Supervisory and Licensing Regime and Fees
The Trust Companies Act 1991 and the Trusts (Regulation of Trust Business) Act 2001 established a regulatory regime for trust management companies in Bermuda, and many professional firms have taken advantage of this legislation.
The 2001 Act prohibited the carrying on of trust business in or from within Bermuda unless the trustee is licensed or exempt. The Act replaced the Trust Companies Act 1991, and conferred new regulatory and information gathering powers on the Bermuda Monetary Authority.
There are over 30 licensed trust companies in Bermuda, some of them operating as exempt companies.
Private trust companies have gained currency in recent years.
Trust Companies (or indeed partnerships) offering their services more widely need a license from the Finance Ministry, which delegates the issue of licences to the Bermuda Monetary Authority. Certain minimum requirements must be met before a license is issued:
Minimum paid-up capital of $250,000;
Adequate premises and appropriately skilled staff.
An application includes details of beneficial ownership, personnel, business plan etc. A licensed company is subject to reporting and other requirements under the Bermuda Monetary Authority Act 1969. It is also subject to Codes of Conduct covering 'know your customer' rules, defences against money laundering and other criminal activities. The annual licensing fee payable to the BMA is dependent on the type of licence and the number of staff employed. The annual fee for a limited trust licence is USD1,100. The annual fee for an unlimited trust licence starts at USD12,130 for a licensed company which employs five people or less, up to USD36,400 where it employs ten people or more.
There is no stamp duty on Bermudan Trusts; and there are no income or corporation taxes in Bermuda.
The two key associations in Bermuda for trust management companies are The Society Of Trusts and Estate Practitioners (STEP, Bermuda Branch), and the Bermuda International Business Association (BIBA).
Although trust management companies have always been required to register with the Ministry of Finance, following a KPMG review of the jurisdiction's supervisory and regulatory regime, it was recommended that individuals who deal with trusts should also be required to sign up, and that both groups should become the responsibility of the financial services regulator.
As a result of the KPMG review, and in response to pressure from the OECD and FATF, Bermuda introduced the aforementioned Trust (Regulation of Trust Business) Act 2001 which established minimum criteria and a statement of practice for trusts, and ensures that trust professionals treat customers in a fair and proper fashion.
Superintendent of Banking, Trust, and Investment at the BMA, Munro Sutherland explained at the time that: "Bermuda was one of the first jurisdictions to regulate trusts with the Trusts Companies Act 1991. It was pioneering stuff at the time, but it was rather limited." The deadline for registration of individual trust professionals with the Bermuda Monetary Authority under the Act was in January, 2003.
A Code of Practice under the 2001 Act was passed in 2002; it provides guidance as to the duties, requirements, procedures, standards and sound principles to be observed by persons carrying on trust business. A revised 'Statement of Principles' under the Act was issued in June, 2004.
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