A Bill entitled Trusts (Regulation of Trust Business) Amendment Act 2012

Summary

This is a draft bill that would amend the Trusts (Regulation of Trust Business) Act 2001 to significantly expand the Bermuda Monetary Authority's disciplinary toolkit over the trust industry. It introduces civil penalties, public censure, prohibition orders and court injunctions, along with a formal warning notice / decision notice procedure and rights of appeal, modelled on provisions already used in the Investment Business Act 2003.

• Civil penalties: The Authority could impose a civil penalty of up to $500,000 on any person who fails to comply with a requirement or contravenes a prohibition under the Act, unless the person took all reasonable steps and exercised due diligence.
• Public censure: The Authority could publish a statement that an undertaking has contravened a requirement, after following a warning notice and decision notice process.
• Prohibition orders: The Authority could prohibit an individual found not fit and proper from performing specified functions in relation to regulated (or exempt) activities; undertakings must not allow a prohibited individual to perform banned functions; breach is a criminal offence with fines up to $200,000 or imprisonment up to four years.
• Injunctions: The Authority could apply to the Court for orders restraining contraventions, requiring remedial steps, or freezing assets of a person suspected of contravening a relevant requirement.
• Notice procedure and appeals: New sections 33A to 33D would govern the content of warning notices and decision notices, publication of decisions, and the Trust Business Appeal Tribunal Regulations 2004 are amended to reflect the new notice-based appeal process.
• Minimum criteria for registration: The Authority's assessment of whether a registered person conducts business in a prudent manner would expressly take into account failures to comply with the Act, AML/CFT laws (Proceeds of Crime Act 1997, Anti-Terrorism (Financial and Other Measures) Act 2004, Proceeds of Crime (AML/ATF) Regulations 2008), the code of conduct, and international sanctions.

As a draft bill circulated for consultation, none of these provisions are yet in force; the Act would come into operation on a day (or days, for different provisions) appointed by the Minister by notice in the Gazette. Compliance officers should treat this as a forward-looking indicator of enhanced enforcement powers rather than a current legal requirement.

Key obligations

• Once in force, undertakings and individuals must comply with all requirements and prohibitions under the Act or face a civil penalty of up to $500,000 per breach
• Undertakings must ensure no individual subject to a prohibition order performs the function they are banned from performing
• Persons subject to warning notices may make representations to the Authority before a decision notice is issued
• Any person who breaches a prohibition order commits an offence, punishable on summary conviction by a fine of $50,000 or two years imprisonment (or both), or on indictment by a fine of $200,000 or four years imprisonment (or both)
• Civil penalties may be recovered by the Authority as a civil debt, but a civil penalty cannot be imposed on a person already criminally convicted for the same matter

Applies to

trust companies, persons licensed under the Trusts (Regulation of Trust Business) Act 2001, registered persons, exempt persons, individuals performing functions in relation to a regulated activity

Deadlines

• on such day as the Minister may appoint by notice published in the Gazette: Commencement of the Act (the Minister may appoint different days for different provisions)

Related documents

• This document amends Trust Business Appeal Tribunal Regulations 2004
• This document amends Trusts (Regulation of Trust Business) Act 2001