Stakeholder Letter – Trust Code of Practice and Statement of Principles (2019-12-16)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority responding to industry feedback on proposed revisions to the Code of Practice and Statement of Principles under the Trusts (Regulation of Trust Business) Act 2001. It clarifies two areas raised by respondents: the proportionality principle in the Code of Practice, and the adequate liquidity requirement in the Statement of Principles. It does not itself enact new rules but explains how existing and proposed requirements will be applied.

• Proportionality principle: Licensed trust undertakings must self-assess the nature, scale and complexity of their operations against the factors in paragraph 6(a) to (c) of the Code of Practice and design governance and risk management frameworks accordingly; the Authority will review the reasonableness of that self-assessment through supervision.
• Minimum liquidity: Maintaining minimum liquidity is mandatory with no exceptions, even for cash flow experience or unique business characteristics; extraordinary cost or events affecting the calculation will be assessed case by case.
• Standby facilities: Any committed standby facility counted toward liquidity must first receive the Authority's written consent, since the Authority needs to review the facility's terms.
• Liquidity Analysis form: Licensed undertakings must complete and submit the Trust Business Act Appendix 6 Liquidity Analysis form to the Authority, as required under First Schedule subparagraph 6A of the Act.

The letter is a consultation follow up communication aimed at licensed trust businesses in Bermuda and does not state a specific effective date or filing deadline within its text.

Key obligations

• Licensed undertakings must self-assess the nature, scale and complexity of their operations under Code of Practice paragraph 6(a) to (c) and design proportionate governance and risk frameworks
• Licensed undertakings must maintain the required minimum liquidity at all times, with no exceptions permitted
• Licensed undertakings must obtain the Authority's written consent before including a committed standby facility in liquidity calculations
• Licensed undertakings must complete and submit the Trust Business Act Appendix 6 Liquidity Analysis form to the Authority in accordance with First Schedule subparagraph 6A of the Act

Applies to

licensed trust undertakings, trust businesses licensed under the Trusts (Regulation of Trust Business) Act 2001