AML/ATF Sector Specific Guidance Notes for Trust Business on the Prevention and Detection of Money Laundering and the Financing of Terrorism

Summary

This is sector specific AML/ATF guidance issued by the Bermuda Monetary Authority for trust business, supplementing the BMA's General Guidance Notes and the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008. It applies to all persons carrying on trust business under section 9(3) of the Trusts (Regulation of Trust Business) Act 2001, who are designated AML/ATF regulated financial institutions. The guidance does not replace the Regulations or General Guidance but explains how core AML/ATF obligations apply specifically to trust structures.

• Risk-based approach: Licensed undertakings must assess and rate trust relationships using customer, product/service, delivery channel and country/geographic risk factors specific to trusts (e.g. complex structures, dummy settlors, opaque beneficiaries, PEPs, high-risk charities).
• Customer due diligence: Identify and verify trust customers and beneficial owners, including settlors, beneficiaries, controllers and classes of persons to benefit, and establish source of funds and source of wealth.
• Simplified and enhanced due diligence: Apply simplified due diligence where appropriate and enhanced due diligence for higher-risk situations such as non face-to-face customers, PEPs and other elevated-risk relationships.
• Ongoing monitoring: Develop a trust customer risk profile, monitor accounts and transactions on a risk-sensitive basis, and consider sanctions and extra-territoriality issues.
• Reliance on third parties and complex transactions: Assess reliance placed on third parties for CDD and scrutinise complex or unusual transactions for suspicious activity.
• Suspicious activity reporting: Identify suspicious activity, file Suspicious Activity Reports with the Financial Intelligence Agency, and observe offences for failure to report and tipping off.
• Internal controls and training: Maintain internal AML/ATF policies, a compliance function, and staff training programmes.

The document is explanatory guidance rather than a standalone legal instrument; compliance with it will be taken into account when assessing compliance with the underlying Regulations. It does not set new filing deadlines but reinforces continuing obligations already imposed on trust licensees under Bermuda's AML/ATF framework.

Key obligations

• Licensed undertakings carrying on trust business must comply with all mandatory provisions of the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 and follow the BMA's General Guidance Notes.
• Must apply a risk-based approach to assess and rate AML/ATF risk for each trust relationship, considering customer, product/service, delivery channel and geographic risk factors.
• Must conduct customer due diligence to identify and verify trust customers and beneficial owners, including settlors, beneficiaries, controllers and classes of persons to benefit.
• Must obtain and verify source of funds and source of wealth information for settlors, particularly where third party funding is involved.
• Must apply enhanced due diligence for higher risk situations such as non face-to-face customers, PEPs, and high-risk charities or not-for-profit organisations.
• Must conduct ongoing monitoring of trust relationships and update customer risk profiles regularly.
• Must scrutinise complex or unusual transactions and file Suspicious Activity Reports with the Financial Intelligence Agency where suspicion arises.
• Must maintain internal AML/ATF policies, a compliance function, and provide staff training on AML/ATF requirements.

Applies to

trust companies, licensed undertakings carrying on trust business, AML/ATF regulated financial institutions

Related documents

• This document is made under Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008