Notice to Industry on AML/ATF Regulated Activities - Interpretative Note (2018-12-06)

Summary

This BMA notice explains an amendment to the definition of 'AML/ATF regulated financial institution' under the Proceeds of Crime Act 1997. A new paragraph 42A(1)(j) and a new Schedule 3 have been added to capture financial activities identified in the FATF recommendations that were not previously covered by Bermuda's sector-specific licensing legislation, closing a gap identified during the CFATF assessment.

• Gap addressed: Entities carrying on lending, financial guarantees and financial leasing business, other than by an already-regulated financial institution, were not previously subject to AML/ATF oversight under the proceeds of crime legislation; Schedule 3 now brings these activities into scope.
• Schedule 3 activities: Covers deposit acceptance, lending (including consumer and mortgage credit, factoring, commercial finance), financial leasing (excluding consumer products), money or value transfer services, issuing and managing means of payment, financial guarantees and commitments, trading in money market instruments/foreign exchange/securities/commodity futures, participation in securities issues, individual and collective portfolio management, safekeeping and administration of cash or securities, investing/administering/managing funds or money, underwriting and placement of life insurance and other investment-related insurance, and money and currency changing.
• Interpretation - portfolio management: The Authority interprets individual and collective portfolio management (paragraph (i)) as investment business under the Investment Business Act 2003, to be carried on in accordance with that Act.
• Interpretation - life insurance underwriting: The Authority interprets 'underwriting and placement of life business and other related investment related insurance' (paragraph (l)) as applying to insurers writing direct long-term business under the Insurance Act 1978, excluding reinsurance of long-term business, but a reinsurer that also writes direct long-term business is subject to AML/ATF oversight for that direct business.

The notice is informational and interpretative in nature, clarifying scope rather than imposing new procedural filing requirements; entities newly captured under paragraph 42A(1)(j) and Schedule 3 should assess whether their activities now fall within the AML/ATF regulated financial institution definition and comply with applicable AML/ATF obligations accordingly. Questions can be directed to the BMA's Policy team.

Key obligations

• Persons or entities carrying on lending, financial guarantees, financial leasing, or other Schedule 3 activities (other than as an already-regulated financial institution) must recognise they are now an 'AML/ATF regulated financial institution' under section 42A(1)(j) of the Proceeds of Crime Act 1997 and comply with applicable AML/ATF requirements.
• Insurers writing direct long-term business (as defined under the Insurance Act 1978) must treat that business as subject to AML/ATF oversight, including reinsurers that also write direct long-term business in respect of that direct business.
• Entities carrying on individual and collective portfolio management must ensure this activity is conducted as investment business in accordance with the Investment Business Act 2003 for AML/ATF purposes.

Applies to

deposit-taking institutions, money service providers, corporate service providers, trustee/trust businesses, investment business firms, investment fund administrators, investment funds/operators, insurers (life/long-term business), insurance managers and brokers, digital asset business licensees, persons carrying on lending, financial guarantees, or financial leasing business, persons providing money or value transfer services or currency changing