Financial Crime World

BERMUDA: Banking Regulations Compliance

Key Changes in CRS Regulations: What You Need to Know

The Bermuda Government has issued the highly anticipated Common Reporting Standard (CRS) Regulations, setting out the CRS obligations that Bermuda Reporting Financial Institutions must comply with. This bulletin highlights key changes that Bermuda Reporting Financial Institutions should take note of, as well as provides reminders of existing obligations and outlines the next steps for Bermuda Reporting Financial Institutions.

Key Changes

  • Notification: Bermuda Reporting Financial Institutions will have to notify the Ministry of their status as a reporting entity by 14 July, 2017, including the submission of contact details of a principal point of contact for CRS purposes.
  • Written policies and procedures: Bermuda Reporting Financial Institutions must establish, implement and comply with written policies and procedures to cover all of their obligations under the CRS. This requirement remains even if the CRS compliance or reporting role has been delegated to a third-party service provider.
  • Maintenance of Records: The TIEA Act includes a requirement for Reporting Financial Institutions to collect, keep and maintain information and records relating to steps undertaken in the performance of their CRS procedures.

Excluded Accounts

  • Dormant Accounts: The CRS Regulations contain new provisions which state that dormant depository accounts are excluded accounts if they meet certain criteria. These include:
    • Where the account has a balance of less than $1,000,
    • Is treated as dormant under the Reporting Financial Institution’s typical operating procedures,
    • The account holder has not initiated a transaction for the previous three years and
    • Has not communicated with the Reporting Financial Institution for the previous six years.

UK FATCA/CDOT

  • Reporting on Electronic Reporting Portal: The CRS Regulations include a provision to allow UK FATCA/CDOT reporting on the Electronic Reporting Portal.
  • Exchange of Information with the UK: The Ministry of Finance will exchange information received on UK persons with the UK this year, easing the administrative burden on Bermuda Reporting Financial Institutions during this transitional year.

Offences and Penalties

  • Anti-Avoidance Measures: The TIEA Act updates and CRS Regulations introduce anti-avoidance measures, various offences and penalties, including for contravention of the CRS regulations.

Next Steps for Bermuda Reporting Financial Institutions

  1. Become familiar with Regulations and Guidance: All Bermuda Reporting Financial Institutions should ensure that they are familiar with the CRS Regulations and Guidance.
  2. Ensure written policies and procedures are in place: Bermuda Reporting Financial Institutions should have in place (or put in place as soon as possible) adequate written CRS policies and procedures and ensure their on-boarding procedures are CRS compliant.
  3. Review third-party contracts: If Bermuda Reporting Financial Institutions are delegating their CRS due diligence obligations, they should ensure that the relevant service agreement sufficiently states the scope of services and provides for liability for failure to comply with CRS obligations.
  4. Notify/Register on the Electronic Reporting Portal: Bermuda Reporting Financial Institutions should register with the Ministry of Finance via the Electronic Reporting Portal once registration becomes available this summer as the deadline for registration or notification is 14 July, 2017.
  5. File CRS reports or nil returns (if applicable): The first CRS reporting by Bermuda Reporting Financial Institutions is due by 30 August, 2017 and the Ministry of Finance is expected to be exchanging information with its CRS partner jurisdictions by the end of September 2017. In subsequent years, the annual CRS reporting deadline for Bermuda Reporting Financial Institutions will be 31 May.
  6. Complete due diligence on pre-existing entity and low-value individual accounts: Bermuda Reporting Financial Institutions should complete due diligence on relevant pre-existing entity and low-value ($1,000,000 or less) individual accounts by 31 December, 2017.

If you are uncertain about any of your obligations under the CRS, it is recommended that you speak with your tax and legal advisors.