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

Summary

This is a Bermuda Monetary Authority consultation paper seeking industry feedback on a draft Corporate Service Provider Business Amendment Act 2019, together with proposed related changes to the CSP Order, Code of Practice and Statement of Principles. It is not yet in force; it sets out proposed reforms and invites comments before any bill is finalised.

• Physical presence: Licensed CSPs would be required to maintain and demonstrate ongoing physical presence in Bermuda, with the Authority assessing factors such as location of strategic decision making, business operations, director/employee residence and board meetings.
• Licence surrender: Section 21 would be amended so the Authority must approve surrender of a licence before it takes effect, ensuring orderly wind-down and client protection.
• Client funds segregation: New section 55B would require CSPs holding client money to segregate it from their own funds and keep records allowing client funds to be clearly identified.
• Prudential rule-making power: New section 55A would let the Authority exempt or modify prudential standards or reporting requirements for a licensed undertaking, subject to conditions and a right to make representations within 28 days of a revocation notice.
• Exemption Order changes: CSPs seeking exemption from licensing would need to apply for exemption and re-declare annually that they continue to qualify.
• Code of Practice and Statement of Principles updates: Proposed clarifications cover recruitment vetting, conflicts of interest, shareholder controller risk management, board delegation oversight, a ban on corporate directors on a CSP's own board, record-keeping, fee/termination terms in client agreements, complaints handling, advertising standards, source-of-wealth evidence for shareholder controllers, insurance expectations, outsourcing oversight, and updated enforcement references.
• Administrative housekeeping: Removal of the section 12 reference to a fee for inspecting the register and other minor drafting corrections.

Licensed institutions and other interested parties were invited to submit comments to policy@bma.bm by 21 June 2019. The Bill's commencement date was left to be set later by the Minister via Gazette notice, with different provisions potentially commencing on different days.

Key obligations

• Licensed institutions and interested parties must submit comments on the proposals to policy@bma.bm no later than 21 June 2019.
• If enacted, licensed CSPs would be required to maintain and demonstrate ongoing physical presence in Bermuda.
• If enacted, licensed CSPs holding client funds would be required to segregate those funds from their own funds and maintain records allowing client money to be readily identified.
• If enacted, licensed CSPs would need the Authority's prior approval before a licence surrender takes effect.
• If enacted, undertakings seeking exemption from licensing would need to apply for exemption and re-notify the Authority annually that they continue to qualify.

Applies to

corporate service providers, licensed corporate service provider undertakings

Deadlines

• 21 June 2019: Deadline for licensed institutions and interested parties to submit comments on the consultation paper to policy@bma.bm.
• such day as the Minister may appoint by notice published in the Gazette: Commencement date(s) for the Corporate Service Provider Business Amendment Act 2019, which may differ for different provisions.
• 28 days from the date of the notice: Period within which a licensed undertaking may make written representations after being served notice of a proposed revocation of an exemption or modification under proposed section 55A.

Related documents

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