Bermuda: Business Environment
Trust management has been a significant activity for Bermuda for more than fifty years. Originally the main sources of trust business were the UK, the USA and Canada, but more recently other parts of the world have become increasingly important, as understanding of the trust concept has spread more widely. Successive tightenings of anti-avoidance legislation in the traditional markets have also tended to reduce volume.
Bermuda has kept up to date with international trust practice, implementing the Hague Convention, and providing for purpose trusts. However the jurisdiction has been cautious about asset protection trusts, and the Bermudan legislation has attempted to draw a sustainable balance between the interest of the settlor and the creditor, rather than going all out for protection like many jurisdictions.
The Trust Companies Act 1991 provided for the regulation and licensing of trust companies, previously only operated by the Bermudan banks, and many professional firms have taken advantage of this legislation. There were 33 licensed trust companies in Bermuda in 2011, some of them operating as exempt companies. Private trust companies have gained currency recently: they don't have to be licensed, and are useful in private trust situations.
Bermuda, like many other offshore jurisdictions, has tightened up its regulatory regime in response to pressure from the OECD and FATF. As part of this, the government passed the Trusts (Regulation of Trust Business) Act 2001.
Much of the Act is based on the recommendations made by the November 2000 KPMG report on financial services regulation in the Overseas Territories, which was commissioned by the UK government.
A Code of Practice under the 2001 Act was passed in 2002; it 'provides guidance as to the duties, requirements, procedures, standards and sound principles to be observed by persons carrying on trust business'. A revised 'Statement of Principles' under the Act was issued in June, 2004.