Consultation Paper - Corporate Service Provider Business Amendment Act 2019 (with Bill) (2019-06-03)

Summary

This is a Bermuda Monetary Authority consultation paper, with a draft Bill attached, proposing amendments to the Corporate Service Provider Business Act 2012, its associated Order, Code of Practice and Statement of Principles. It seeks industry feedback before any changes are finalised and enacted.

• Physical presence: Licensed corporate service providers (CSPs) would be required to demonstrate and maintain an ongoing physical presence in Bermuda, assessed by factors such as location of strategic decision making, where CSP business is carried out, residence of directors/controllers/employees, and location of board meetings.
• Licence surrender: Section 21 would be amended so the Authority must approve surrender of a licence before it takes effect, to ensure orderly wind down and protect client interests; surrender would be irrevocable unless the Authority allows withdrawal.
• Client funds segregation: A new section 55B would require licensed undertakings holding client funds to segregate those funds from their own funds and maintain records allowing client money to be readily identified.
• Prudential standards power: A new section 55A would give the Authority power to exempt a licensed undertaking from, or modify, prudential standards or reporting requirements, subject to conditions and a right for the undertaking to make representations within 28 days of a notice to revoke or vary such exemption/modification.
• Exemption Order changes: CSPs seeking exemption from licensing would need to apply for exemption and re-notify the Authority annually that they continue to qualify.
• Code of Practice changes: Proposed enhancements cover recruitment vetting, conflicts of interest, managing shareholder controller risk, board/senior management responsibility for delegated functions, a ban on corporate directors on a CSP's own board, record keeping, client fee/termination disclosure in client agreements, written complaints handling shared with clients, and ethical advertising practices.
• Statement of Principles changes: Shareholder controllers would need to demonstrate source of wealth on acquisition of shares and ongoing; clarified expectations on insurance cover and oversight of outsourced activities; references updated to the 2018 Enforcement Guide.

The Authority invited licensed institutions and other interested parties to submit comments on these proposals to policy@bma.bm no later than 21 June 2019. As a consultation, none of the proposed changes are yet in force; the amendments would take effect only once the Bill is enacted and any commencement date appointed by the Minister.

Key obligations

• Submit comments on the proposed amendments to policy@bma.bm no later than 21 June 2019

Applies to

corporate service providers, licensed undertakings under the Corporate Service Provider Business Act 2012

Deadlines

• 21 June 2019: Deadline for licensed institutions and interested parties to submit comments on the consultation proposals

Related documents

• This document amends Bermuda Monetary Authority Act 1969
• This document amends Corporate Service Provider Business Act 2012