Trusts (Regulation of Trust Business) Act 2001 - Information for Prospective Applicants (April 2020)

Summary

This is Bermuda Monetary Authority guidance explaining the licensing and ongoing supervisory framework for trust business under the Trusts (Regulation of Trust Business) Act 2001. It sets out who needs a licence, the difference between limited and unlimited licences, the application process, and the reporting and supervisory obligations that apply once licensed.

• Licensing scope: Anyone carrying on trust business (providing trustee services as a business, trade, profession or vocation) in or from Bermuda must be licensed unless exempted.
• Unlimited licence: Available to local/exempted companies and Overseas Permit Companies; allows soliciting trust business from the public generally.
• Limited licence: Available to partnerships, overseas partnerships and other unincorporated entities or individuals; holder cannot act as sole trustee and is restricted to holding trust assets not exceeding 30 million dollars unless the Authority agrees a higher amount.
• Application requirements: Applicants must submit T Form 1 with prescribed fees, a statement of the nature and scale of the proposed trust business under section 11(6), and completed Personal or Institutional Questionnaires for shareholders/controllers, directors and officers.
• Reporting for unlimited licensees: Audited financial statements must be submitted annually, no later than four months after the end of the financial year.
• Reporting for all undertakings: Standard financial statements and liquidity analysis must be submitted quarterly, within 21 business days of each calendar quarter.
• Certificate of Compliance: Each licensed trust undertaking must submit an annual Certificate of Compliance confirming it meets minimum licensing criteria and Codes of Practice; failure to do so is an offence under section 35.
• Proactive disclosure: Undertakings are expected to promptly notify the Authority of significant developments such as capital or liquidity breaches, key personnel changes, litigation for fiduciary breaches, foreign regulator inquiries, cybersecurity incidents, material insurance claims, or material business changes.
• Supervisory process: The Authority applies a risk based supervisory framework involving prudential meetings, thematic reviews, and on-site visits, and may use statutory powers to compel information or appoint investigators where concerns arise.

The Authority generally aims to decide licence applications within about three months, though the Act sets no statutory deadline. On-site visits are typically preceded by written notice roughly eight to ten weeks in advance requesting pre-visit information.

Key obligations

• Applicants for a trust licence must submit T Form 1 together with prescribed fees to the Authority
• Applicants must submit a statement under section 11(6) of the Act describing the nature and scale of the proposed trust business (per Appendix 2)
• Applicants must submit completed Personal or Institutional Questionnaires for each shareholder/controller, director and officer
• Limited licence holders must not hold trust assets exceeding 30 million dollars unless the Authority approves a higher aggregate amount
• Companies holding unlimited trust licences must submit audited financial information annually, no later than four months after the end of their financial year
• All licensed undertakings must submit standard financial statements and liquidity analysis quarterly, within 21 business days of each calendar quarter
• Each licensed trust undertaking must submit an annual Certificate of Compliance confirming compliance with minimum licensing criteria and Codes of Practice; failure to do so is an offence under section 35
• Undertakings must proactively notify the Authority of significant developments (e.g. capital/liquidity breaches, key personnel changes, litigation, foreign regulator inquiries, cybersecurity incidents, material insurance claims, material business changes) when or before they occur

Applies to

licensed trust undertakings, unlimited trust licensees, limited trust licensees, prospective applicants for a trust licence, trust companies, partnerships and overseas partnerships conducting trust business, individuals conducting trust business

Deadlines

• no later than four months after the end of their financial year: Unlimited trust licensees must submit audited financial information to the Authority
• within 21 business days of each calendar quarter: All licensed undertakings must submit standard financial statements and liquidity analysis
• annually: Each licensed trust undertaking must submit a Certificate of Compliance to the Authority
• approximately eight to ten weeks ahead of a visit: Authority typically notifies an undertaking in advance of an on-site visit, requesting pre-visit information
• generally not exceeding three months: Indicative timeframe within which the Authority normally aims to decide a licence application, though the Act sets no statutory time limit