CSP Statement of Principles (December 2019)

Summary

This is the Bermuda Monetary Authority's Statement of Principles under the Corporate Service Provider Business Act 2012. It explains how the Authority interprets the minimum licensing criteria in Schedule 1 of the Act, how it exercises its discretion to grant, restrict or revoke a Corporate Service Provider (CSP) licence, and how it uses its statutory powers to obtain information, reports and documents from CSPs.

• Licensing criteria: Sets out the Authority's interpretation of Schedule 1 criteria: controllers and officers must be fit and proper, corporate governance must be appropriate to the CSP's nature/scale/complexity/risk, business must be conducted prudently with adequate accounting, record keeping and insurance, and officers must have integrity, skill and regard for the reputation of Bermuda.
• Ongoing supervision: Describes the Authority's risk-based supervisory activities, including periodic and occasional regulatory reports, prudential discussions with senior management, and routine compliance visits.
• Shareholder controllers: Explains that scrutiny of shareholder controllers scales with their influence over the CSP and the risk of financial or reputational contagion, and that shareholders must be able to demonstrate source of wealth and source of funds.
• Information and enforcement powers: Describes the Authority's statutory powers under sections 46 to 49 of the Act to require certificates of compliance, information, auditor or professional reports, and documents, and to enter business premises, as well as its powers under sections 14, 15, 18 and 19 to restrict or revoke licences.

The Principles are informational and interpretive rather than a standalone source of new legal duties, but they restate several continuing obligations that already arise under the Act and highlight when CSPs must proactively notify the Authority.

Key obligations

• CSPs must submit information about their business to the Authority at intervals determined by the Authority, in accordance with the Act and related regulations, rules, guidance notes or codes.
• A CSP must alert the Authority forthwith upon becoming aware of breaches or potential breaches of the licensing criteria.
• A CSP must alert the Authority to any proposed material change in its business.
• CSPs are expected to notify the Authority immediately if they become aware of material concerns regarding the suitability of a shareholder controller.
• Shareholders must be able to demonstrate to the CSP and the Authority their sources of wealth and source of funds.
• A CSP must submit a certificate of compliance, signed by an officer, certifying compliance with the minimum licensing criteria, as required under section 46 of the Act.
• CSPs must comply with written notices under sections 47 and 48 of the Act requiring information, reports (including auditor or professional reports) or documents, and permit entry to business premises under section 49 where notice has been served.

Applies to

Corporate Service Providers (CSPs), controllers, officers, shareholder controllers

Deadlines

• forthwith: CSPs must alert the Authority forthwith upon becoming aware of breaches or potential breaches of the minimum licensing criteria.
• immediately: CSPs must notify the Authority immediately of material concerns regarding the suitability of a shareholder controller.