Corporate Service Provider Business Update (2013-08-13)

Summary

This is a 2013 BMA update to industry following consultation on the Corporate Service Provider Business Act 2012, its Statement of Principles, licence application, and Guidance Notes. It summarises industry feedback and the Authority's resolutions on several contentious points, and invites further comment on proposed legislative amendments. As a superseded consultation document, its proposals were later formalised or replaced by subsequent rules and the Code of Practice.

• Tiered licensing: The Authority will introduce an Unlimited Licence (all corporate services) and a Limited Licence (excluding services under sections 2(2)(a) and 2(2)(c)(vii) of the Act).
• Financial information: CSPs will not be required to submit financial statements as part of annual returns or licence applications, since they do not directly manage client money.
• Governance: No mandatory four-eyes rule, but CSPs will be subject to a proportionate Corporate Governance Policy; at least one individual responsible for day-to-day operations must reside in Bermuda.
• Insurance: CSPs must purchase adequate insurance coverage proportionate to their business, or justify why particular coverage is unnecessary.
• Prudent conduct: CSPs providing contracted services are expected to fulfil contractual obligations relating to client companies' compliance with the Companies Act 1981.
• Customer due diligence: Where a CSP lacks direct sight of original documents and relies on an overseas professional intermediary for validation, it must conduct appropriate checks on that intermediary.
• Code of Practice: The Authority will issue a Code of Practice under section 7 of the Act, absorbing much of the content previously in the Guidance Note.
• Exemptions and transition: Exemptions from the Act will be set by statutory order (no application needed for qualifying persons), and the transition period will be extended to two years or a date set by statutory order.

The Authority requested industry comments on the proposed legislative amendments by Friday, 6th September 2013, submitted to policy@bma.bm.

Key obligations

• CSPs will not be required to submit financial statements with annual returns or licence applications
• CSPs must purchase adequate insurance coverage proportionate to the nature and scale of their business, or justify why specific coverage is unnecessary
• CSPs providing contracted services must fulfil contractual obligations relating to client companies' compliance with the Companies Act 1981
• Where a CSP does not have direct sight of original documents and relies on an overseas professional intermediary, it must conduct appropriate due diligence checks on that intermediary
• At least one individual responsible for day-to-day business operations of a CSP must reside in Bermuda
• Industry stakeholders were invited to submit comments on proposed legislative changes to policy@bma.bm by Friday, 6th September 2013

Applies to

Corporate Service Providers (CSPs)

Deadlines

• Friday, 6th September 2013: Deadline for industry stakeholders to submit comments on the proposed amendments to the Corporate Service Provider Business Act 2012 and related documents