Consultation Paper - AML/ATF Guidance Notes for Trust Business

Summary

This is a consultation draft of Sector-Specific Guidance Notes (SSGN) for Trust Business, issued by the Bermuda Monetary Authority as Annex I to the general 2021 AML/ATF Guidance Notes for Regulated Financial Institutions (RFIs). It explains how existing AML/ATF legal obligations under POCA, POCR, ATFA and the POCA SEA apply specifically to persons carrying on trust business, including certain exempted private trust companies. As a consultation paper it is not yet final guidance, but it sets out in detail how the BMA expects trust business RFIs to structure their AML/ATF policies, procedures and controls.

• Who is covered: Persons carrying on trust business under Section 9(3) of the Trusts (Regulation of Trust Business) Act 2001, who are designated as AML/ATF RFIs under Section 42A(1)(g) of POCA, and certain exempted private trust companies unless they use a licensed corporate service provider or licensed trust business in their structure.
• Governance: Senior management must ensure compliance with the acts and regulations, approve AML/ATF policies and procedures, identify and mitigate ML/TF risks, and appoint a qualified compliance officer and a reporting officer.
• Customer due diligence: Guidance addresses identifying customers and beneficial owners in a trust context, including settlors, trustees, protectors, classes of beneficiaries and persons with control, source of wealth and funds checks, timing of CDD, and enhanced due diligence for higher-risk trust relationships.
• Ongoing obligations: RFIs must screen owners, managers and employees to high standards, conduct ongoing monitoring, maintain records, provide employee training, and report suspicious activity to the Financial Intelligence Agency while avoiding tipping-off.
• Group and third-party arrangements: RFIs with branches, subsidiaries or group entities outside Bermuda must communicate their AML/ATF policies to those entities and ensure equivalent measures are applied; specific risk factors are set out for reliance on third parties, intermediaries and delivery channels.
• Risk factors: The annex lists trust-business-specific ML/TF risk indicators covering customer, product/service, geographic, delivery channel and third-party risk factors.

Because this is a consultation paper, the obligations described reflect the BMA's proposed articulation of existing statutory AML/ATF duties for trust business RFIs rather than new binding rules; readers should check the BMA consultation page for the comment process and any final version before treating this as authoritative guidance.

Key obligations

• Senior management must ensure compliance with AML/ATF acts and regulations and approve the RFI's AML/ATF policies, procedures and controls
• RFIs conducting trust business must appoint a qualified compliance officer at managerial level to oversee AML/ATF policies and procedures
• RFIs conducting trust business must appoint a qualified reporting officer to receive and assess internal disclosures and file external reports with the FIA where suspicion of ML/TF exists
• RFIs must screen owners, directors, managers and employees against high standards under POCR Regulation 18(1)(c)
• RFIs must obtain and verify customer and beneficial owner identification information appropriate to trust structures, including settlors, trustees, protectors and beneficiaries
• RFIs must conduct ongoing monitoring of trust business relationships and transactions
• RFIs must report suspicious transactions or activities to the Financial Intelligence Agency and avoid tipping-off
• RFIs must maintain records in accordance with AML/ATF requirements
• RFIs must provide appropriate AML/ATF training to relevant employees
• RFIs with overseas branches, subsidiaries or group entities must communicate their AML/ATF policies to those entities and ensure equivalent measures are applied
• RFIs conducting trust business should include AML/ATF policies, procedures, and business/client risk assessments with any application for a trust business licence

Applies to

trust business RFIs, persons carrying on trust business under the Trusts (Regulation of Trust Business) Act 2001, exempted private trust companies, corporate service provider businesses (where relevant to exemptions)