Consultation Paper - Regulation of Corporate Service Providers (October 2011)

Summary

This is a 2011 consultation paper in which the Bermuda Monetary Authority (BMA) sets out a proposed licensing regime for Corporate Service Providers (CSPs) - businesses engaged in company formation, registered office provision, acting as directors/officers/nominee shareholders, and related corporate administration services. It follows a Bermuda Government decision that the BMA, rather than the Bar/Accountants AML Board or the Financial Intelligence Agency, should become the CSP regulator, partly to address AML/ATF risk and partly to allow removal of existing 'double vetting' and Exchange Control share-transfer approval processes.

• Scope: Regulation would cover commercial (third-party, for-profit) providers of company formation, registered office/address services, statutory filings, acting as director/officer/secretary/nominee shareholder, and possibly partnership and overseas company services; in-house group CSPs and accounting/financial services would be excluded.
• Licensing: CSPs would need a BMA licence to carry on the specified activities, with an annual fee and a tiered structure likely based on business volume; unlicensed provision would be prohibited.
• Minimum Criteria: Licensees would have to satisfy fit-and-proper, prudent conduct, integrity/skill, and 'reputation of Bermuda' criteria, including maintaining policies, procedures and staff training.
• Ongoing requirements: Proposed obligations include filing annual returns on activities carried out, maintaining specified records, and obtaining BMA approval before changes in directors or senior officers.
• Regulatory powers: The BMA would gain powers of regulatory review, investigation, directions/conditions, licence revocation, banning individuals, injunctions, restitution, publication of enforcement action, and criminal penalties for false statements or unlicensed activity, broadly modelled on the Investment Business Act 2003.
• Transition and consequential changes: A 12-month transition period is proposed for CSPs to implement new policies before licensing, alongside anticipated consequential amendments to AML/ATF legislation, Exchange Control Regulations 1973, and the Companies Act 1981.

As a consultation paper, this document does not itself impose binding obligations; it invites industry comment on the proposed regime before legislation is drafted. Readers should note it reflects the BMA's 2011 thinking and may have been superseded by subsequent legislation or further consultations.

Key obligations

• Interested parties must send comments on the Consultation Paper to legal@bma.bm by 28 October 2011

Applies to

Corporate Service Providers (CSPs), prospective CSP licensees, entities currently subject to corporate registration double-vetting and Exchange Control share transfer approval

Deadlines

• 28th October 2011: Deadline for submitting comments on the Consultation Paper to legal@bma.bm
• 12 months: Proposed transition period for CSPs to implement new requirements and prepare policies/procedures once the regime is enacted