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Major Changes Expected For Bermuda's Trust Companies Act

Robert Lee, Tax-news.com, London

20 February 2001

According to a report in the Bermuda Sun newspaper, the jurisdiction is looking at making major changes to the regulation of its trust companies. Laws relating to Bermuda's trust industry will be a matter of priority for the House of Assembly during its current session and the upshot will be increased powers of supervision and enforcement for the Bermuda Monetary Authority (BMA).

There have been a number of changes to financial services legislation in recent months, and it is generally considered that Bermuda's 10 year old Trust Companies Act is due for an overhaul too. To this end, the BMA has put forward a series of proposals to be considered by trust providers by the end of February 2001.

Much of what the BMA suggests is based on the recommendations made by the recent KPMG report on financial services regulation in the Overseas Territories, which was commissioned by the UK government. The BMA, says the Bermuda Sun, is in full agreement with a number of the KPMG recommendations - including giving the BMA
exclusive enforcement powers - but other measures and full details will depend on the outcome of ongoing consultation between the BMA and the trust sector.

Alec Anderson, a specialist in trust law with Conyers, Dill and Pearman, was quoted in the Bermuda Sun as saying: 'By and large most of the suggestions are non-objectionable. But there are one or two areas of concern.' He said that concern centred around disclosure of information and just how far the amended legislation should reach, but was confident that trust service providers would generally choose to comply when they report back to the BMA at the end of the month. Mr Anderson said: 'I don’t believe there will be widespread disagreement.'

Essentially the BMA wants the power to access "all relevant information" about those providing trust services and their operations. It also wants to be able to investigate private trust companies, which do not require a licence, if dubious transactions are suspected. Trust companies are currently protected by law from having to disclose clients' information without a Supreme Court order. The BMA is also pushing for banks to be allowed to operate trusts without having to set up a separate subsidiary.

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