Action Task Force recommendations — a distinction held by only a handful of countries worldwide. This compliance record reflects the depth and maturity of the regulatory framework, which includes regular on-site examinations, required regulatory reporting, and robust AML/CFT standards.

Like the Cayman Islands, the Bahamas offers high-quality trustee regulation paired with a trust law framework that is not specifically engineered for asset protection against creditors. The jurisdiction’s strengths lie in institutional trust services, wealth management, and estate planning. Clients whose primary objective is creditor protection will find the regulatory environment professional and well-supervised, but the underlying statutory protections less aggressive than those available in the Cook Islands.

Panama: Superintendency of Banks

Panama regulates trust business through the Superintendency of Banks (Superintendencia de Bancos) under Law 21 of 2017, which replaced and modernized the earlier trust framework established by Law 1 of 1984. Under the current regime, all persons or legal entities engaging regularly and professionally in trust business must hold a trust license issued by the Superintendency. Unlicensed trust activity can result in sanctions of up to US$1,000,000.

The Superintendency has licensed more than 80 local and international fiduciary companies, reflecting the breadth of Panama’s trust industry. Licensed trustees must maintain records of all trust transactions, implement adequate internal controls, and comply with due diligence and know-your-client protocols. Law 21 also introduced provisions specifically targeting money laundering and terrorist financing, requiring trustees to report suspicious transactions and maintain transaction records for five years.

Panama’s regulatory framework is unusual in that it overlaps with its banking supervision infrastructure. The Superintendency of Banks oversees both the banking sector and the trust industry, which means trustee regulation benefits from the institutional resources and enforcement capacity of a banking regulator. However, Panama’s trust law does not provide the same level of creditor-specific protections found in the Cook Islands. While Panama’s trust assets are statutorily separated from trustee assets and cannot be seized for trustee debts, the jurisdiction does not impose the heightened burden of proof, shortened limitation periods, or explicit non-recognition of foreign judgments that characterize Cook Islands law.

Panama’s strengths as a trust jurisdiction are its low formation costs, perpetual trust duration, strong confidentiality protections, and the scale of its fiduciary services industry. For clients seeking asset protection specifically, Panama is better understood as a jurisdiction that layers well with other structures than as a standalone alternative to the Cook Islands.

What the Comparison Reveals

Comparing these six jurisdictions on trustee regulation produces a counterintuitive result: the jurisdictions with the most comprehensive trustee oversight — the Cayman Islands and the Bahamas — are not the strongest jurisdictions for asset protection. And the jurisdiction with the most protective trust statutes — the Cook Islands — does not have the largest or most elaborately regulated trustee market.

This is not a contradiction. It reflects the fact that trustee regulation and trust law serve different functions. Trustee regulation protects the client from trustee misconduct, mismanagement, and insolvency. Trust law protects the client’s assets from external threats, primarily creditor claims and foreign court orders. A jurisdiction can excel at one without excelling at the other.

The Cook Islands occupies a distinctive position because it pairs purpose-built asset protection statutes with a small, tightly regulated trustee market. Seven licensed companies, each subject to meaningful FSC oversight, administer trusts governed by statutes designed specifically to resist creditor collection. The licensing framework ensures that the companies carrying out this work are professionally managed, adequately capitalized, and properly insured.

Nevis and Belize offer creditor-protective trust statutes with lighter trustee regulation, which reduces costs but also reduces the depth of supervisory infrastructure backing each trustee. The Cayman Islands and the Bahamas offer institutional-grade trustee regulation without the aggressive creditor protections. Panama sits somewhere in between — a large, professionally regulated trustee market paired with trust statutes that provide some but not all of the protections available in the Cook Islands.

For clients evaluating where to establish an asset protection trust, trustee regulation is one factor among several. But it is not one that should be dismissed. When a creditor pursues trust assets across international borders, the regulatory infrastructure supporting the trustee — the licensing standards, the capitalization requirements, the supervisory relationship with the local regulator — affects the trustee’s capacity and willingness to resist foreign court pressure. A well-regulated trustee operating under a well-designed statute is stronger than either element alone.

The case law involving Cook Islands trusts, summarized in the litigation history, reflects this combination. The outcomes in those cases depend not only on the statutory protections but also on the conduct of the trustees involved — trustees who operated under the FSC’s regulatory framework.

For a comprehensive overview of Cook Islands trust structures, statutory protections, and how trustee regulation fits into the broader planning framework, return to the Cook Islands trust overview.