Consultation Paper – Proposed Enhancements to the Corporate Service Provider Business Act 2012
The Bermuda Monetary Authority (BMA) has released a consultation paper in June 2024 proposing several enhancements to the Corporate Service Provider Business Act 2012. These enhancements aim to align Bermuda’s corporate service provider (CSP) regime with international standards and best practices, ensuring robust regulatory oversight and promoting transparency within the sector.
Key recommendations include:
Refinement of Scope: The Act will be amended to clarify that it applies to business activities conducted “by way of business,” broadening its applicability beyond for-profit activities. This change aims to eliminate ambiguity and ensure consistency in licensing requirements.
Prudential Requirements: New requirements for CSPs to maintain appropriate liquidity and net assets will be introduced. CSPs will need to report their financial status to the BMA, ensuring prudent business conduct. The minimum net asset requirements are set at $50,000 for unlimited license holders and $12,000 for limited license holders.
Financial Filing Requirements: CSPs holding client money must submit annual audited accounts, while those not holding client money will need to file annual management accounts. All CSPs will also be required to submit quarterly liquidity returns and statutory returns as prescribed by the BMA.
Consolidated Financial Filings: CSPs owned by a parent company that already provides consolidated financial statements to the BMA are exempt from submitting separate financial filings. Similarly, CSPs with additional licenses in banking, investment, or trust business only need to submit one set of audited financial statements.
Fee Structure: An administrative fee of $1,000 will be imposed for late submissions of mandatory filings to encourage timely compliance. Additional fees include $300 for filing extensions and $635 for exemption or modification applications.
Winding Up and Licence Revocation: The Act will be amended to expand the circumstances under which the BMA can petition the court for the winding up or dissolution of a firm, enhancing client protection.
Reporting Requirements for Auditors: Auditors will be mandated to report specific matters directly to the BMA, reinforcing transparency and regulatory oversight.
Stakeholders are invited to provide feedback on these proposals by August 9, 2024. The BMA aims to ensure that the new regulations are practical and effective while maintaining Bermuda’s competitiveness in the global financial market (Bermuda Monetary Authority) (Bermuda Monetary Authority).
The full consultation paper can be found here.