Bermuda
Financial Services
Foreign
banks were not permitted to operate in Bermuda
until 2003, when the government allowed HSBC
to take over the Bank of Bermuda. The Bermuda
Monetary Authority supervises Bermudian banks.
Each bank maintains its own trust company and
the domestic banks operate a joint clearing
system. Although few in number (just three until
very recently), the Bermudian banks have expanded
throughout the world and have subsidiaries in
the major financial centres. They offer a full
range of banking services.
The
early decision of the Bermuda Government to
exclude foreign banks may have owed more to
self-interest than to fear of money-laundering
or the OECD, but it turns out to have been very
successful, leading not only to Bermuda's high
reputation but to the establishment of strong,
local banks, something that has eluded almost
all other IOFCs. The unrestrained growth of
the insurance and mutual fund sectors certainly
doesn't seem to have been curtailed by any lack
of banking variety. Indeed, the variety and
quality of private banking services on offer
has contributed strongly to the development
of international business in and from Bermuda.
Although
there are no foreign banks as such in Bermuda
other than HSBC, a number of financial advisory
and securities firms with foreign involvement
have been established, some in connection with
the Stock Exchange. There has also been considerable
growth in securities trading, much of it based
on the Internet. There are at least two separate
hedge-fund trading operations, both supported
by the Stock Exchange, giving investors 24-hour
a day access to non-US domiciled hedge-funds
on a world-wide basis.
The
Bermudian banks themselves have become involved
in e-commerce payment services in co-operation
with Internet service providers, offering payment-processing
facilities to 3rd-party banks and merchants
world-wide. In addition, an Internet start-up
company is offering secure Digital Certificates
locally and world-wide from Bermuda.
The
Investment Business Act 2003, which came into
force at the end of January, 2004, provides
that any person undertaking investment business
in or from Bermuda must hold a licence from
the Bermuda Monetary Authority (BMA), unless
they qualify for an exemption. The
IBA also prohibits persons from entering into
an investment agreement with an individual in
the course of or in consequence of an unsolicited
call made on that person.
Legislation
in this area was further clarified and enhanced
with the Investment Funds Act 2006.
See
Bermuda
Table of Statutes for legislation affecting
offshore and non-resident business.
