CP - Segregated Accounts Companies and AML/ATF Risks (May 2018)

Summary

This is a Bermuda Monetary Authority consultation paper, issued on behalf of Bermuda's National Anti-Money Laundering Committee, proposing to tighten AML/ATF oversight of segregated accounts (under the Segregated Accounts Companies Act 2000) and separate accounts (established by Private Acts). The core proposal is to require that owners of these accounts be identified and vetted as beneficial owners, closing a gap identified in BMA's AML/ATF risk assessment ahead of Bermuda's 2018 FATF Mutual Evaluation. This is a consultation seeking stakeholder feedback, not a final rule.

• Beneficial ownership definition: Amend the Proceeds of Crime (AML/ATF) Regulations 2008 to extend the definition of beneficial owner to include persons who own or control a segregated account or separate account.
• CDD scope: Clarify or expand customer due diligence requirements under regulation 5 of the POC Regulations to apply to beneficial owners of segregated/separate accounts, not just legal owners.
• Service provider vetting duty: Require AML/ATF regulated service providers to a segregated accounts company (SAC) or Private Act company (Insurance Managers, Investment Business providers, Corporate Service Providers, Fund Administrators, Custodians) to carry out CDD vetting of the beneficial owners of the accounts.
• Registration as Non-Licensed Person: Where an SAC or Private Act company is not itself an AML/ATF regulated financial institution and does not engage a regulated service provider, it must register as a Non-Licensed Person (NLP) under the Proceeds of Crime (AML/ATF Supervision and Enforcement) Act 2008 (SEA) and comply with the AML/ATF Regulations.
• Legislation to be amended: Proposed changes would amend the Proceeds of Crime Act 1997 (POCA), the Anti-Terrorism (Financial and Other Measures) Act 2004 (ATFA), the POC Regulations 2008, and the SEA.

The paper also solicits information on the extent to which companies use segregated/separate accounts and the associated ML/TF/PF and prudential risks, and invites comment on the proposed vetting criteria (e.g. 10% or more shareholding, contractual ownership, variable structures such as insurance pools or rent-a-captives). Feedback was due to BMA by 4 June 2018, after which a finalised Bill would be tabled in Parliament.

Key obligations

• Once implemented, SACs and Private Act companies would need to identify and verify the owners of all segregated or separate accounts
• AML/ATF regulated service providers (Insurance Managers, Investment Business providers, Corporate Service Providers, Fund Administrators, Custodians) to an SAC or Private Act company would need to conduct CDD vetting on the beneficial owners of segregated/separate accounts
• SACs or Private Act companies that are not themselves AML/ATF regulated financial institutions and do not engage a regulated service provider would need to register as a Non-Licensed Person under the SEA and comply with AML/ATF Regulations
• Stakeholders were invited to submit written feedback on the consultation paper to BMA by 4 June 2018 via mail or email to policy@bma.bm

Applies to

segregated accounts companies, companies operating separate accounts under a Private Act, Insurance Managers, Investment Business providers, Corporate Service Providers, Fund Administrators, Custodians, AML/ATF regulated financial institutions

Deadlines

• 4 June, 2018: Deadline for stakeholders to submit written feedback on the Consultation Paper to the Bermuda Monetary Authority