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 are 33 licensed
trust companies in Bermuda currently (2007),
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.
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