Notice - Changes to Bermuda's Investment Fund Regime (2019-05-30)

Summary

This notice from the Bermuda Monetary Authority explains changes to Bermuda's investment fund regime resulting from the Economic Substance Act 2018, which amended the Investment Funds Act 2006. It renames existing fund categories, introduces new registration and ongoing compliance requirements for Private Funds, and confirms that a six month transition period for existing funds expired on 1 July 2019.

• Renamed categories: Excluded Funds are now Private Funds; Class A and Class B Exempt Funds are now Professional Class A and Professional Class B Funds; Professional Funds and Private Funds are collectively Registered Funds.
• Registration required: Registered Funds must apply to the Authority for registration and approval before commencing trading.
• Private Fund application content: Applications for Private Fund registration must include fund information, a copy of the offering document, and details of service providers.
• Local service provider: Private Funds must appoint a local service provider authorised and regulated by the Authority (the definition of service provider now includes corporate service providers).
• Custodian requirement: Private Funds must appoint a custodian for safekeeping of assets, though the Authority may waive this if certain requirements are met.
• Annual certification: The operator of a Private Fund must annually certify that it satisfies the qualifying criteria and registration requirements on an ongoing basis.
• Annual filings: Operators of Private Funds must annually file net asset value and underlying asset information, management accounts or audited financial statements, and details of any material changes during the year.
• Transition for existing funds: Existing funds (previously Excluded, Class A or Class B Exempt Funds) had a six month transition period, expiring 1 July 2019, to comply with new requirements.
• ERICA submission for former Excluded Funds: Operators of funds previously deemed Excluded must complete the new Private Fund submission form in ERICA and submit it with attachments so the Authority can confirm compliance with Section 6 of the Funds Act as amended; no application fee applies to this submission.
• AML/ATF obligations: Private and Professional Funds remain within scope of the AML/ATF Regulations and must provide or update Money Laundering Reporting Officer and Compliance Officer information and Board approved AML/ATF Policies and Procedures.

As a result of the new registration requirements, Private and Professional Funds are no longer deemed Non Licensed Persons under the Proceeds of Crime Act 2008. Inquiries can be directed to funds@bma.bm.

Key obligations

• Registered Funds (Private and Professional Funds) must apply to the Authority for registration and approval before commencing trading
• Private Fund applications must include fund information, a copy of the offering document, and service provider details
• Private Funds must appoint a local service provider authorised and regulated by the Authority
• Private Funds must appoint a custodian for safekeeping of assets unless the Authority waives this requirement
• Operators of Private Funds must annually certify ongoing compliance with qualifying and registration criteria
• Operators of Private Funds must annually file net asset value information, underlying asset details, management accounts or audited financial statements, and information on material changes
• Operators of existing funds previously classified as Excluded Funds must submit the new Private Fund submission form and attachments via ERICA to demonstrate compliance with Section 6 of the Funds Act as amended
• Private and Professional Funds must provide or update Money Laundering Reporting Officer and Compliance Officer information and submit Board approved AML/ATF Policies and Procedures

Applies to

Private Funds, Professional Class A Funds, Professional Class B Funds, Registered Funds, Excluded Funds (existing funds), Class A Exempt Funds, Class B Exempt Funds, fund operators, service providers

Deadlines

• 1 July 2019: Expiry of the six month transition period for existing funds (previously Excluded, Class A or Class B Exempt Funds) to comply with new requirements under the Funds Act as amended