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The Trusts (Regulation of Trust Business) Act 2001 (as amended) (“the Act”) came into force on 25 January 2002. The Act provides for a licensing regime for any person or entity (unless otherwise exempted) engaging in a trust business, as defined by the Act, either in or from within Bermuda. The Act replaces the Trust Companies Act 1991, and confers new regulatory and information gathering powers on the Bermuda Monetary Authority (“the Authority”).

“Trust Business” is defined in section 9(3) of the Act as “the provision of the services of a trustee as a business, trade, profession or vocation.”

The Act provides a statutory basis for regulating trust business in Bermuda, and provides the Authority with supervisory powers to obtain information from institutions necessary to conduct its supervision. The Act requires that trust undertakings must submit audited financial statements or its annual accounts, along with a Certificate of Compliance to the Authority within four months of their year-end.

The supervision of trust business will take the form of an off-site supervision program and on-site visit. Supervision enables and requires judgement to be made about the nature of a trust undertaking’s business, the quality of its management, the effectiveness of its controls and compliance, the fairness of its treatment of customers and its financial viability.

The Authority’s off-site supervision program allows the Authority to have regular discussion and receive updates on the development of the institution’s business, including both past performance and future strategies.

The Authority’s on-site supervision program involves structured visits to an undertakings office which are usually scheduled on a three year rolling basis. The on-site review will consist of interviews with management and staff, and assessing the undertakings internal controls, staffing, adequacy of procedures as well as the processes that management have put in place to monitor and control key risks in the business (including anti-money laundering compliance testing).

The Act also enables the Authority to commission reports on an institution’s business from an accountant or other person with relevant professional skills. Use of this provision can offer an alternative means of conducting part of the on-site element of regulation. However, this route is normally used only in exceptional circumstances.

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