CP - Monetary Lending Activities (2018-02)

Summary

This is a February 2018 joint consultation paper from the National Anti-Money Laundering Committee (NAMLC) and the Bermuda Monetary Authority (BMA), proposing legislative amendments to strengthen Bermuda's AML/ATF regime ahead of its 2018 FATF Mutual Evaluation. It seeks industry feedback on a draft Bill that would widen the definition of 'AML/ATF regulated financial institution' to capture lending, financial leasing, and financial guarantees and commitments ('Money Lending activities'), and on a related restriction on insurers' non-insurance business.

• Scope expansion: Amends section 42A of the Proceeds of Crime Act 1997 (POCA), the Anti-Terrorism (Financial and Other Measures) Act 2004, the SEA, and the POCA Regulations 2008 to bring lending, financial leasing, and financial guarantees/commitments within the definition of 'AML/ATF regulated financial institution' where not already covered.
• New registration category: Persons or entities carrying on these activities as a business for customers, who are not otherwise licensed, would become a 'non-licensed AML/ATF regulated financial institution' and would need to register with the BMA under section 9(1) SEA and comply with the AML/ATF Regulations; the Authority could cancel registration for material breach under section 12(b) SEA.
• Proposed exemptions: Carve-outs proposed for collection/administration of service or maintenance charges on Bermuda immovable property, and for provision of these activities between a holding company and its subsidiaries or between subsidiaries of the same holding company.
• Insurance Act amendment: Section 19 of the Insurance Act 1978 would be amended to restrict all registered insurers (not just those licensed as commercial entities) from engaging in non-insurance business, including Money Lending activities, unless ancillary to their insurance business.
• Request for information: BMA and NAMLC also seek stakeholder input on the actual nature and extent of lending, financial leasing, and financial guarantee activities being carried on in or from Bermuda, and the associated ML/TF/PF and prudential risks.

As a consultation paper, the document itself is not yet in force; it invites written comments on the draft Bill and requests information from industry, with the proposed changes to take effect only if and when the Bill is enacted.

Key obligations

• Submit written comments on the draft Bill and consultation questions to the BMA at policy@bma.bm by March 26, 2018.
• Provide information to the BMA/NAMLC on the nature, extent and AML/ATF/prudential risks of lending, financial leasing and financial guarantee/commitment activities carried on in or from Bermuda.
• If enacted, non-bank persons or entities carrying on lending, financial leasing, or financial guarantee/commitment business for customers would be required to register with the BMA under section 9(1) of the SEA and comply with the AML/ATF Regulations.
• If enacted, all registered insurers would be restricted from engaging in non-insurance business (including Money Lending activities) unless ancillary to their insurance business.

Applies to

AML/ATF regulated financial institutions, non-bank lenders, private individuals engaged in lending, financial leasing companies, entities providing financial guarantees and commitments, insurers, insurance intermediaries (agents and brokers), investment providers, money service providers, trustees, corporate service providers, fund administrators

Deadlines

• March 26, 2018: Deadline for industry and other stakeholders to submit written responses to the consultation paper to policy@bma.bm.

Related documents

• This document amends Proceeds of Crime Act 1997
• This document amends Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008
• This document amends Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008
• This document amends Insurance Act 1978