NOTICE - Sector-Specific AML/ATF Guidance Notes for Trust Business (Consultation) (2016-04-27)

Summary

This is a Bermuda Monetary Authority consultation notice releasing draft sector specific AML/ATF guidance for trust business (Annex I), meant to supplement the Authority's main AML/ATF Guidance Notes. The Authority invited stakeholder comments on the draft before finalising it; the draft itself sets out how existing AML/ATF legal obligations under the Proceeds of Crime Act, the SEA Act 2008 and ATFA 2004 apply specifically to trust business.

• Scope: Applies to all AML/ATF regulated financial institutions (RFIs) carrying on trust business under section 9(3) of the Trusts (Regulation of Trust Business) Act 2001, except those conducting only private trust business under the 2002 Exemption Order.
• Senior management and controls: Draft guidance describes senior management's duties to ensure compliance, assess and mitigate ML/TF risk, appoint a Compliance Officer and Reporting Officer, screen staff, resource and test AML/ATF controls.
• Risk based approach: RFIs conducting trust business must use a risk based approach to set CDD levels, mitigation measures, monitoring scope and suspicious activity detection, given trust structures generally carry higher ML/TF risk than retail banking.
• Customer due diligence: Guidance details identifying and verifying trust customers (settlors, trustees, beneficiaries, protectors, enforcers, other connected persons), beneficial owners, source of wealth and funds, and the nature/purpose of the trust relationship.
• Other areas covered: International sanctions screening, ongoing monitoring, suspicious activity reporting, employee training, record keeping, and sector specific risk factors (product, delivery channel, third party, geographic) for trust business.

Because this is a consultation notice, the obligations described reflect the draft guidance as circulated for comment rather than a confirmed final version; readers should check for a subsequent finalised version of the sector specific trust guidance.

Key obligations

• Senior management of RFIs conducting trust business must ensure compliance with the Acts and Regulations, identify and mitigate ML/TF risks, appoint a Compliance Officer and a Reporting Officer, screen employees, resource and periodically test AML/ATF controls
• RFIs conducting trust business must apply a risk based approach to determine CDD levels, risk mitigation measures, ongoing monitoring scope and suspicious activity detection/reporting measures
• RFIs must carry out customer due diligence on all persons connected with a trust, including settlors, trustees, co-trustees, protectors/enforcers and beneficial owners, and verify their identities
• RFIs must identify and verify beneficial owners of a trust as defined under Regulation 3(3), including any individual entitled to at least 25% of trust capital
• RFIs must obtain and document the nature, purpose, size and complexity of each trust business relationship, including source of wealth and source of funds
• Stakeholders wishing to comment on the draft sector specific trust business guidance must submit comments to policy@bma.bm referencing 'AML/ATF Trust Business' within the 30 day consultation period

Applies to

Regulated financial institutions (RFIs) carrying on trust business, Trust companies/trustees regulated under the Trusts (Regulation of Trust Business) Act 2001

Deadlines

• 27 May 2016: End of the 30 day consultation period for comments on the draft Sector-Specific AML/ATF Guidance Notes for Trust Business