Notice - Code of Practice Consultation Paper (2014-09-15)

Summary

This is a Bermuda Monetary Authority notice opening a consultation on a draft Code of Practice for corporate service provider (CSP) business, issued under section 7 of the Corporate Service Provider Business Act 2012. It follows an earlier 2012 consultation and republishes finalised versions of several CSP licensing documents while putting the new Code of Practice itself out for industry comment.

• Documents reissued: CSP Statement of Principles, CSP Guidance Notes, and Appendices I to V covering the CSP application form, shareholder controller and senior executive questionnaires, business plan requirements, and certificate of compliance.
• Draft Code of Practice: Sets out expected duties, standards and internal controls for licensed CSPs, including client due diligence, integrity and ethics, confidentiality, record keeping, adequate staffing and systems, fee transparency, client agreements, complaints handling, nominee shareholder agreements, risk management, and disclosure of licensing status.
• Consultation process: Comments on the draft Code of Practice are invited from industry stakeholders and interested parties, to be sent to policy@bma.bm.
• Existing statutory obligation noted in Appendix V: Every licensed CSP undertaking must deliver a certificate of compliance to the Authority within four months of its financial year end, with a civil penalty of up to $5,000 per week of default under section 46(2) of the Act.

Because this is a consultation notice, the Code of Practice provisions described are in draft form pending finalisation; the document does not state whether or when the Code was subsequently adopted in this text.

Key obligations

• Submit any comments on the draft Code of Practice to policy@bma.bm by 15th October 2014
• Licensed corporate service providers must have due diligence procedures to verify client identity and beneficial ownership before acting for a new client
• Licensed corporate service providers must conduct business with integrity, disclose conflicts of interest, and deal fairly with clients
• Licensed corporate service providers must keep and preserve appropriate records in Bermuda, including identity of shareholders, directors, officers or partners
• Licensed corporate service providers must maintain adequate, appropriately trained staff and adequate systems and controls, including a documented business interruption recovery plan
• Licensed corporate service providers must agree a clear, transparent fee structure with clients in advance and give notice before material fee changes
• Licensed corporate service providers acting as nominee shareholders must maintain a written nominee agreement identifying the beneficial owner
• Licensed corporate service providers must implement a risk management framework commensurate with the scale and risk profile of their business
• Every licensed CSP undertaking must deliver a certificate of compliance to the Authority within four months of its financial year end

Applies to

corporate service providers, holders of corporate service provider licences

Deadlines

• 15th October 2014: Deadline for industry stakeholders and interested parties to submit comments on the draft Code of Practice to policy@bma.bm
• within 4 months from the end of its financial year: Deadline for every licensed CSP undertaking to deliver a certificate of compliance to the Authority under section 46 of the Act