table of contents preliminary 2016 : 36 citation ... laws/money... · the provisions in the bermuda...

FA E R NAT F

TQUO U

BERMUDA

MONEY SERVICE BUSINESS ACT 2016

2016 : 36

TABLE OF CONTENTS

PART 1PRELIMINARY

CitationInterpretationMeaning of "director", "controller", "senior executive" and "associate"Carrying on business of money service in BermudaAnnual reportsAuthority’s statement of principles and guidance provisionCodes of practice

PART 2LICENSING

Restriction on carrying on money service business without a licenceExemption orderMoney service business licenceGrant and refusal of applicationsDisplay and registration of licenceAnnual licence feeRestriction of licenceRevocation of licenceWinding up on petition from the AuthorityNotice of restriction or revocation of licenceRestriction in cases of urgencyDirections to protect interests of clientsNotification and confirmation of directionsSurrender of licence

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89101112131415161718192021

1


PART 3ACCOUNTS AND AUDIT

Duty to prepare annual financial statements and accountsAppointment of auditorsAuditor to communicate certain matters to Authority

PART 4OBJECTIONS TO SHAREHOLDER CONTROLLERS

Notification of new or increased controlObjection to new or increased controlObjection to existing controllerContraventions by controllerRestriction on sale of shares

PART 5DISCIPLINARY MEASURES

Power to impose civil penalties for breach of requirementsCivil penalties proceduresPublic censurePublic censure procedureProhibition ordersProhibition orders: proceduresApplications relating to prohibition orders: proceduresDetermination of applications for variation, etc.Injunctions

PART 6RIGHTS OF APPEAL

Rights of appealConstitution of tribunalsDetermination of appealsCosts, procedure and evidenceFurther appeals on a point of law

PART 7NOTICES AND INFORMATION

Warning noticesDecision noticesNotices of discontinuancePublicationNotification of change of controller or officerPower to obtain information and reportsGeneral power to require production of documentsRight of entry to obtain information and documents

PART 8INVESTIGATIONS

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Investigations on behalf of the AuthorityInvestigations of suspected contraventionsPower to require production of documents during investigationPowers of entryObstruction of investigations

PART 9CERTIFICATE OF COMPLIANCE

Certificates of compliance

PART 10RESTRICTION ON DISCLOSURE OF INFORMATION

Restricted informationDisclosure for facilitating the discharge of functions of the AuthorityDisclosure for facilitating the discharge of functions by other authoritiesInformation supplied to the Authority by relevant overseas authority

PART 11MISCELLANEOUS AND SUPPLEMENTAL

False documents or informationOffences by licensed undertakingProhibition on use of words "money service business"NoticesService of notice on AuthorityCivil debt and civil penaltiesRegulationsPrudential and other returnsTransitionalConsequential amendmentsCommencement

SCHEDULE 1Minimum Criteria for Licensing

SCHEDULE 2Consequential Amendments

WHEREAS it is expedient to enhance the powers of the Bermuda MonetaryAuthority required for the regulation of the business of money service business by repealingthe provisions in the Bermuda Monetary Authority Act 1969 relating to money servicebusiness and providing a comprehensive regulatory framework for the regulation of moneyservice business under this Act necessary for the protection of the interests of clients orpotential clients of persons carrying on the business of money service business; and forpurposes connected with those matters:

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Be it enacted by The Queen’s Most Excellent Majesty, by and with the advice andconsent of the Senate and the House of Assembly of Bermuda, and by the authority of thesame, as follows:

PART 1

PRELIMINARY

CitationThis Act may be cited as the Money Service Business Act 2016.

InterpretationIn this Act, unless the context requires otherwise—

“the Authority” means the Bermuda Monetary Authority established under theBermuda Monetary Authority Act 1969;

“bureau de change” means a business that exchanges cash in one currency for cashin another currency;

“cashing cheques” means exchanging a signed written negotiable instrument whichis drawn on a specific bank account for cash;

“code of practice” means a code of practice issued by the Authority pursuant tosection 7;

“company” means a body corporate wherever incorporated;

“controller” has the meaning given in section 3(3);

“Court” means the Supreme Court;

“decision notice” means a notice prepared in accordance with section 41;

“director” has the meaning given in section 3(2);

“documents” includes information recorded in any form; and in relation toinformation recorded otherwise than in legible form, references to itsproduction include references to producing a copy of the information in legibleform;

“financial statements” in relation to the business of an undertaking which is acompany, means the statements specified in subsection (1)(a) and the notesmentioned in subsection (1A) of section 84 of the Companies Act 1981;

“financial year” means the period not exceeding 53 weeks at the end of which thebalance of an undertaking’s accounts is struck or, if no such balance is struckor a period of more than 53 weeks is employed for that purpose, then calendaryear;

“fit and proper person” has the meaning assigned to the term in Schedule 1;

1

2 (1)

4


“guaranteeing cheques” means providing a guarantee for the payment of a chequein accordance with prescribed procedures;

“issuing, selling or redeeming drafts, money orders or traveller’s cheques” meansselling or otherwise exchanging, drafts, money orders and traveller’s chequesas negotiable instruments for cash;

“licence” means a licence issued by the Authority under section 8(2) and "licensee"and "licensed" shall be construed accordingly;

“minimum criteria” means the minimum criteria for licensing specified in Schedule1;

“Minister” means the Minister of Finance;

“money service business” has the meaning given in subsection (2);

“money transmission service” means a service that involves sending money by anymeans other than payment service;

“officer”, in relation to an undertaking, means director, secretary or seniorexecutive of the undertaking by whatever name called;

“payment service business” means a business that is licensed to provide andexecute payment services to and for third parties by whatever means;

“senior executive” has the meaning given in section 3(6);

“share” has the meaning given in section 2 of the Companies Act 1981;

“shareholder controller” has the meaning given in section 3(4);

“subsidiary” has the meaning given in section 86 of the Companies Act 1981;

“undertaking” means—

a company;

a partnership; or

an individual;

“warning notice” means a notice prepared in accordance with section 44.

Subject to section 4(4), in this Act, “money service business” means thebusiness of providing any or all of the following money service business activities to thegeneral public—

money transmission services;

cashing cheques which are made payable to customers and guaranteeingcheques;

issuing, selling or redeeming drafts, money orders or traveller’s cheques forcash;

payment service business;

(a)

(b)

(c)

(2)

(a)

(b)

(c)

(d)

5


operating a bureau de change whereby cash in one currency is exchangedfor cash in another currency.

The Minister may, after consultation with the Authority, by order amendsubsection (2) by adding new provisions, or by amending or deleting any of the moneyservice business activities set out thereunder.

An order made under this section is subject to the negative resolutionprocedure.

Meaning of "director", "controller", "senior executive" and "associate"In this Act, “director”, “controller”, “senior executive” and “associate” shall be

construed in accordance with the provisions of this section.

“Director”, in relation to an undertaking—

includes an alternate director and any person who occupies the position ofdirector, by whatever name called; and

where it is used in subsections (6) and (7), includes a partner of apartnership.

“Controller”, in relation to an undertaking, means—

a managing director of the undertaking or of another company of which theundertaking is a subsidiary;

in the case of an undertaking which is a partnership, a partner;

in the case of an undertaking which is neither a company nor apartnership, a sole proprietor;

a chief executive of the undertaking or of another company of which theundertaking is a subsidiary;

a person who satisfies the requirements of this paragraph;

a person in accordance with whose directions or instructions the directorsof the undertaking or of another company of which the undertaking is asubsidiary or persons who are controllers of the undertaking by virtue ofparagraph (e) (or any of them) are accustomed to act.

For the purpose of subsection (3)(e), a person is a shareholder controller inrelation to an undertaking if, either alone or with any associate or associates—

he holds 10% or more of the shares in the undertaking or another companyof which it is a subsidiary company;

he is entitled to exercise or control the exercise of 10% or more of the votingpower at any general meeting of the undertaking or another company ofwhich it is such a subsidiary; or

(e)

(3)

(4)

3 (1)

(2)

(a)

(b)

(3)

(a)

(b)

(c)

(d)

(e)

(f)

(4)

(a)

(b)

6


he is able to exercise a significant influence over the management of theundertaking or another company of which the undertaking is such asubsidiary by virtue of—

a holding of shares in it; or

an entitlement to exercise, or control the exercise of, the voting powerat any general meeting of the undertaking, or as the case may be, theother company concerned.

In this Act, "majority shareholder controller" means a shareholder controller inwhose case the percentage referred to in subsection 4(a) or (b) is 50 or more.

“Senior executive”, in relation to an undertaking, means a person (other thana chief executive) who, under the immediate authority of a director or chief executive of theundertaking—

exercises managerial functions; or

is responsible for maintaining accounts or other records of theundertaking.

In this section, “chief executive” in relation to an undertaking means a personwho, either alone or jointly with one or more persons, is responsible under the immediateauthority of the directors for the conduct of the business of the undertaking.

In this Act, “associate” in relation to a person entitled to exercise or control theexercise of voting power in a company, or in relation to a person holding shares in acompany, means—

if that person is an individual—

the spouse, child, step-child or parent of that person;

the trustees of any settlement under which that person has a lifeinterest in possession;

any company of which that person is a director;

any person who is an employee or partner of that person;

if that person is a company—

any director of that company;

any subsidiary of that company;

any director or employee of any such subsidiary company;

if that person has with any other person an agreement or arrangement withrespect to the acquisition, holding or disposal of shares or other interestsin that company or under which they undertake to act together inexercising their voting power in relation to it, that other person.

For the purpose of subsection (8), “settlement” includes any disposition orarrangement under which property is held in trust.

(c)

(i)

(ii)

(5)

(6)

(a)

(b)

(7)

(8)

(a)

(i)

(ii)

(iii)

(iv)

(b)

(i)

(ii)

(iii)

(c)

(9)

7


Carrying on business of money service in BermudaFor the purposes of this Act, a person carries on money service business in or

from within Bermuda if such person—

carries on money service business from a place of business maintained bysuch person in Bermuda; or

discharges in Bermuda the duties of a money service business, thedischarge of which constitutes the carrying on by such person of moneyservice business in Bermuda under an order made under subsection (2).

The Minister, acting on the advice of the Authority, may make an orderspecifying the circumstances in which a person is to be regarded for the purpose of thissection as—

carrying on money service business in Bermuda;

not carrying on money service business in Bermuda.


This Act shall not apply to an institution licensed under the Banks and DepositCompanies Act 1999.

Annual reportsThe Authority shall, as soon as practicable after the end of each of its financial

years, make to the Minister and publish in such manner as it thinks appropriate an annualreport on its activities under this Act in that year.

Authority’s statement of principles and guidance provisionThe Authority shall, as soon as practicable after the coming into force of this

Act, publish in such manner as it thinks fit a statement of principles in accordance withwhich it is acting or proposing to act—

in interpreting the minimum criteria and the grounds for revocationspecified in section 15;

in exercising its power to grant, revoke or restrict a licence;

in exercising its power to obtain information and reports and to requireproduction of documents;

in exercising its powers—

under section 30 to impose a civil penalty;

under section 32 to censure publicly;

under section 34 to make a prohibition order; and

under section 47 to publish information about any matter to which adecision notice relates.

4 (1)

(a)

(b)

(2)

(a)

(b)

(3)

(4)

5

6 (1)

(a)

(b)

(c)

(d)

(i)

(ii)

(iii)

(iv)

8


If the Authority makes a material change to the principles, it shall publish astatement of the change or the revised statement of principles in the same manner as itpublished the statement under subsection (1).

The Authority may from time to time give guidance on the application of thisAct and regulations made under it.

The Authority may publish such guidance (which may be in the form ofinformation and advice) in such manner as it thinks fit.

Codes of practiceThe Authority may issue codes of practice in connection with the manner by

which licensed undertakings shall carry on money service business.

Without prejudice to the generality of subsection (1), the Authority may issuecodes of practice for the purpose of providing guidance as to the duties, requirements andstandards to be complied with, and the procedures (whether as to identification, record-keeping, internal reporting and training or otherwise) and sound principles to be observedby persons carrying on money service business.

Before issuing a code of practice, the Authority shall publish a draft of that codein such manner as it thinks fit and shall consider any representations made to it about thedraft.

Every licensed undertaking shall in the conduct of its business have regard toany code of practice issued by the Authority.

A failure on the part of a licensed undertaking to comply with the provisions ofsuch a code shall be taken into account by the Authority in determining whether thebusiness is being conducted in a prudent manner as required by paragraph 2 of Schedule1 (Minimum Criteria for Licensing).

PART 2

LICENSING

Restriction on carrying on money service business without a licenceSubject to section 9, a person shall not carry on money service business in or

from within Bermuda, or carry on money service business as an agent for a person carryingon money service business in or from within Bermuda, unless that person is for the timebeing a licensed undertaking in one of the classes specified in subsection (2).

The Authority may license an undertaking to carry on one or more of thefollowing money service business activities for the period specified in the licence—

money transmission services;

cashing cheques which are made payable to customers and guaranteeingcheques;

(2)

(3)

(4)

7 (1)

(2)

(3)

(4)

(5)

8 (1)

(2)

(a)

(b)

9


issuing, selling or redeeming drafts, money orders or traveller’s cheques forcash;

carrying on payment service business; or

operating a bureau de change.

A person who contravenes this section is guilty of an offence and liable—

on summary conviction, to a fine of $25,000 or to imprisonment for oneyear or to both such fine and imprisonment;

on conviction on indictment, to a fine of $100,000 or to imprisonment forfive years or to both such fine and imprisonment.

[Section 8 subsection (1) amended by 2018 : 51 s. 13 effective 10 August 2018]

Exemption orderSection 8 shall not apply to any person exempted by or under an exemption

order issued in terms of this section.

The Minister acting on the advice of the Authority may issue an exemptionorder, which shall provide for—

a specified person;

persons falling within a specified class,

to be exempt from the requirement of section 8.

An exemption order may provide for an exemption to have effect—

in respect of all money service business activities under paragraphs (a) to(e) of section 8(2);

only in respect of one or more of such money service business activities;

in respect of specified circumstances; or

subject to conditions.

In subsection (3)(c), “specified” means specified by the exemption order.


Money service business licenceAn application for a money service business licence may be made to the

Authority.

An application shall be made in such manner as the Authority may direct andshall be accompanied by—

a business plan setting out the nature and scale of the money servicebusiness activity which is to be carried on by the applicant;

(c)

(d)

(e)

(3)

(a)

(b)

9 (1)

(2)

(a)

(b)

(3)

(a)

(b)

(c)

(d)

(4)

(5)

10 (1)

(2)

(a)

10


particulars of the applicant’s arrangements for the management of thebusiness;

policies and procedures to be adopted by the applicant to meet theobligations under this Act and the Proceeds of Crime (Anti-MoneyLaundering and Anti-Terrorist Financing) Regulations 2008;

such other information and documents as the Authority may reasonablyrequire for the purpose of determining the application; and

an application fee of such amount as may be prescribed under theBermuda Monetary Authority Act 1969.

An application may be withdrawn by notice in writing to the Authority at anytime before it has determined the application.

Grant and refusal of applicationsSubject to this section, the Authority may on an application duly made in

accordance with section 10, and after being provided with all such information, documentsand reports as it may reasonably require under that section, grant or refuse the applicationfor a licence.

The Authority shall not grant an application unless it is satisfied that theminimum criteria set out in Schedule 1 are fulfilled with respect to the applicant.

It shall be a condition of every licence issued under this Act that a licensedundertaking shall not hold client monies or any other client assets.

A licence issued under this section may be subject to such limitations on thescope of the money service business activity or the manner of operating the money servicebusiness as the Authority may determine to be appropriate having regard to the nature andscale of the proposed business.

The Authority may, on application made by a licensed undertaking, vary orremove any limitation imposed on the scope of its licence.

A licence issued to a partnership shall be issued in the partnership name, andshall not be affected by any change in the name of the partners.

The Minister, acting on the advice of the Authority, may by order amendSchedule 1 by adding new criteria or by amending or deleting the criteria for the time beingspecified in the Schedule.

Display and registration of licenceA licensed undertaking shall at all times keep the licence on display at its

principal place of business in Bermuda.

The Authority shall cause a notice of every licence issued under this Act to bepublished in the Gazette.

The Authority shall compile and maintain, in such manner as it thinks fit, aregister containing, in respect of each licence, such particulars as may be prescribed.

(b)

(c)

(d)

(e)

(3)

11 (1)

(2)

(3)

(4)

(5)

(6)

(7)

12 (1)

(2)

(3)

11


The register referred to in subsection (3) shall, at all reasonable times, beavailable for inspection at the offices of the Authority by any person or the matters requiredto be set out in the register shall be posted by the Authority on its website.

Annual licence feeA licensed undertaking shall pay such fee as may be prescribed under the

Bermuda Monetary Authority Act 1969—

on the grant of a licence; and

on or before 31 March in every year after the year in which the licence wasgranted.

For each week or part of a week that a licensed undertaking fails to comply witha requirement imposed on it by subsection (1), it shall be liable to a civil penalty notexceeding $5,000.

Restriction of licenceSubject to section 17, the Authority may restrict a licence—

if it is satisfied of the matters specified in paragraph (a), (b), (d) or (e) ofsection 15, but it appears to the Authority that the circumstances are notsuch as to justify revocation;

if it is satisfied that a person has become a controller of an undertaking incontravention of section 25 or has become or remains a controller afterbeing given a notice of objection pursuant to section 26 or 27;

in connection with the revocation of a licence—

when giving the undertaking notice that it proposes to revoke itslicence; or

at any time after such notice has been given to the undertaking; or

at any time after the undertaking has served a notice surrendering itslicence with effect from a later date.

The Authority may restrict a licence by imposing such conditions as it thinksdesirable for the protection of the undertaking’s clients or potential clients, and may inparticular—

require the undertaking to take certain steps or to refrain from adopting orpursuing a particular course of action or to restrict the scope of itsbusiness activities in a particular way;

impose limitations on the acceptance of money service business;

prohibit the undertaking from soliciting money service business eithergenerally or from persons who are not already its clients;

prohibit the undertaking from accepting new money service business;

(4)

13 (1)

(a)

(b)

(2)

14 (1)

(a)

(b)

(c)

(i)

(ii)

(d)

(2)

(a)

(b)

(c)

(d)

12


prohibit the undertaking from entering into any other transactions or classof transactions;

require the removal of any officer or controller;

specify requirements to be fulfilled otherwise than by action taken by theundertaking.

Any condition imposed under this section may be varied or withdrawn by theAuthority.

The Authority may, on the application of an undertaking, vary any conditionimposed on its licence.

The fact that a condition imposed under this section has not been compliedwith shall, where the restriction has been imposed pursuant to paragraphs (a) or (b) ofsubsection (1), be a ground for the revocation of the licence in question but shall notinvalidate any transaction.

Revocation of licenceSubject to section 17, the Authority may revoke the licence of an undertaking if the

Authority is satisfied that—

any of the minimum criteria is not or has not been fulfilled, or may not beor may not have been fulfilled, in respect of the undertaking;

the undertaking has failed to comply with any obligation imposed on it byor under this Act or is carrying on business in a manner not authorised byits licence;

a person has become a majority shareholder controller of the undertakingin contravention of section 25 or has become or remains such a controllerafter being given a notice of objection pursuant to section 26 or 27;

the Authority has been provided with false, misleading or inaccurateinformation by or on behalf of the undertaking or, in connection with anapplication for a licence, by or on behalf of a person who is or is to be anofficer or controller of the undertaking; or

the interests of the clients or potential clients of the undertaking are in anyway threatened.

Winding up on petition from the AuthorityOn a petition presented by the Authority by virtue of this section, the Court

may wind up an undertaking which is a company in respect of which a licence is revoked,if the Court is of the opinion that it is just and equitable that the undertaking be woundup.

Part XIII (Winding Up) of the Companies Act 1981 shall apply to the windingup of an undertaking under this section.

(e)

(f)

(g)

(3)

(4)

(5)

15

(a)

(b)

(c)

(d)

(e)

16 (1)

(2)

13


Notice of restriction or revocation of licenceWhere the Authority proposes to—

restrict a licence under section 14(1);

vary a restriction imposed on a licence otherwise than with the agreementof the undertaking concerned; or

revoke a licence under section 15,

the Authority shall give to the undertaking concerned a warning notice under section 44.

Where—

the ground for a proposal to impose or vary a restriction or for a proposedrevocation is that it appears to the Authority that the criterion in paragraph1 of the Schedule 1 is not or has not been fulfilled, or may not be or maynot have been fulfilled, in the case of any person; or

a proposed restriction consists of or includes a condition requiring theremoval of any person as a controller or an officer,

the Authority shall give that person a copy of the warning notice but the Authority may omitfrom such copy any matter which does not relate to him.

After giving a notice under subsection (1) and taking into account anyrepresentations made under section 44(2), the Authority shall decide whether—

to proceed with the action proposed in the notice;

to take no further action;

if the proposed action was to revoke the undertaking’s licence, to restrictits licence instead; or

if the proposed action was to restrict the undertaking’s licence or to varythe restrictions on a licence, to restrict it or to vary the restrictions in adifferent manner.

Once the Authority has made a decision under subsection (3), it shall forthwithprovide either a decision notice under section 45 or a notice of discontinuance under section46, as the case may be.

The Authority shall publish in the Gazette, in such form as it thinks fit, noticeof every revocation of a licence under the Act.

Restriction in cases of urgencyNo notice need be given under section 17 in respect of the imposition or

variation of a restriction on an undertaking’s licence in any case in which the Authorityconsiders that the restriction should be imposed or varied as a matter of urgency.

In any such case, the Authority may by written notice to the undertakingimpose or vary the restriction.

17 (1)

(a)

(b)

(c)

(2)

(a)

(b)

(3)

(a)

(b)

(c)

(d)

(4)

(5)

18 (1)

(2)

14


Any such notice shall state the reason for which the Authority has acted andparticulars of the rights conferred by subsection (5) and section 39.

Section 14(2) shall apply to a notice under subsection (2) imposing or varyinga restriction as it applies to a notice under section 14(1) in respect of a proposal to imposeor vary a restriction; but the Authority may omit from a copy given to a person by virtue ofthis subsection any matter which does not relate to him.

An undertaking to which a notice is given under this section of the impositionor variation of a restriction and a person who is given a copy of it by virtue of subsection (4)may within the period of 14 days beginning with the day on which the notice was givenmake representations to the Authority.

After giving a notice under subsection (2) imposing or varying a restriction andtaking into account any representations made in accordance with subsection (5), theAuthority shall decide whether—

to confirm or rescind its original decision; or

to impose a different restriction or to vary the restriction in a differentmanner.

The Authority shall within the period of 28 days beginning with the day onwhich the notice was given under subsection (2) give the undertaking concerned writtennotice of its decision under subsection (6) and, except where the decision is to rescind theoriginal decision, the notice shall state the reason for the decision.

Where the notice under subsection (7) is of a decision to take the actionspecified in subsection (6)(b), the notice under subsection (7) shall have the effect ofimposing the restriction or making the variation specified in the notice with effect from thedate on which it is given.

Directions to protect interests of clientsThe Authority may give a licensed undertaking directions under this section at

any time after its licence is revoked or surrendered.

Directions under this section shall be such as appear to the Authority to bedesirable for safeguarding the interests of the licensed undertaking’s clients.

An undertaking which fails to comply with any requirement or contravenes anyprohibition imposed on it by a direction under this section shall be guilty of an offence andliable—

on summary conviction, to a fine of $25,000;

on conviction on indictment, to a fine of $75,000.

Notification and confirmation of directionsA direction under section 19 shall be given by notice in writing and may be

varied by a further direction; and a direction may be revoked by the Authority by a noticein writing to the licensed undertaking concerned.

(3)

(4)

(5)

(6)

(a)

(b)

(7)

(8)

19 (1)

(2)

(3)

(a)

(b)

20 (1)

15


A direction under section 19(1), except one varying a previous direction withthe agreement of the licensed undertaking concerned—

shall state the reasons for which it is given and give particulars of thelicensed undertaking’s rights under subsection (3) and section 39; and

shall cease to have effect at the end of the period of 28 days beginning withthe day on which it is given unless before the end of that period it isconfirmed by a further written notice given by the Authority to the licensedundertaking concerned.

A licensed undertaking to which a direction is given which requiresconfirmation under subsection (2)(b) may, within the period of 14 days beginning with theday on which the direction is given, make written representations to the Authority; and theAuthority shall take any such representations into account in deciding whether to confirmthe direction.

Surrender of licenceA licensed undertaking may surrender its licence by written notice to the

Authority.

A surrender shall take effect on the giving of the notice or, if a later date isspecified in it, on that date; and where a later date is specified in the notice the licensedundertaking may by further written notice to the Authority substitute an earlier date, notbeing earlier than that on which the first notice was given.

The surrender of a licence shall be irrevocable unless it is expressed to takeeffect at a later date and before that date the Authority by notice in writing allows it to bewithdrawn.

PART 3

ACCOUNTS AND AUDIT

Duty to prepare annual financial statements and accountsEvery licensed undertaking shall prepare annual financial statements or

accounts as required by this section in respect of all transactions and balances relating toits business.

A licensed undertaking which is a company shall prepare annual financialstatements of its business, and shall cause copies of those statements to be laid before thecompany in general meeting.

A licensed undertaking which is not a company shall prepare annual accountsin such form and containing such particulars as the Authority may direct.

A licensed undertaking, where required by subsection (1) to prepare financialstatements or to prepare audited financial statements or accounts in accordance withsubsection (6), shall keep a copy of the most recent financial statements or accounts or

(2)

(a)

(b)

(3)

21 (1)

(2)

(3)

22 (1)

(2)

(3)

(4)

16


audited financial statements or accounts as the case may be, at each of its offices inBermuda together with the auditor’s report thereon.

Not later than four months after the close of its financial year every licensedundertaking shall provide the Authority with a copy of its financial statements or itsaccounts for that year, and, where such statements or accounts have been audited inaccordance with subsection (6), a report thereon.

Notwithstanding subsection (1), the Authority may require a licensedundertaking to prepare audited financial statements or accounts in such manner as it maydirect.

Appointment of auditorsEvery licensed undertaking required by the Authority in accordance with

section 22(6) to prepare audited financial statements or accounts shall annually appointan approved auditor to audit such financial statements or accounts.”

If a licensed undertaking fails to appoint an approved auditor as required bysubsection (1) or, at any time, fails to fill a vacancy for such auditor, the Authority mayappoint an approved auditor and shall fix the remuneration to be paid by that money servicebusiness to such auditor.

A licensed undertaking shall forthwith give written notice to the Authority ifit—

proposes to remove an auditor before the expiration of his term of office; or

proposes to replace an auditor at the expiration of the term of his officewith a different auditor.

A licensed undertaking which fails to comply with this section shall be guiltyof an offence and shall be liable on summary conviction to a fine of $25,000.

For the purposes of this section, “approved auditor” means an auditor who isa person entitled to practise as a public accountant and is a member of a professional bodyapproved by the Authority for the purposes of this Act.

No person having an interest in any licensed undertaking otherwise than as aclient, and no officer, servant or agent of any money service business shall be eligible forappointment as an approved auditor for that licensed undertaking; and any personappointed as such auditor to any licensed undertaking who subsequently acquires suchinterest or becomes an officer, servant or agent of that licensed undertaking shall cease tobe an approved auditor.

Auditor to communicate certain matters to AuthorityAn auditor of a licensed undertaking shall in the circumstances specified in

subsection (2) forthwith give written notice to the Authority of those matters.

The circumstances referred to in subsection (1) are—

his resignation before the expiration of his term of office;

(5)

(6)

23 (1)

(2)

(3)

(a)

(b)

(4)

(5)

(6)

24 (1)

(2)

(a)

17


his intention not to seek to be re-appointed;

a decision to include a modification of his report on the licensedundertaking’s financial statements and, in particular, a qualification ordenial of his opinion, or the statement of an adverse opinion.

An auditor of a licensed undertaking shall forthwith give written notice to theAuthority of any fact or matter of which he becomes aware which is likely to be of materialsignificance for the discharge, in relation to the licensed undertaking of which he is anauditor, of the Authority’s functions under this Act.

An auditor who fails to comply with subsection (1) shall be guilty of an offenceand shall be liable on summary conviction to a fine of $25,000.

PART 4

OBJECTIONS TO SHAREHOLDER CONTROLLERS

Notification of new or increased controlNo person shall become a 10% shareholder controller or a majority shareholder

controller of a licensed undertaking which is a company unless—

he has served on the Authority a written notice stating that he intends tobecome such a controller of the licensed undertaking; and

either the Authority has, before the end of the period of three monthsbeginning with the date of service of that notice, notified him in writing thatthere is no objection to his becoming such a controller of the licensedundertaking, or that period has elapsed without the Authority havingserved him under section 26 a written notice of objection to his becomingsuch a controller of the licensed undertaking.

Subsection (1) applies also in relation to a person becoming a partner in alicensed undertaking which is a partnership.

A notice under subsection (1)(a) shall contain such information as theAuthority may direct and the Authority may, after receiving such a notice from any person,by notice in writing require him to provide such additional information or documents as theAuthority may reasonably require for deciding whether to serve notice of objection.

Where additional information or documents are required from any person by anotice under subsection (3), the time between the giving of the notice and the receipt of theinformation or documents shall be added to the period mentioned in subsection (1)(b).

Objection to new or increased controlThe Authority may serve a notice of objection under this section on a person

who has given notice under section 25 unless it is satisfied—

that the person concerned is a fit and proper person to become a controllerof the description in question of the licensed undertaking;

(b)

(c)

(3)

(4)

25 (1)

(a)

(b)

(2)

(3)

(4)

26 (1)

(a)

18


that the interests of clients and potential clients of the licensedundertaking would not be in any manner threatened by that personbecoming a controller of that description of the licensed undertaking; and

without prejudice to paragraphs (a) and (b), that, having regard to thatperson’s likely influence on the licensed undertaking as a controller of thedescription in question, the criteria in Schedule 1 would continue to befulfilled in the case of the licensed undertaking or, if any of those criteriais not fulfilled, that that person is likely to undertake adequate remedialaction.

Before serving a notice of objection under this section, the Authority shall servethe person concerned with a preliminary written notice stating that the Authority isconsidering service on that person of a notice of objection and that notice—

shall specify which of the matters mentioned in subsection (1) theAuthority is not satisfied with and, subject to subsection (5), the reasonsfor which it is not satisfied; and

shall give particulars of the rights conferred by subsection (3).

A person served with a notice under subsection (2) may, within a period of 28days beginning with the day on which the notice is served, make written representations tothe Authority; and where such representations are made the Authority shall take them intoaccount in deciding whether to serve a notice of objection.

A notice of objection under this section shall—

specify which of the matters mentioned in subsection (1) the Authority isnot satisfied with and, subject to subsection (5), the reasons for which it isnot satisfied; and

give particulars of the rights conferred by section 39.

Subsections (2)(a) and (4)(a) shall not require the Authority to specify anyreason which would in its opinion involve the disclosure of confidential information thedisclosure of which would be prejudicial to a third party.

Where a person required to give a notice under section 25 in relation tobecoming a controller of any description becomes a controller of that description withouthaving given the notice, the Authority may serve him with a notice of objection under thissection at any time within three months after becoming aware of his having done so andmay, for the purpose of deciding whether to serve him with such a notice, require him bynotice in writing to provide such information or documents as the Authority may reasonablyrequire.

The period mentioned in section 25(1)(b) (with any extension under subsection(4) of that section) and the period mentioned in subsection (6) shall not expire, if they wouldotherwise do so, until 14 days after the end of the period within which representations canbe made under subsection (3).

(b)

(c)

(2)

(a)

(b)

(3)

(4)

(a)

(b)

(5)

(6)

(7)

19


Objection to existing controllerWhere it appears to the Authority that a person who is a controller of any

description of a licensed undertaking is not or is no longer a fit and proper person to besuch a controller of the licensed undertaking, it may serve him with a written notice ofobjection to his being such a controller of the licensed undertaking.

Before serving a notice of objection under this section, the Authority shall servethe person concerned with a preliminary written notice stating that the Authority isconsidering service on that person of a notice of objection and that notice shall—

subject to subsection (5), specify the reasons for which it appears to theAuthority that the person in question is not or is no longer a fit and properperson as mentioned in subsection (1); and

give particulars of the rights conferred by subsection (3).

A person served with a notice under subsection (2) may, within a period of 28days beginning with the day on which the notice is served, make written representations tothe Authority; and where such representations are made the Authority shall take them intoaccount in deciding whether to serve a notice of objection.

A notice of objection under this section shall—

subject to subsection (5), specify the reasons for which it appears to theAuthority that the person in question is not or is no longer a fit and properperson as mentioned in subsection (1); and

give particulars of the rights conferred by section 39.

Subsections (2)(a) and (4)(a) shall not require the Authority to specify anyreason which would in its opinion involve the disclosure of confidential information thedisclosure of which would be prejudicial to a third party.

Contraventions by controllerSubject to subsection (2), any person who contravenes section 25 by—

failing to give the notice required by subsection (1)(a) of that section; or

becoming a controller of any description to which that section appliesbefore the end of the period mentioned in subsection (1)(b) of that sectionin a case where the Authority has not served him with a preliminary noticeunder section 26(2),

shall be guilty of an offence.

A person shall not be guilty of an offence under subsection (1) if he shows thathe did not know of the acts or circumstances by virtue of which he became a controller ofthe relevant description; but where any person becomes a controller of any such descriptionwithout such knowledge and subsequently becomes aware of the fact that he has becomesuch a controller he shall be guilty of an offence unless he gives the Authority written noticeof the fact that he has become such a controller within 14 days of becoming aware of thefact.

27 (1)

(2)

(a)

(b)

(3)

(4)

(a)

(b)

(5)

28 (1)

(a)

(b)

(2)

20


Any person who—

before the end of the period mentioned in section 25(1)(b), becomes acontroller of any description to which that subsection applies after beingserved with a preliminary notice under section 26(2);

contravenes section 25 by becoming a controller of any description afterbeing served with a notice of objection to his becoming a controller of thatdescription; or

having become a controller of any description in contravention of thatsection (whether before or after being served with such notice of objection),continues to be such a controller after such a notice has been served onhim,

shall be guilty of an offence.

A person guilty of an offence under subsection (1) or (2) shall be liable onsummary conviction to a fine of $25,000.

A person guilty of an offence under subsection (3) shall be liable—

on summary conviction, to a fine of $25,000 and in respect of an offenceunder paragraph (c) of that subsection, to a fine of $500 for each day onwhich the offence has continued;

on conviction on indictment, to a fine of $50,000 or to imprisonment fortwo years or to both such fine and imprisonment.

Restriction on sale of sharesThe powers conferred by this section shall be exercisable where a person—

has contravened section 25 by becoming a controller of any descriptionafter being served with a notice of objection to his becoming a controller ofthat description;

having become a controller of any description in contravention of section25, continues to be one after a notice has been served on him; or

continues to be a controller of any description after being served undersection 26 with a notice of objection to his being a controller of thatdescription.

The Authority may by notice in writing served on the person concerned directthat any specified shares to which this section applies shall, until further notice, be subjectto one or more of the following restrictions—

any transfer of, or agreement to transfer, those shares or, in the case ofunissued shares, any transfer of or agreement to transfer the right to beissued with them, shall be void;

no voting rights shall be exercisable in respect of the shares;

(3)

(a)

(b)

(c)

(4)

(5)

(a)

(b)

29 (1)

(a)

(b)

(c)

(2)

(a)

(b)

21


no further shares shall be issued in right of them or in pursuance of anyoffer made to their holder; or

except in liquidation, no payment shall be made of any sums due from theundertaking on the shares, whether in respect of capital or otherwise.

The Court may, on the application of the Authority, order the sale of anyspecified shares to which this section applies and, if they are for the time being subject toany restrictions under subsection (2), that they shall cease to be subject to thoserestrictions.

No order shall be made under subsection (3) in a case where the notice ofobjection was served under section 26 or 27—

until the end of the period within which an appeal can be brought againstthe notice of objection; and

if an appeal is brought, until it has been determined or withdrawn.

Where an order has been made under subsection (3), the Court may, on theapplication of the Authority, make such further order relating to the sale or transfer of theshares as it thinks fit.

Where shares are sold in pursuance of an order under this section, theproceeds of sale, less the costs of the sale, shall be paid into the Court for the benefit of thepersons beneficially interested in them; and any such person may apply to the Court forthe whole or part of the proceeds to be paid to him.

This section applies—

to all the shares in the licensed undertaking of which the person inquestion is a controller of the relevant description which are held by himor any associate of his and were not so held immediately before he becamesuch a controller of the licensed undertaking; and

where the person in question became a controller of the relevantdescription as a result of the acquisition by him or any associate of his ofshares in another company, to all the shares in that company which areheld by him or any associate of his and were not so held before he becamesuch a controller of that licensed undertaking.

A copy of the notice served on the person concerned under subsection (2) shallbe served on the licensed undertaking or company to whose shares it relates and, if it relatesto shares held by an associate of that person, on that associate.

PART 5

DISCIPLINARY MEASURES

Power to impose civil penalties for breach of requirementsExcept as provided in section 13, 48, 57 and 69, every person who fails to

comply with any requirement or contravenes any prohibition imposed by or under this Act

(c)

(d)

(3)

(4)

(a)

(b)

(5)

(6)

(7)

(a)

(b)

(8)

30 (1)

22


shall be liable to a civil penalty not exceeding $500,000, as the Authority considersappropriate, for each such failure.

For the purposes of subsection (1), “appropriate” means effective, proportionateand dissuasive.

The Authority shall not impose a civil penalty where it is satisfied that theperson concerned took all reasonable steps and exercised all due diligence to ensure thatthe requirement would be complied with.

Civil penalties proceduresIf the Authority proposes to impose a civil penalty, it must give the licensed

undertaking concerned a warning notice.

If the Authority decides to impose a civil penalty, it must give the licensedundertaking concerned a decision notice.

Public censureIf the Authority considers that a licensed undertaking has contravened a

requirement imposed on it by or under this Act, the Authority may publish a statement tothat effect.

After a statement under this section is published, the Authority shall send acopy of it to the licensed undertaking.

Public censure procedureIf the Authority proposes to publish a statement in respect of a licensed

undertaking under section 32, it must give the institution a warning notice.

If the Authority decides to publish a statement under section 32 (whether ornot in the terms proposed), it must give the licensed undertaking concerned a decisionnotice.

Prohibition ordersSubsection (2) applies if it appears to the Authority that an individual is not a

fit and proper person to perform functions in relation to a regulated activity carried on bya person who is licensed by the Authority under this Act (‘a regulated person’).

The Authority may make a prohibition order prohibiting the individual fromperforming a specified function, any function falling within a specified description, or anyfunction.

A prohibition order may relate to—

a specified regulated activity, any regulated activity falling within aspecified description, or all regulated activities;

regulated persons generally, or any person within a specified class ofregulated persons.

(2)

(3)

31 (1)

(2)

32 (1)

(2)

33 (1)

(2)

34 (1)

(2)

(3)

(a)

(b)

23


In exercising its discretion to make a prohibition order under subsection (2),the Authority must have regard (among other things) to such factors, including assessmentcriteria, as the Authority may establish in a statement of principles.

A licensed undertaking must ensure that no function performed in relation tothe carrying on of a regulated activity, is performed by an individual who is prohibited fromperforming that function by a prohibition order.

The Authority may, on the application of the individual named in a prohibitionorder, vary or revoke the order.

The Authority shall publish a prohibition order that is in effect, and everyvariation of such order, in such manner as it considers appropriate to bring the order tothe attention of the public.

This section applies to the performance of functions in relation to a regulatedactivity carried on by a person who is an exempted person in relation to that activity as itapplies to the performance of functions in relation to a regulated activity carried on by aregulated person.

Any person who fails to comply with the terms of a prohibition order commitsan offence and is liable—

on summary conviction, to a fine of $50,000 or to imprisonment for twoyears or to both such fine and imprisonment;

on conviction on indictment, to a fine of $200,000 or to imprisonment forfour years or to both such fine and imprisonment.

In this section—

“exempted person” means a person who is exempted in accordance with section 9from the requirement to hold a licence by or under this Act;

“regulated activity” means any activity that is carried on by way of a businessrequiring licensing or other authority under any provision of this Act,regulations or orders made thereunder;

“regulated person” has the meaning given in subsection (1);

“specified” means specified in the prohibition order.

Prohibition orders: proceduresIf the Authority proposes to make a prohibition order, it must give the

individual concerned a warning notice.

If the Authority decides to make a prohibition order, it must give the individualconcerned a decision notice.

Applications relating to prohibition orders: proceduresThis section applies to an application for the variation or revocation of a

prohibition order.

(4)

(5)

(6)

(7)

(8)

(9)

(a)

(b)

(10)

35 (1)

(2)

36 (1)

24


If the Authority decides to grant the application, it must give the applicantwritten notice of its decision.

If the Authority decides to refuse the application, it must give the applicant adecision notice.

Determination of applications for variation, etc.The Authority may grant an application made under section 36 if it is satisfied

that the applicant is a fit and proper person to perform the function to which the applicationrelates.

In deciding that question, the Authority may have regard (among other things)to whether the applicant—

has obtained a qualification;

has undergone, or is undergoing, training; or

possesses a level of competence required in relation to persons performingfunctions of the kind to which the application relates.

InjunctionsIf, on the application of the Authority, the Court is satisfied—

that there is a reasonable likelihood that any person will contravene arelevant requirement; or

that any person has contravened a relevant requirement and that there isa reasonable likelihood that the contravention will continue or be repeated,

the Court may make an order restraining the contravention.

If, on the application of the Authority, the Court is satisfied—

that any person has contravened a relevant requirement; and

that there are steps which could be taken for remedying the contravention,

the Court may make an order requiring that person, and any other person who appears tohave been knowingly concerned in the contravention, to take such steps as the Court maydirect to remedy it.

If, on the application of the Authority, the Court is satisfied that any personmay have—

contravened a relevant requirement; or

been knowingly concerned in the contravention of such a requirement,

the Court may make an order restraining such person from disposing of, or otherwisedealing with, any of his assets which it is satisfied the person is reasonably likely to disposeof or otherwise deal with.

(2)

(3)

37 (1)

(2)

(a)

(b)

(c)

38 (1)

(a)

(b)

(2)

(a)

(b)

(3)

(a)

(b)

25


In subsection (2), references to remedying a contravention include referencesto mitigating its effect.

“Relevant requirement”, in relation to an application by the Authority, meansa requirement which is imposed by or under this Act.

PART 6

RIGHTS OF APPEAL

Rights of appealA licensed undertaking which is aggrieved by a decision of the Authority—

to restrict its licence, to restrict it in a particular manner or to vary anyrestrictions of its licence;

to revoke its licence;

to refuse an application for a licence made under section 11(1);

to impose a civil penalty under section 30; or

to publish a statement in respect of it pursuant to section 32,

may appeal against the decision to the tribunal constituted in accordance with section 40(the tribunal).

Where—

the ground or a ground for a decision within subsection (1)(a) or (b) is thatmentioned in section 17(2)(a); or

the effect of a decision within subsection (1)(a) is to require the removal ofa person as a controller or officer of an undertaking,

the controller or officer to whom the ground relates or whose removal is required may appealto the tribunal against the finding that there is such a ground for the decision or, as thecase may be, against the decision to require his removal.

Any person on whom a notice of objection is served under section 26 or 27 mayappeal to the tribunal against the decision of the Authority to serve the notice; but thissubsection does not apply to a person in any case in which he has failed to give a notice orbecome or continued to be a controller in circumstances in which his doing so constitutesan offence under section 28(1), (2) or (3).

Any individual in respect of whom a prohibition order has been made undersection 34 may appeal to the tribunal.

Any person in respect of whom a decision notice has been issued refusing arevocation or variation of a prohibition order may appeal to the tribunal.

(4)

(5)

39 (1)

(a)

(b)

(c)

(d)

(e)

(2)

(a)

(b)

(3)

(4)

(5)

26


The tribunal may suspend the operation of a restriction or a variation of arestriction pending the determination of an appeal in respect of the decision imposing orvarying the restriction.

The revocation of a licensed undertaking’s licence pursuant to a decisionagainst which there is a right of appeal under this section shall not have effect—

until the end of the period within which the appeal can be brought; and

if such an appeal is brought, until it is determined or withdrawn.

Constitution of tribunalsA tribunal shall be constituted in accordance with this section, where an appeal

is brought under section 39, to determine the appeal.

The tribunal shall consist of a chairman, or, in his absence, a deputy chairmanand two other members.

The chairman and the deputy chairman shall be appointed by the Minister fora term not exceeding three years, and shall be barristers and attorneys of at least sevenyears’ standing.

The two other members of the tribunal shall be selected by the chairman or, inhis absence, the deputy chairman, from a panel of members appointed by the Ministerunder subsection (6), who shall be persons appearing to the chairman or, as the case maybe, the deputy chairman, to have relevant experience.

During any period of time when the chairman or deputy chairman is absentfrom Bermuda or is for any other reason unable to act, the Minister may appoint anotherperson to act in his place for the period of his absence or inability to act.

The Minister shall appoint a panel of not less than nine persons with relevantexperience to serve as members of appeal tribunals.

A person shall not be eligible for appointment as chairman, deputy chairmanor member of the tribunal if he is or has at any time during the period of two years endingwith the date of his appointment been an officer, servant or agent of the Authority or of anylicensed undertaking.

There shall be paid to the members of the tribunal such remuneration and suchallowances as the Minister may determine.

[Section 40 subsection (8) inserted by 2017 : 38 s. 9 effective 30 October 2017]

Determination of appealsOn an appeal made under section 39, the question for the determination of the

tribunal shall be whether, for the reasons adduced by the appellant, the decision wasunlawful or not justified by the evidence on which it was based.

On any such appeal, the tribunal may confirm or reverse the decision which isthe subject of the appeal but shall not have power to vary it except that—

(6)

(7)

(a)

(b)

40 (1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

41 (1)

(2)

27


where the decision was to impose or vary any restriction, the tribunal maydirect the Authority to impose different restrictions or to vary them in adifferent way; or

where the decision was to revoke a licence, the tribunal may direct theAuthority to restrict it instead.

Notice of a tribunal’s determination, together with a statement of its reasons,shall be given to the appellant and to the Authority; and, unless the tribunal otherwisedirects, the determination shall come into operation when the notice is given to theappellant and to the Authority.

Costs, procedure and evidenceA tribunal may give such directions as it thinks fit for the payment of costs or

expenses by any party to the appeal.

The Minister may make regulations with respect to appeals and thoseregulations may in particular make provision—

as to the period within which and the manner in which such appeals areto be brought;

as to the manner in which such appeals are to be conducted, includingprovision for any hearing to be held in private and as to the persons entitledto appear on behalf of the parties;

as to the procedure to be adopted where appeals are brought both by alicensed undertaking and by a person who is to be a controller or officer ofa licensed undertaking, including provision for the hearing of the appealstogether and for the mutual disclosure of information;

for requiring an appellant or the Authority to disclose or allow theinspection of documents in his or its custody or under his or its control;

for requiring any person, on tender of the necessary expenses of hisattendance, to attend and give evidence or produce documents in hiscustody or under his control and for authorising the administration ofoaths to witnesses;

for enabling an appellant to withdraw an appeal or the Authority towithdraw its opposition to an appeal and for the consequences of any suchwithdrawal;

for taxing or otherwise settling any costs or expenses which the tribunaldirects to be paid and for the enforcement of any such direction;

for enabling any preliminary or incidental functions in relation to an appealto be discharged by the chairman or, as the case may be, the deputychairman of the tribunal; and

as to any other matter connected with such appeals.

(a)

(b)

(3)

42 (1)

(2)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

28


Regulations made under subsection (2) shall be subject to the negativeresolution procedure.

A person who, having been required in accordance with regulations madeunder this section to attend and give evidence, fails without reasonable excuse to attend orgive evidence, shall be guilty of an offence and liable on summary conviction to a fine of$10,000.

A person who without reasonable excuse alters, suppresses, conceals, destroysor refuses to produce any document which he has been required to produce in accordancewith regulations under this section, or which he is liable to be so required to produce, shallbe guilty of an offence and liable—

on summary conviction, to a fine of $25,000 or to imprisonment for sixmonths or to both such fine and imprisonment;


Further appeals on a point of lawA licensed undertaking or other person who has appealed to a tribunal may

appeal to the Court on any question of law arising from the decision on the appeal by thetribunal and an appeal on any such question shall also lie at the instance of the Authority;and if the Court is of the opinion that the decision was erroneous in point of law it shallremit the matter to the tribunal for rehearing and determination by it.

No appeal to the Court of Appeal shall be brought from a decision undersubsection (1), except with leave of that court.

PART 7

NOTICES AND INFORMATION

Warning noticesA warning notice must—

state the action which the Authority proposes to take;

be in writing; and

give reasons for the proposed action.

The warning notice must specify a reasonable period (which may not be lessthan 14 days) within which the person to whom it is given may make representations to theAuthority; and where such representations are made, the Authority shall take them intoaccount in deciding whether to give a decision notice.

The Authority may extend the period specified in the notice.

A warning notice about a proposal to publish a statement under section 32must set out the terms of the statement.

(3)

(4)

(5)

(a)

(b)

43 (1)

(2)

44 (1)

(a)

(b)

(c)

(2)

(3)

(4)

29


A warning notice given under section 35 must set out the terms of theprohibition.

Decision noticesA decision notice must—

be in writing;

give reasons for the Authority’s decision to take the action to which thenotice relates;

give its decision; and

give an indication of the right to appeal the decision to the tribunal undersection 39.

A decision notice shall be given within 90 days beginning with the day on whicha warning notice under section 44 was given; and if no decision notice under subsection (1)is given within that period, the Authority shall be treated as having at the end of that periodgiven a notice of discontinuance under section 46.

A decision notice about the imposition of a civil penalty under section 31 muststate the date of payment.

A decision notice about public censure under section 32 must—

set out the terms of the statement;

give details of the manner in which, and the date on which, the statementwill be published.

A decision notice about a prohibition order made under section 34(2) must—

name the individual to whom the prohibition order applies;

set out the terms of the order; and

be given to the individual named in the order.

A decision notice shall state the day on which it is to take effect.

The Authority may, before it takes the action to which a decision notice (“theoriginal notice”) relates, give the person concerned a further decision notice which relatesto different action in respect of the same matter.

The Authority may give a further decision notice as a result of subsection (7)only if the person to whom the original notice was given consents.

If the person to whom a decision notice under subsection (1) is given had theright to refer the matter to which the original decision notice related to the tribunal, he hasthat right as respects the decision notice under subsection (7).

(5)

45 (1)

(a)

(b)

(c)

(d)

(2)

(3)

(4)

(a)

(b)

(5)

(a)

(b)

(c)

(6)

(7)

(8)

(9)

30


Notices of discontinuanceSubject to section 45(2), if the Authority decides not to take the action proposed

in a warning notice it must give a notice of discontinuance to the person to whom thewarning notice was given.

A notice of discontinuance must identify the action which is beingdiscontinued.

PublicationSubject to sections 17, 32 and 34, the Authority may publish such information

about a matter to which a decision notice relates as it considers appropriate.

The Authority must not publish a decision notice under subsection (1)—

before notifying the person concerned; and

pending an appeal under section 39.

Notification of change of controller or officerA licensed undertaking shall give written notice to the Authority of the fact of

any person having become or ceased to be a controller or officer of the licensed undertaking.

A notice required to be given under subsection (1) shall be given before the endof the period of 14 days beginning with the day on which the licensed undertaking becomesaware of the relevant facts.

A licensed undertaking which fails to give a notice required by this section shallbe liable to a civil penalty calculated in accordance with subsection (4).

For each week or part of a week that a licensed undertaking fails to comply witha requirement imposed under subsection (1), it shall be liable to a civil penalty not exceeding$5,000.

Power to obtain information and reportsThe Authority may by notice in writing served on a licensed undertaking—

require the undertaking to provide the Authority (or such person acting onbehalf of the Authority as may be specified in the notice), at such time ortimes or at such intervals or in respect of such period or periods as may beso specified, with such information as the Authority may reasonablyrequire for ensuring that the undertaking is complying with the provisionsof this Act and any code of practice, and for safeguarding the interests ofclients and potential clients of the undertaking;

require the undertaking to provide the Authority with a report, in such formas may be specified in the notice, by the undertaking’s auditor or by anaccountant or other person with relevant professional skill in, or on anyaspect of, any matter about which the Authority has required or couldrequire the undertaking to provide information under paragraph (a).

46 (1)

(2)

47 (1)

(2)

(a)

(b)

48 (1)

(2)

(3)

(4)

49 (1)

(a)

(b)

31


The person appointed by a licensed undertaking to make any report requiredunder subsection (1)(b) shall forthwith give written notice to the Authority of any fact ormatter of which he becomes aware which is likely to be of material significance for thedischarge, in relation to the licensed undertaking, of the functions of the Authority underthis Act.

General power to require production of documentsThe Authority may—

by notice in writing served on a licensed undertaking require it to produce,within such time and at such place as may be specified in the notice, suchdocument or documents of such description as may be so specified;

authorise an officer, servant or agent of the Authority, producing suchevidence of his authority, to require it to provide to him such information,or to produce to him such documents, as he may specify, being suchinformation or documents as the Authority may reasonably require for theperformance of its functions under this Act.

Where, by virtue of subsection (1), the Authority or any officer, servant or agentof the Authority has power to require the production of any documents from a licensedundertaking, the Authority or that officer, servant or agent shall have the like power torequire the production of those documents from any person who appears to be in possessionof them; but where any person from whom such production is required claims a lien ondocuments produced by him, the production shall be without prejudice to the lien.

The power under this section to require a licensed undertaking or other personto produce any documents includes power—

if the documents are produced, to take copies of them or extracts fromthem and to require that undertaking or person, or any other person whois a present or past controller or officer of, or is or was at any time employedby or acting as an employee of, the licensed undertaking in question, toprovide an explanation of any of them; and

if the documents are not produced, to require the person who was requiredto produce them to state, to the best of his knowledge and belief, wherethey are.

If it appears to the Authority to be desirable in the interests of the clients orpotential clients of a licensed undertaking which is a company to do so, it may also exercisethe powers conferred by section 49 and subsection (1) of this section in relation to anycompany which is or has at any relevant time been—

a parent company, subsidiary company or related company of thatundertaking;

a subsidiary company of a parent company of that undertaking;

a parent company of a subsidiary company of that undertaking; or

(2)

50 (1)

(a)

(b)

(2)

(3)

(a)

(b)

(4)

(a)

(b)

(c)

32


a company in the case of which a shareholder controller of thatundertaking, either alone or with any associate or associates, holds 50%or more of the shares or is entitled to exercise, or control the exercise of,more than 50% of the voting power at a general meeting.

The Authority may by notice in writing served on any person who is or is to bea controller or officer of a licensed undertaking require him to provide the Authority, withinsuch time as may be specified in the notice, with such information or documents as theAuthority may reasonably require for determining whether he is a fit and proper person tohold the particular position which he holds or is to hold.

Any person who without reasonable excuse fails to comply with a requirementimposed on him under this section shall be guilty of an offence and liable on summaryconviction to a fine of $10,000 or to imprisonment for six months or to both such fine andimprisonment.

Nothing in this section shall require the disclosure or production by a personof information or documents which he would be entitled to refuse to disclose or produce onthe grounds of legal professional privilege in proceedings in Bermuda.

Right of entry to obtain information and documentsAny officer, servant or agent of the Authority may, on producing if required

evidence of his authority, enter any premises occupied by a person on whom a notice hasbeen served under sections 49(1) and 50(1) for the purpose of obtaining there theinformation or documents required by that notice and of exercising the powers conferredby section 50(3).

Any officer, servant or agent of the Authority may, on producing if requiredevidence of his authority, enter any premises occupied by any person on whom a noticecould be served under sections 49(1) and 50(1) for the purpose of obtaining there suchinformation or documents as are specified in the authority, but the Authority shall notauthorise any person to act under this subsection unless it has reasonable cause to believethat if such a notice were served it would not be complied with or that any documents towhich it would relate would be removed, tampered with or destroyed.

Any person who intentionally obstructs a person exercising rights conferred bythis section shall be guilty of an offence and liable on summary conviction to a fine of$10,000 or to imprisonment for six months or to both such fine and imprisonment.

PART 8

INVESTIGATIONS

Investigations on behalf of the AuthorityIf it appears to the Authority desirable to do so in the interests of the clients or

potential clients of a licensed undertaking, the Authority may appoint one or morecompetent persons to investigate and report to the Authority on—

(d)

(5)

(6)

(7)

51 (1)

(2)

(3)

52 (1)

33


the nature, conduct or state of the undertaking’s business or anyparticular aspect of it; or

the ownership or control of the undertaking,

and the Authority shall give written notice of any such appointment to the undertakingconcerned.

If a person appointed under subsection (1) thinks it necessary for the purposesof the investigation he is appointed to carry out, he may also investigate the business of anycompany which is or has at any relevant time been—

a parent company, subsidiary company or related company of theundertaking under investigation;

a subsidiary company or related company of a parent company of thatundertaking;

a parent company of a subsidiary company of that undertaking; or

a company in the case of which a shareholder controller of thatundertaking, either alone or with any associate or associates, holds 50%or more of the shares or is entitled to exercise, or control the exercise of,more than 50% of the voting power at a general meeting.

Where a person appointed under subsection (1) decides to investigate thebusiness of any company by virtue of subsection (2), he shall give it written notice to thateffect.

It shall be the duty of every person who is or was a controller, officer, employee,agent, banker, auditor or barrister and attorney of a licensed undertaking which is underinvestigation (whether by virtue of subsection (1) or (2)), or any person appointed to makea report in respect of that undertaking under section 49(1)(b)—

to produce to the persons appointed under subsection (1), within such timeand at such place as they may require, such documents, or documents ofsuch description, as may be specified, being documents the production ofwhich may be reasonably required for the investigation, which are in hiscustody or power;

to attend before the persons so appointed at such time and place as theymay require and answer questions relevant to the investigation as thepersons appointed under subsection (1) may require; and

otherwise to give the persons so appointed all assistance in connection withthe investigation which he is reasonably able to give,

and those persons may take copies of or extracts from any documents produced to themunder paragraph (a).

For the purpose of exercising his powers under this section, a person appointedunder subsection (1) may enter any premises occupied by a licensed undertaking which isbeing investigated by him under this section; but he shall not do so without prior notice inwriting.

(a)

(b)

(2)

(a)

(b)

(c)

(d)

(3)

(4)

(a)

(b)

(c)

(5)

34


A person exercising powers by virtue of an appointment under this sectionshall, if so required, produce evidence of his authority.

Unless the Authority otherwise directs, the licensed undertaking underinvestigation shall pay to the Authority all expenses of, and incidental to, the investigation.

Any person who—

without reasonable excuse, fails to produce any documents which it is hisduty to produce under subsection (4);

without reasonable excuse, fails to attend before the persons appointedunder subsection (1) when required to do so;

without reasonable excuse, fails to answer any question which is put tohim by persons so appointed with respect to a licensed undertaking whichis under investigation or a company which is being investigated by virtueof subsection (2); or

intentionally obstructs a person in the exercise of the rights conferred bysubsection (5),

shall be guilty of an offence and liable on summary conviction to a fine of $10,000 or toimprisonment for six months or to both such fine and imprisonment.

A statement made by a person in compliance with a requirement imposed byvirtue of this section shall not be used in evidence against him.


Investigations of suspected contraventionsThe Authority may conduct an investigation if it appears to the Authority

that—

a person may have contravened section 8;

any exempted person may have contravened any restriction or exemptionor condition given under an exemption order under section 9;

an undertaking may have contravened a requirement imposed by or underthis Act, regulations or orders made thereunder;

an individual may not be a fit and proper person to perform functions inrelation to a regulated activity within the meaning of section 34.

The power conferred by subsection (1)(c) may be exercised in relation to aformer licensed undertaking but only in relation to—

business carried on at any time when the undertaking was licensed underthis Act; or

(6)

(7)

(8)

(a)

(b)

(c)

(d)

(9)

(10)

53 (1)

(a)

(b)

(c)

(d)

(2)

(a)

35


the ownership or control of an undertaking at any time when it waslicensed under this Act.

Power to require production of documents during investigationThe Authority may by notice in writing require the person who is the subject of

an investigation under section 53 (“the person under investigation”) or any personconnected with the person under investigation—

to provide, at such place as may be specified in the notice and eitherforthwith or at such time as may be so specified, such information as theAuthority may reasonably require for the purpose of the investigation;

to produce, at such place as may be specified in the notice and eitherforthwith or at such time as may be so specified, such documents, ordocuments of such description, as may be specified, being documents theproduction of which may be reasonably required for the investigation;

to attend at such place and time as may be specified in the notice andanswer questions relevant to the enquiry as the Authority may require.

The Authority may by notice in writing require every person who is or was acontroller, officer, employee, agent, banker, auditor or barrister and attorney of anundertaking which is under investigation by virtue of subsection (1)—

to produce to the Authority, within such time and at such place as theAuthority may require, such documents, or documents of suchdescription, as may be specified, being documents the production of whichmay be reasonably required for the investigation, which are in his custodyor power;

to attend before the Authority at such time and place as the Authority mayrequire and answer questions relevant to the investigation as the Authoritymay require; and

to take such actions as the Authority may direct in connection with theinvestigation.

The Authority or a duly authorised officer, servant or agent of the Authoritymay take copies of or extracts from any documents produced under this section.

Any officer, servant or agent of the Authority may, on producing if requiredevidence of his authority, enter any premises occupied by a person on whom a notice hasbeen served under subsection (1) for the purpose of obtaining there the information ordocuments required by the notice, putting the questions referred to in paragraph (c) of thatsubsection or exercising the powers conferred by subsection (3).

Any person who without reasonable excuse fails to comply with a requirementimposed on him under this section or intentionally obstructs a person in the exercise of therights conferred by subsection (4) shall be guilty of an offence and liable on summaryconviction to a fine of $10,000 or to imprisonment for six months or to both such fine andimprisonment.

(b)

54 (1)

(a)

(b)

(c)

(2)

(a)

(b)

(c)

(3)

(4)

(5)

36


A statement made by a person in compliance with a requirement imposed byvirtue of this section shall not be used in evidence against him.


For the purposes of this section, a person is connected with the person underinvestigation if such person is or has at any relevant time been—

a member of a group to which the person under investigation belongs;

a controller of the person under investigation;

a partner of a partnership of which the person under investigation is amember.

Powers of entryA magistrate may issue a warrant under this section if satisfied on information

on oath that the Authority is conducting an investigation under section 53 and—

a person has failed to comply with a notice served on him under section54;

that there are reasonable grounds for suspecting the completeness of anyinformation provided or documents produced by the person in response toa notice served on him under section 54; or

that there are reasonable grounds for suspecting that if a notice wereserved on the person under section 54 it would not be complied with orthat any documents to which it would relate would be removed, tamperedwith or destroyed.

A warrant under this section shall authorise any police officer not below therank of inspector, together with any other person named in the warrant and any other policeofficers—

to enter any premises occupied by the person under investigation whichare specified in the warrant, using such force as is reasonably necessaryfor the purpose;

to search the premises and take possession of any documents appearingto be such documents as are mentioned in subsection (1) or to take, inrelation to any such documents, any other steps which may appear to benecessary for preserving them or preventing interference with them;

to take copies of or extracts from any such documents;

to require any person named in the warrant to answer questions relevantfor determining whether that person is guilty of any such contravention asis mentioned in section 53.

(6)

(7)

(8)

(a)

(b)

(c)

55 (1)

(a)

(b)

(c)

(2)

(a)

(b)

(c)

(d)

37


A warrant under this section shall continue in force until the end of the periodof one month beginning with the day on which it is issued.

Any documents of which possession is taken under this section may beretained—

for a period of three months; or

until the conclusion of proceedings, if within the period of three monthsreferred to in paragraph (a), proceedings to which the documents arerelevant are commenced against any person for any such contravention asis mentioned in section 53.

Any person who intentionally obstructs the exercise of any right conferred bya warrant issued under this section or fails without reasonable excuse to comply with anyrequirement imposed in accordance with subsection (2)(d) shall be guilty of an offence andliable—



Obstruction of investigationsA person who knows or suspects that an investigation is being or is likely to be

carried out—

into a suspected contravention of section 8 or a term or condition of anexemption order made under section 9; or

under section 53,

shall be guilty of an offence if he falsifies, conceals, destroys or otherwise disposes of, orcauses or permits the falsification, concealment, destruction or disposal of, documentswhich he knows or suspects are or would be relevant to such an investigation unless heproves that he had no intention of concealing facts disclosed by the documents from personscarrying out such an investigation.

A person guilty of an offence under this section shall be liable—



(3)

(4)

(a)

(b)

(5)

(a)

(b)

56 (1)

(a)

(b)

(2)

(a)

(b)

38


PART 9

CERTIFICATE OF COMPLIANCE

Certificates of complianceEvery licensed undertaking shall, within four months from the end of its

financial year, deliver to the Authority a certificate of compliance, signed by an officer of theundertaking, made up to the end of its financial year, certifying that the undertaking hascomplied with the minimum criteria and codes of practice.

A licensed undertaking that fails to deliver a certificate as required bysubsection (1) within the time specified therein shall be liable to a civil penalty not exceeding$5,000 for each week or part of a week that the undertaking is in default.

PART 10

RESTRICTION ON DISCLOSURE OF INFORMATION

Restricted informationExcept as provided by sections 59, 60 and 61, no person who—

under or for the purposes of this Act, receives information relating to thebusiness or other affairs of any person; and

obtains information directly or indirectly from a person who has receivedit as provided under paragraph (a),

shall disclose the information without the consent of the person to whom it relates and (ifdifferent) the person from whom it was received as aforesaid.

This section does not apply to information which at the time of the disclosureis or has already been made available to the public from other sources or to information inthe form of a summary or collection of information so framed as not to enable informationrelating to any particular person to be ascertained from it.

Any person who discloses information in contravention of this section commitsan offence and is liable—


on conviction on indictment, to a fine of $100,000 or to imprisonment forfive years or to both such fine and imprisonment.

Disclosure for facilitating the discharge of functions of the AuthoritySection 58 does not preclude the disclosure of information in any case in which

disclosure is for the purpose of enabling or assisting the Authority to discharge—

its functions under this Act; and

its functions under the Bermuda Monetary Authority Act 1969.

57 (1)

(2)

58 (1)

(a)

(b)

(2)

(3)

(a)

(b)

59 (1)

(a)

(b)

39


Without prejudice to the generality of subsection (1), section 58 does notpreclude the disclosure of information by the Authority to the auditor or accountant of alicensed undertaking, or to the person appointed to make a report under section 49(1)(b) ifit appears to the Authority that disclosing the information would enable or assist theAuthority to discharge the functions mentioned in that section or would otherwise be in theinterests of the clients or potential clients of a licensed undertaking.

Disclosure for facilitating the discharge of functions by other authoritiesSection 58 does not preclude the disclosure of information to the Minister or

other authority in Bermuda in any case in which the disclosure is for the purpose ofenabling or assisting him to discharge his regulatory functions.

Section 58 does not preclude the disclosure of information for the purpose ofenabling or assisting an authority in a country or territory outside Bermuda to exercisefunctions corresponding to the functions of the Authority under this Act.

Subsection (2) does not apply in relation to disclosures to an authority unlessthe Authority is satisfied that the authority is subject to restrictions on further disclosureat least equivalent to those imposed by sections 58 and 59 and this section.

Section 58 does not preclude the disclosure of information—

for the purpose of enabling or assisting a person to do anything which heis required to do in pursuance of a requirement imposed under section49(1)(b);

with a view to the undertaking of, or otherwise for the purposes of, anycriminal proceedings, whether under this Act or any other Act;

in connection with any other proceedings arising out of this Act.

Section 58 does not preclude the disclosure by the Authority to the Director ofPublic Prosecutions or a police officer not below the rank of inspector of informationobtained pursuant to section 52, 54 or 55 or of information in the possession of theAuthority as to any suspected contravention in relation to which the powers conferred bythose sections are exercisable.

Information which is disclosed to a person in pursuance of this section shallnot be used otherwise than for the purposes mentioned in this section.

Information supplied to the Authority by relevant overseas authoritySection 58 applies to information which has been supplied to the Authority for

the purposes of any relevant functions by the relevant supervisory authority in a countryor territory outside Bermuda.

Information supplied to the Authority as mentioned in subsection (1) shall notbe disclosed except as provided by section 58 or—

for the purpose of enabling or assisting the Authority to discharge itsfunctions under this Act; or

(2)

60 (1)

(2)

(3)

(4)

(a)

(b)

(c)

(5)

(6)

61 (1)

(2)

(a)

40


with a view to the undertaking of, or otherwise for the purpose of, criminalproceedings, whether under this Act or any other Act.

In this section—

“relevant functions”, in relation to the Authority, means its functions under thisAct;

“relevant supervisory authority” means the authority discharging in a country orterritory outside Bermuda functions corresponding to those of the Authorityunder this Act.

PART 11

MISCELLANEOUS AND SUPPLEMENTAL

False documents or informationAny person who, for any purposes of this Act—

issues a document, or supplies information, which is false or misleadingin a material respect; or

signs a document which is false or misleading in a material respect; or

takes part in the preparation or issue of a document, or the supplying ofinformation, which is false in a material respect,

commits an offence.

A person who commits an offence under subsection (1) is liable—


on conviction on indictment, to a fine of $50,000 or to imprisonment forfour years or to both such fine and imprisonment.

It shall be a defence for a person charged with an offence under subsection (1)to prove—

if an individual, that he had no knowledge of the falsity or misleadingcharacter of the document or information, and took every reasonableprecaution to ensure its accuracy; and

if not an individual, that every person acting on such person’s behalf hadno such knowledge, and took every such reasonable precaution, asaforesaid.

Offences by licensed undertakingWhere an offence under this Act committed by a licensed undertaking is proved

to have been committed with the consent or connivance of, or to be attributable to neglecton the part of, any officer of the licensed undertaking, or any person who was purporting

(b)

(3)

62 (1)

(a)

(b)

(c)

(2)

(a)

(b)

(3)

(a)

(b)

63 (1)

41


to act in any such capacity, he, as well as the licensed undertaking, shall be guilty of thatoffence and be liable to be proceeded against and punished accordingly unless such personshows that he took all reasonable steps to avoid the commission of an offence.

Where the affairs of a licensed undertaking are managed by its members,subsection (1) shall apply in relation to the acts and defaults of a member in connectionwith his functions of management as if he were a director of the licensed undertaking.

Prohibition on use of words "money service business"No person carrying on business in or from Bermuda shall use any name which

indicates or may reasonably be understood to indicate (whether in English or in any otherlanguage) that it is carrying on money service business unless it is a licensed undertakingor is exempted under section 9.

Any person using a name in contravention of subsection (1) commits an offenceand is liable on summary conviction to a fine of $5,000.

NoticesThis section has effect in relation to any notice, direction or other document

required or authorised by or under this Act to be given to or served on any person otherthan the Authority.

Any such document may be given to or served on the person in question by—

delivering it to him;

leaving it at his principal place of business; or

sending it to him at that address by facsimile or other similar means whichproduces a document containing the text of the communication.

Any such document may in the case of a company be given to or served by—

delivering it to the company’s principal place of business or registered officein Bermuda; or

sending it by registered post addressed to the company’s principal place ofbusiness.

Service of notice on AuthorityNo notice required by this Act to be given to or served on the Authority shall be

regarded as given or served until it is received.

Subject to subsection (1), such notice may be given by facsimile or other similarmeans which produces a document containing the text of the communication.

Civil debt and civil penaltiesWhen a person is convicted of an offence under this Act, such person shall not

also be liable to a civil penalty imposed by or under this Act in relation to the same matters.

(2)

64 (1)

(2)

65 (1)

(2)

(a)

(b)

(c)

(3)

(a)

(b)

66 (1)

(2)

67 (1)

42


When a person is liable to a civil penalty imposed by or under this Act, suchperson shall not also be charged with an offence under this Act in relation to the samematters.

A civil penalty levied pursuant to this Act may be recovered by the Authorityas a civil debt.

RegulationsThe Minister may, after consulting with the Authority, make regulations

prescribing anything which may be prescribed under this Act and generally for theimplementation of this Act.

Without prejudice to the generality of subsection (1), regulations may inparticular provide with respect to any of the following matters—

any matter relating to the conduct of a money service business;

the requirement for any additional service or services to be deemed amoney service business activity;

the preparation, adoption and implementation of processes or proceduresrelating to a money service business.

Regulations made under subsection (1) may—

prescribe penalties not exceeding $10,000 for any breach of theregulations;

make such transitional, incidental or supplementary provision as appearsto the Minister to be necessary or expedient.

Regulations made under this Act shall be subject to the negative resolutionprocedure.

Prudential and other returnsThe Authority may make Rules prescribing statutory returns that must be

made.

Every licensed undertaking shall, not later than 28 days after the relevant day,file with the Authority such returns as the Authority may prescribe in Rules made underthis section; and for purposes of this subsection, “relevant day” means such day as may bespecified in Rules.

Every undertaking that fails to file a return within the time specified insubsection (2) shall be liable to a civil penalty not exceeding $5,000 for each week or partof a week that it is in default.

Sections 6, 7 and 8 of the Statutory Instruments Act 1977 shall not apply toRules made under this section.

(2)

(3)

68 (1)

(2)

(a)

(b)

(c)

(3)

(a)

(b)

(4)

69 (1)

(2)

(3)

(4)

43


TransitionalThis section applies to an undertaking which on the commencement of this Act

is a licensed undertaking carrying on money service business under a licence issued by theAuthority under the Money Service Business Regulations 2007 made under section 20AAof the Bermuda Monetary Authority Act 1969.

On the commencement of this Act, the Authority shall issue to an undertakingto which this section applies, a money service business licence, and thereupon theprovisions of this Act shall apply to the licensed undertaking as if such licence were issuedpursuant to an application made under section 10.

An undertaking shall not be liable to pay the fee prescribed by virtue of section13(1)(a) on the issue of its licence under subsection (2), but shall be liable to pay the feeprescribed thereby on or before 31 March and annually thereafter, and the provisions ofsection 13(2) shall apply in relation to failure to pay such fee.

Where the undertaking referred to in subsection (1) makes an application fora licence within the one year period from the date of commencement of this Act, it maycontinue to carry on money service business activities without a licence until thatapplication is finally disposed of or withdrawn, and if the application is refused and anappeal is brought against the refusal, until it has been determined or withdrawn.

Consequential amendmentsSchedule 2 has effect with respect to consequential amendments.

CommencementThis Act shall come into operation on such day as the Minister may appoint by

notice published in the Gazette, and the Minister may appoint different days for differentprovisions.

70 (1)

(2)

(3)

(4)

71

72

44


SCHEDULE 1

(Section 11(2))

MINIMUM CRITERIA FOR LICENSING

Controllers and officers to be fit and proper personsEvery person who is, or is to be, a controller or officer of the licensed

undertaking is a fit and proper person to hold the particular position which he holds or isto hold.

In determining whether a person is a fit and proper person to hold anyparticular position, regard shall be had to his probity, to his competence and soundness ofjudgement for fulfilling the responsibilities of that position, to the diligence with which heis fulfilling or likely to fulfil those responsibilities and to whether the interests of clients orpotential clients of the licensed undertaking are, or are likely to be, in any way threatenedby his holding that position.

Without prejudice to the generality of the foregoing provisions, regard may behad to the previous conduct and activities in business or financial matters of the person inquestion and, in particular, to any evidence that he has—

committed an offence involving fraud or other dishonesty, or violence;

contravened any provision made by or under any enactment appearing tothe Authority to be designed for protecting members of the public againstfinancial loss due to dishonesty, incompetence or malpractice by personsconcerned in the provision of banking, insurance, investment or otherfinancial services or the management of companies or against financial lossdue to the conduct of discharged or undischarged bankrupts;

engaged in any business practices appearing to the Authority to bedeceitful or oppressive or otherwise improper (whether lawful or not) orwhich otherwise reflect discredit on his method of conducting business;

engaged in or has been associated with any other business practices orotherwise conducted himself in such a way as to cast doubt on hiscompetence and soundness of judgement.

Business to be conducted in prudent mannerThe licensed undertaking shall conduct or, in the case of an undertaking which

is not yet carrying on money service business, will conduct its business in a prudentmanner.

In determining whether a licensed undertaking is conducting its business in aprudent manner, the Authority shall take into account any failure by the undertaking tocomply with the provisions of—

this Act;

any applicable law, including the provisions of the law pertaining to anti-money laundering and anti-financing of terrorism as provided in the

1 (1)

(2)

(3)

(a)

(b)

(c)

(d)

2 (1)

(2)

(a)

(b)

45


Proceeds of Crime Act 1997, the Anti-Terrorism (Financial and OtherMeasures) Act 2004 and the Proceeds of Crime (Anti-Money Launderingand Anti-Terrorist Financing) Regulations 2008;

codes of practice issued by the Authority pursuant to section 7 of this Act;

international sanctions in effect in Bermuda.

A licensed undertaking shall not be regarded as conducting its business in aprudent manner unless it maintains or, as the case may be, will maintain minimum netassets of $50,000 or such amount as the Authority may direct taking into consideration thenature, size and complexity of the licensed undertaking.

A licensed undertaking shall not be regarded as conducting its business in aprudent manner unless it maintains or, as the case may be, will maintain adequateaccounting and other records of its business and adequate systems of control of its businessand records, and has developed policies and procedures pertaining to its obligations underthis Act or any other Act.

Those records and systems shall not be regarded as adequate unless they aresuch as to enable the business of the licensed undertaking to be prudently managed andthe licensed undertaking to comply with the duties imposed on it by or under this Act orother provisions of law.

A licensed undertaking shall not be regarded as carrying on its business in aprudent manner unless it maintains insurance cover that is appropriate to the nature andscale of its operations.

Subparagraphs (2) to (5) are without prejudice to the generality ofsubparagraph (1).

Integrity and skillThe business of the licensed undertaking is or, in the case of an undertaking which

is not yet carrying on money service business, will be carried on with integrity and theprofessional skills appropriate to the nature and scale of its activities.

Corporate governanceThe licensed undertaking shall implement corporate governance policies and

processes as the Authority considers appropriate given the nature, size, complexity and riskprofile of the licensed company.

Without prejudice to subparagraph (1) the business of the licensed undertakingshall be—

effectively directed by at least two persons; and

under the oversight of such number of non-executive directors appointedas the Authority considers appropriate given the nature, size, complexityand risk profile of the licensed company.

(c)

(d)

(3)

(4)

(5)

(5A)

(6)

3

4 (1)

(2)

(a)

(b)

46


Consolidated supervisionThe position of the licensed undertaking within the structure of any group to which

it may belong shall be such that it will not obstruct the conduct of effective consolidatedsupervision.

[Schedule 1 paragraph 2(5A) inserted by BR 89 / 2019 para. 2 effective 6 August 2019]

5

47


SCHEDULE 2

(Section 71)

CONSEQUENTIAL AMENDMENTS

Amends Bermuda Monetary Authority Act 1969The Bermuda Monetary Authority Act is amended—

by repealing sections 20AA, 20C, 20D and 20E.

in the Third Schedule, by deleting the words “Money Service Business” andsubstituting the words “Undertaking licensed under the Money ServiceBusiness Act 2016”;

in the Fourth Schedule, by deleting the heading “Bermuda MonetaryAuthority Act 1969” and paragraphs (1) and (2) thereunder andsubstituting the following—

“ Money Service Business Act 2016(1) Application fee pursuant to section 10(2)(e) $2,266(2) Grant of a licence to carry on a money

service business pursuant to section 13(1)(a)

$5,150

(3) Annual fee pursuant to section 13(1)(b) $5,150 ”.

Amends Anti-Terrorism (Financial and Other Measures) Act 2004The Anti-Terrorism (Financial and Other Measures) Act 2004 is amended, in section

2 in the definition of “AML/ATF regulated financial institution”, by repealing paragraph (f)and substituting the following—

carries on money service business within the meaning of section2(2) of the Money Service Business Act 2016;”.

“(f)

Amends Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist FinancingSupervision and Enforcement) Act 2008

The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist FinancingSupervision and Enforcement) Act 2008 is amended in section 2(1)—

in the definition of “AML/ATF regulated financial institution”, by repealingparagraph (f) and substituting the following—

carries on money service business within the meaning of section2(2) of the Money Service Business Act 2016;”;

“(f)

in the definition of “regulatory Acts”, by repealing paragraph (g) andsubstituting the following—

1

(a)

(b)

(c)

2

3

(a)

(b)

48


Money Service Business Act 2016; and”.“(g)

Amends Proceeds of Crime Act 1997The Proceeds of Crime Act 1997 is amended, in section 42A in the definition of

“AML/ATF regulated financial institution”, by repealing paragraph (f) and substituting thefollowing—

carries on money service business within the meaning of section2(2) of the Money Service Business Act 2016;”.

“(f)

Revokes Money Service Business Regulations 2007The Money Service Business Regulations 2007 are revoked.

[Assent Date: 21 July 2016]

[Operative Date: 31 January 2017]

[Amended by:2017 : 382018 : 51BR 89 / 2019]

4

5

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