Consultation Comments - AML/ATF Schedule XVIII (2016-06-21)

Summary

This is a BMA consultation feedback document responding to industry comments on Schedule XVIII, the new Anti-Money Laundering and Anti-Terrorism Financing (AML/ATF) reporting schedule for long-term insurers, which was originally issued for consultation on 2 May 2016. It summarises stakeholder questions and the Authority's final resolutions on scope, content and mechanics of the schedule, rather than setting out new rules itself.

• Scope: The schedule applies only to long-term insurers writing direct business in or from Bermuda; reinsurance business of a long-term insurer is excluded, though reinsurance data is still collected to assess materiality of direct versus reinsurance business.
• Overseas branches: Overseas branches of Bermuda long-term insurers will not complete the schedule itself but must complete a certificate of compliance confirming they are subject to broadly equivalent AML/ATF requirements; BMA will publish this certificate form separately.
• First filing and historical data: No historical or comparative data will be required for the first filing; the first filing is expected to relate to 2016 year end business, filed in 2017.
• Risk based approach retained: BMA rejected a proportionality based exemption for insurers in run off, confirming supervision will instead follow a risk based approach reflecting each insurer's size and activity level.
• Content clarifications: The individual financial solvency question for prospective employees has been removed; entities may report in their own reporting currency (not only USD); part or full surrenders count as claims paid; claims should be reported on a gross paid basis; the term intermediary has been changed to affiliated intermediary for clarity.
• Format: BMA will design the schedule to allow easy roll forward of prior year data, though it declined to make Table II an update only, exceptions based filing.

The document is informational and reflects finalised policy decisions ahead of the schedule's implementation; it also links the exercise to Bermuda's AML/ATF Mutual Evaluation scheduled for the first quarter of 2018.

Key obligations

• Long-term insurers writing direct business in or from Bermuda must complete and file Schedule XVIII annually.
• Overseas branches of Bermuda long-term insurers must complete a certificate of compliance confirming they are subject to broadly equivalent AML/ATF requirements.
• Insurers must report gross claims paid, including part or full surrenders, under the schedule.
• Insurers may report in their own reporting currency rather than being required to use US dollars.

Applies to

long-term insurers, insurance managers, Bermuda insurers with overseas branches

Deadlines

• 2016 year end, filed in 2017: First filing of Schedule XVIII is expected to apply to 2016 year end data, to be filed in 2017, with no historical or comparative data required for that first filing.