Corporate Service Provider Stakeholder Letter (2013-10-04)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority responding to industry comments on proposed amendments to the Corporate Service Provider Business Act 2012 via the Corporate Service Provider Business Amendment Act 2013. It clarifies the Authority's positions on scope of licensed activities, a new power to restrict a licensee's scope, minimum criteria expectations, and forthcoming exemptions, rather than setting out new binding rules itself.

• Nominee shareholders: Holders of a limited licence may act as nominee shareholders, but any CSP doing so must apply customer due diligence, verify the beneficial owner of the client, and continue to monitor ownership, meeting prudential standards for this activity.
• Non-executive directors: A CSP offering non-executive director services falls within scope of the Act under a strict reading, though the Authority says this is under further review.
• Power to limit scope: The Bill gives the Authority a new power (similar to that under the Investment Business Act 2003) to designate and limit the specific CSP activities a licensee may carry out, based on its business plan and structure.
• Minimum criteria and non-executive directors: Whether a licensee should appoint a non-executive director or require two-person oversight (the four-eyes principle) will depend on the Authority's assessment of the business's nature, size, complexity, risk profile and group structure, as detailed in a forthcoming Statement of Principles.
• Companies Act compliance: Minimum Criteria require CSPs to comply with obligations under the Companies Act 1981 as companies carrying on business in Bermuda, in addition to CSP licensing requirements.
• Exemptions: The Authority is reviewing proposed exemptions and will issue them shortly, with an opportunity for stakeholder comment before finalisation.

No firm compliance deadlines are set in this letter; it is primarily explanatory, addressing stakeholder queries ahead of finalising the amendment Bill, Statement of Principles, and exemptions.

Key obligations

• A CSP acting as a nominee shareholder must conduct customer due diligence and verify the beneficial owner of its client.
• A CSP acting as a nominee shareholder must continue to monitor the ownership of the client on an ongoing basis.
• Licensees carrying out nominee shareholder or other CSP activities must meet prudential standards and comply with the minimum criteria applicable to their business model.
• Licensees must comply with obligations under the Companies Act 1981 as part of meeting the Minimum Criteria for licensing.

Applies to

Corporate Service Providers (CSPs), limited licence holders, licensees under the Corporate Service Provider Business Act 2012