Corporate and Trust Service Providers Act,

2015-12

Presented by Stefan Mayers

Principal Legal OfficerInternational Business Division

Ministry of Industry, International Business , Commerce and Small Business Development

July 9, 2015

Anti-Money Laundering Guidelines

This Ministry published new AML Guidelines in conjunction with the Anti-Money Laundering Authority. The new CTSPA allows for this so that the Guidelines now have the full legal weight of the Act behind them.

This will also satisfy CFATF requirements as we prepare for the next round of Mutual Evaluations. After the last Mutual Evaluation there were several holes in our AML regime that urgently needed to be plugged in order to be deemed compliant.

This included record keeping requirements, UBO identification, treatment of PEPS and DNFBPs, including Service Providers.

Failure to comply with the AML Guidelines carries the same penalties provided for under the AMLFT Act, 2011-23.

Corporate and Trust Service Providers Act

Last year the CPC drafted a new Bill which was intended to replace the International Trust and Corporate Service Providers Act, 2011-5 (ICTSPA) (an Act to govern the operation of persons and companies which provide corporate and or Trust services to the International Business sector, proclaimed in Dec 2011).

The Corporate and Trust Service Providers Act, 2015 (CTSPA) was recently Proclaimed into law and will be fully implemented before November 1, 2015.

The CTSPA removes the “International” designation so that it captures providers of Services to Foundations, Private Trust Companies and Regular Barbados Companies which are set up as domestic entities, which initially escaped the purview of the previous Act.

CTSPA cont’dThe core functions of the law remain the same and include;

That all Corporate and Trust Service Providers be licensed and regulated after satisfying specific criteria to determine whether they are fit and proper to be licensed.

That all Corporate and Trust Service Providers operate in an efficient and professional manner towards their clients while minimising risk to the jurisdiction’s reputation.

That all Corporate and Trust Service Providers comply with international standards for record keeping on clients as well as certain reporting requirements as part of their Anti-money laundering and compliance requirements.

CTSPA cont’dThe legislation empowers the regulator to

suspend or revoke a licence for certain breaches as well as provides recourse for an aggrieved party to challenge such punitive action.

The legislation also offers protection of information submitted to the Ministry by applicants and imposes penalties for the unauthorised disclosure of such information.

SPECIFIED ENTITIES AND SERVICES UNDER THE CTSPA 2015-12an international business company;an international society; an international trust ;a foreign sales corporation ;a foundation; a private trust company; andAny entity which either conducts international

business and has obtained permission from the Exchange Control Commission

CORPORATE AND TRUST SERVICES

Services where the Service Provider: acts as agent for the setting up of a specified entity; provides services as a registered office or acts as an agent for

correspondence for the specified entity;prepares by filing, statutory forms, resolutions, returns and

notices for any specified entity;acts as, fulfills the function of or arranges for another to act as

an officer, director, secretary or as a person in a similar capacity for the company;

acts as a shareholder or a quota holder of the specified entity; offers services which involves controlling in whole or part the

assets of a specified entity

Who and what the Act regulatesThe First Schedule lists the types of entities recognised by the Act

and the types of services that qualify as Corporate or Trust services.

Section 1. (1) (g) refers to an unnamed entity that conducts international business and/or has obtained specific permission from the Central Bank to deal in foreign currency. This refers to any regular domestic company that engages primarily in international business outside of the regulatory regime for international business.

Those who provide corporate and trust services, as described under the First Schedule, to these types of domestic companies must also be licensed.

Directors, Officers and SecretariesUnder the First Schedule, fulfilling the function of, or

arranging for another to act as a Director, Officer or Secretary of a specified entity is listed among the corporate services that would require a license.

The IBD has previously stated to stakeholders that it will not require Directors of international companies to be licensed but the IBD reserves the right to request information on proposed Directors.

Directors, Officers and Secretaries cont’dPersons fulfilling one of the aforementioned roles within their

own specified entity (an employee or owner) will not require a licence to do so.

This reflects the current international standard for Corporate Governance and the same provisions were enacted over a decade ago in other international financial centres, such as Malta, the Seychelles, the Isle of Man and the Caymans.

However, a licensed Director regime may exist in the future in relation to Mutual Funds regulated by the FSC, where Directors are held to very exacting international standards due to their fiduciary duties.

Exemptions:Entities already licensed under the Financial Institutions

Act, Cap.324 (FIA) or the International Financial Services Act, Cap. 325 (IFSA) do not need a licence under the CTSPA 2015-12 in order to provide corporate and trust services as described under the First Schedule.

Section 38 of the CTSPA sets out the limitations of this exemption and the powers conferred unto the original regulator (under the FIA or IFSA) by the CTSPA to take disciplinary action against an offending licensee.

Only nominee shareholders who provide this service for profit need a licence.

Exemptions cont’dThose who only provide advice, such as legal, financial and

tax advice, to international clients will not require a licence under the CTSPA unless they also perform any of the services listed in the First Schedule.

This includes the filing of the listed statutory documents and returns on behalf of specified entities, under Section 2 (2) (c).

This includes filings under the Companies Act, Cap.308, the IBC Act, Cap.77, the SRL Act, Cap.318.B, the PTC Act, 2012-22 and the ITA, Cap. 245.

Everyone, including exempted persons, is reminded of their obligations under the Money Laundering and Financing of Terrorism (Prevention and Control) Act, 2011-23.

Exemptions cont’dLawyers or law firms that act as company or

partnership formation agents for specified entities will require a license under the CTSPA.

Lawyers arranging for directors or officers in the context of carrying on the business of the law firm are acting as a Corporate Service Provider and must be licensed. However, simply arranging for a Corporate Service Provider to carry on the activities prescribed in the Act would not require a license under the Act.

Statutory obligations:Sections 11 to 18 impose several obligations on the

Service Provider including;Entering into a written contract with the client;Maintaining separate client accounts;Maintaining a professional relationship with clients;Maintaining professional indemnity insurance;Sections 19-24 impose reporting obligations for material

changes, legal proceedings, clients ending the contract, the winding up of the SP’s business, submitting audited financial statements and retaining client records for at least 6 years.

Draft Forms:The Draft forms create a profile of the applicant

Service Provider and help determine whether they are “fit and proper” to be licensed using the criteria set out in Section 8;

Applicants may apply for any one of 3 types of license offered;

Applicants for a Trust or Corporate and Trust license must demonstrate competence in the area of Trust administration;

Input from the sector will help in completing the forms.

Q & A For further information, please contact:

Mr. Kaeron Venner, Director of International BusinessThe Ministry of International Business

7th Floor, Baobab TowersWarrens, St. Michael

Tel: 625-2225Kaeron_Venner@barbadosbusiness.gov.bb