Where must trust funds be maintained?

Trust funds must be maintained at banks that are listed in Schedule 1 or 2 of the Bank Act, which ensures that those institutions meet specific regulatory standards and are subject to adequate oversight. This requirement is in place to protect the funds and ensure that they are handled securely and with integrity, providing a level of assurance for the customers and clients who rely on those fiduciary services.

By requiring trust funds to be held at specific types of banks, the regulation promotes financial stability, reduces the risk of fraud or mismanagement, and ensures a higher level of consumer protection. Maintaining trust funds in an appropriate financial institution prevents situations where funds could be inaccessible or improperly managed, which is vital given the nature of trust accounts that hold money on behalf of clients or third parties. Other options, such as maintaining trust funds in any financial institution or with offshore accounts, do not guarantee the same level of security and oversight, which is why they do not meet the regulatory expectations outlined in the RIBO Act.