Corporate Service Providers Guidance Notes (December 2012)

Summary

These guidance notes explain how the Bermuda Monetary Authority expects licensed Corporate Service Providers (CSPs) to comply with the Corporate Service Provider Business Act 2012, which took effect 1 January 2013. They emphasise the CSP's role as a gatekeeper now that the Authority no longer pre-vets beneficial owners or share transactions on company formations, and set out expectations for governance, risk management, client due diligence and supervision.

• Scope: Applies to all holders of a corporate services business licence under section 11 of the CSP Act 2012, covering company/partnership formation agents, nominee shareholders, registered office and administrative/secretarial service providers, and resident representatives.
• Governance and conduct: Boards and senior management must maintain corporate governance policies, prudent business conduct, conflict of interest controls, complaints handling procedures, and adequate skilled staff.
• Nominee arrangements: Written nominee agreements identifying the beneficial owner must be retained where a CSP acts as or arranges a nominee shareholder.
• AML/ATF and gatekeeper duties: CSPs are AML/ATF regulated financial institutions under the AML Regulations and the Proceeds of Crime Act, and must apply customer due diligence, risk-based client profiling and ongoing monitoring.
• Risk management framework: CSPs must address operations, accounting, compliance, business continuity, information and reputational risk in a manner proportionate to their business.
• Supervision: The Authority supervises CSPs through off-site review of financial and governance information, prudential meetings, and on-site visits assessing controls and management oversight.
• Annual filing: CSPs must annually submit a certificate of compliance confirming adherence to the minimum criteria under the CSP Act 2012.

Because compliance with the Companies Act 1981 falls under the Registrar of Companies rather than the Authority, CSPs must otherwise focus on meeting the CSP Act's licensing and AML/ATF obligations, with breaches potentially triggering the Authority's enforcement powers.

Key obligations

• CSPs must establish and maintain written corporate governance policies and procedures, approved by the board, covering AML/ATF, client agreements, staff training and risk assessment.
• Where acting as or arranging a nominee shareholder, a CSP must obtain and retain a written nominee agreement identifying the beneficial owner.
• CSPs must implement policies and procedures to identify, disclose and manage conflicts of interest, including director disclosure of interests in contracts.
• CSPs must maintain accessible complaint-handling procedures and document complaints, responses and remedial action taken.
• CSPs must maintain adequate financial, human and technical resources and ensure staff have professional skills appropriate to the business.
• CSPs must alert the Authority to material changes in business strategy, staffing, or systems and controls.
• A CSP must annually provide the Authority with a certificate of compliance, certified by an officer, confirming compliance with the minimum criteria under the CSP Act 2012.

Applies to

Corporate Service Providers (CSPs), company formation agents, nominee shareholders, resident representatives

Deadlines

• 31 January 2013: Deadline for public comments on the proposals in this guidance paper, to be sent to Tamara Anfossi at the BMA.
• 1 January 2013: Effective date of the Corporate Service Provider Business Act 2012, which this guidance accompanies.
• annually: A CSP must provide the Authority with an annual certificate of compliance certifying adherence to the minimum criteria under the CSP Act 2012.