Bermuda

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Combined Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The BMA collects information on “ultimate beneficial owners” of relevant legal entities in many instances as part of its role as exchange controller. However, this information may not always mirror the definition of beneficial owner under the international standard and may not identify a natural person who exercises ultimate effective control over the legal entity. Moreover, beneficial ownership information, as defined under the standard, is required to be collected by AML obligated persons, such as financial institutions, lawyers, accountants, trust companies and licensed corporate service providers, as part of their customer due diligence obligations. However, there is no legal requirement for companies and partnerships to engage an AML-obligated person in Bermuda, although in practice most of them are likely do so.    
In respect of exempted (non-licensed) trustees, such as private trust companies, the statutory requirements to identify beneficiaries appear to be limited to the immediate beneficiaries. Also, there are no statutory requirements to identify a protector of the trust (if any) and any other natural person exercising ultimate effective control over the trust.   Bermuda should take all reasonable measures to ensure that beneficial ownership information is available to their competent authorities in respect of trusts governed by the laws of Bermuda or in respect of which a trustee is resident in Bermuda. 
During the review period, the Registrar did not exercise his monitoring and enforcement powers to support the legal requirements for the availability of ownership and identity information with regard to companies and partnerships. Since then, the Registrar of Companies (Compliance Measures) Act 2017 came into force in March 2017. This Act empowers the Registrar of Companies to monitor and regulate registered entities through inspections and enforcement. The Registrar established a new compliance unit and commenced to exercise its statutory powers. During the review period, the Registrar did not exercise his monitoring and enforcement powers to support the legal requirements for the availability of ownership and identity information with regard to companies and partnerships. Since then, the Registrar of Companies (Compliance Measures) Act 2017 came into force in March 2017. This Act empowers the Registrar of Companies to monitor and regulate registered entities through inspections and enforcement. The Registrar established a new compliance unit and commenced to exercise its statutory powers.   Bermuda should ensure that all its monitoring and enforcement powers are appropriately exercised in practice to support the legal requirements which ensure the availability of ownership and identity information in all cases. 
Bermuda has a comprehensive system requiring that information on “ultimate beneficial owners” of relevant legal entities and arrangements be available in the hands of the exchange controller and that beneficial ownership information, as defined under the standard, be available in the hands of AML obligated persons. However, (i) there is limited oversight and enforcement of the compliance with the obligations to update “ultimate beneficial ownership” information pursuant to the exchange control regulations; and (ii) the supervision of CSPs’ compliance with their customer due diligence obligations and identify the beneficial owner under the AML framework is yet to be implemented.  Bermuda should enhance the monitoring and enforcement of the compliance with the obligations to update beneficial ownership information. This includes establishing adequate oversight of corporate service providers and ensure that they perform adequate customer due diligence and maintain beneficial ownership information of their customers in practice. 
Phase 2 Rating Factors Recommendations
Partially Compliant.     
   
   
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.   Except for those entities that are subject to licensing with the BMA, no system of monitoring of compliance with accounting record keeping requirements was in place during the review period, which may cause the legal obligations to keep accounting records to be difficult to enforce. Since then, the Registrar of Companies (Compliance Measures) Act 2017 came into force in March 2017. This Act empowers the Registrar of Companies to monitor and regulate registered entities through inspections and enforcement. The Registrar established a new compliance unit and commenced to exercise its statutory powers.   Bermuda should ensure that all its appropriate monitoring and enforcement powers are sufficiently exercised in practice to support the legal requirements which ensure the availability of accounting information in all cases. 
Bermuda’s law in force during the review period provided the court with discretion of determining how long books and records of an involuntarily liquidated company should be maintained following its dissolution and, in practice, the court often determined that such books and records should be destroyed immediately after liquidation. This has prevented Bermuda from replying to one EOI request during the review period. Effective as of 10 March 2017, Bermuda’s law requires that the liquidator maintain records of account for five years from the end of the period to which such records of account relate.  Bermuda should monitor the implementation of the recently introduced record keeping obligations regarding liquidated companies to ensure that records are kept for a minimum period of five years in all cases.  
Phase 2 Rating Factors Recommendations
Largely Compliant.     
   
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.   Banks are required to identify individuals who ultimately own or control a trust as part of their customer due diligence measures. However, they are not required to identify all of the beneficiaries of a trust as only individuals who are entitled to a specified interest in at least 25% of the capital of the trust property must be identified.  Bermuda should ensure that banks are required to identify all of the beneficiaries (or class of beneficiaries) of trusts which have an account with a bank in Bermuda as required under the standard. 
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.   The EOI Acts were amended in July 2015 to expressly annul the information holder’s rights to access an EOI request that would otherwise exist pursuant to the Supreme Court (Records) Act 1955. The amendments have not been sufficiently tested in practice.   Bermuda should monitor that the EOI request is only disclosed in line with the international standard.  
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Compliant.     

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.