CSP Business Act 2012 - Guidance Notes: Information for Prospective Applicants (March 2020)

Summary

This is a Bermuda Monetary Authority guidance note explaining the licensing regime and supervisory approach under the Corporate Service Provider Business Act 2012. It is aimed at persons or entities intending to apply for a CSP business licence and at existing licensees, describing what activities require licensing, how to apply, and how the Authority supervises licensed CSPs on an ongoing basis.

• Scope: Covers any person or entity carrying on CSP business for profit in or from Bermuda, including company/partnership formation agents, nominee service providers, registered office and administrative/secretarial service providers, and resident representatives, unless exempted (e.g. intra-group management only).
• Licence types: Licences may be limited (subject to section 10(6) limits) or unlimited, and may be granted to local/exempted companies, overseas permit companies, partnerships, overseas partnerships, other unincorporated entities or individuals.
• Application requirements: Applicants must submit Form CSP 1 with prescribed fees, a detailed business plan under section 10(2), and completed Questionnaires for Shareholder Controllers and Senior Executives for each relevant shareholder/controller, director and officer.
• Ongoing supervision: The Authority applies a risk based supervisory framework involving prudential meetings, on-site visits, thematic reviews, and use of statutory information and investigation powers where concerns arise.
• Reporting: Licensed CSPs must submit an annual Certificate of Compliance confirming adherence to minimum licensing criteria and Codes of Practice, and are expected to proactively notify the Authority of significant developments such as key personnel changes, legal actions, cybersecurity incidents, or material business changes.
• Gatekeeper role: CSPs holding an unlimited licence are expected to act as gatekeepers, maintaining independence, good governance and high professional standards to protect Bermuda's reputation as a financial centre.

Failure to submit the annual Certificate of Compliance, or to provide required particulars, is a statutory offence. The Authority retains broad discretion in granting, restricting or revoking licences and in using its enforcement powers where breaches are identified.

Key obligations

• Applicants must submit Form CSP 1 together with prescribed fees and a detailed business plan under section 10(2) of the Act.
• Applicants must submit completed Questionnaires for Shareholder Controllers and Senior Executives for each relevant shareholder/controller, director and officer.
• Each licensed CSP must submit a Certificate of Compliance to the Authority on an annual basis confirming compliance with minimum licensing criteria and applicable Codes of Practice under section 46 of the Act.
• Licensees must proactively advise the Authority of significant developments (e.g. changes in key personnel, material legal actions, cybersecurity incidents, material claims on insurance, material changes in business) when or before they occur.
• Licensees are expected to voluntarily and routinely provide information necessary for the Authority's supervision, and to cooperate with prudential meetings and on-site visits, including providing pre-visit information when requested.
• CSPs holding an unlimited licence must act as gatekeepers, maintaining independence, objectivity and good governance in their client relationships.

Applies to

Corporate service providers (CSPs), prospective applicants for a CSP business licence, local and exempted companies, overseas (permit) companies, partnerships formed under the Partnership Act 1902 or Exempted Partnerships Act 1992, overseas partnerships, unincorporated entities and individuals conducting CSP business

Deadlines

• annually: Each licensed CSP must submit a Certificate of Compliance to the Authority on an annual basis under section 46 of the Act.
• approximately eight to ten weeks ahead of an on-site visit: The Authority will normally write to a licensed undertaking requesting pre-visit information ahead of a scheduled on-site visit.
• generally within three months: The Authority generally would not expect a licence application to remain outstanding beyond this period, though no statutory time limit applies.