Money Service Business Regulations 2007

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Money Service Business Regulations 2007
MONEY SERVICE BUSINESS REGULATIONS 2007


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BR 4 / 2007

BERMUDA MONETARY AUTHORITY ACT 1969

1969 : 57

MONEY SERVICE BUSINESS REGULATIONS 2007


ARRANGEMENT OF REGULATIONS

1 Citation
2 Interpretation
3 Restriction on carrying on

money service business
without a licence

4 Exemption
5 Application for a licence
6 Grant and refusal of

application for a licence
7 Fees
8 Form, display and

registration of licences
9 Notification of change of

director, senior executive
and controller

10 Statement of compliance

11 Offences
12 Surrender of licence
13 Directions to protect

interests of clients
14 Revocation of licence
15 Notice of direction or

revocation of licence
16 Winding up on petition

from the Authority
17 False documents or

information
18 Offences by companies
19 Transitional

SCHEDULE




The Minister of Finance, in exercise of the power conferred by
section 20AA(2) of the Bermuda Monetary Authority Act 1969, makes the
following Regulations:

Citation
1 These Regulations may be cited as the Money Service Business
Regulations 2007.

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Interpretation
2 In these Regulations —

“controller” has the meaning given in section 7(3) of the
Investment Business Act 2003 as it applies to companies;

“chief executive” means a person who, either alone or jointly with
one or more persons, is responsible under the immediate
authority of the directors for the conduct of the business of
the company;

“licensed company” means a company licensed under regulation
6 to carry on money service business;

“minimum criteria” means the minimum criteria set out in the
Schedule;

“money service business” has the meaning given in section
20AA(1) of the Bermuda Monetary Authority Act 1969;

“officer” includes a director, secretary or senior executive of the
company by whatever name called;

“senior executive” means a person (other than a chief executive)
who, under the immediate authority of a director or chief
executive of the company ⎯

(a) exercises managerial functions; or

(b) is responsible for maintaining accounts or other records
of the undertaking.

Restriction on carrying on money service business without a licence
3 (1) Except as otherwise provided under these Regulations, a
person shall not carry on, or purport to carry on, money service business
in or from Bermuda unless that person is licensed under regulation 6.

(2) A person not otherwise exempted under regulation 4 who
carries on money service business without being in possession of a
licence is guilty of an offence and liable on summary conviction to a fine
of $50,000.

Exemption
4 These Regulations shall not apply to an institution licensed
under the Banks and Deposit Companies Act 1999.

Application for a licence
5 (1) An application for a licence shall be made to the Authority
in such manner as the Authority may direct and shall be accompanied
with —

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(a) a business plan setting out the nature and scale of the
business which is to be carried on by the applicant;

(b) such other information as the Authority may reasonably
require for the purpose of considering the application;
and

(c) the application fee.

(2) An application may be withdrawn by notice in writing to the
Authority at any time before it has determined the application, but in
any such case no application fee shall be refunded to the applicant.

Grant and refusal of application for a licence
6 (1) Subject to this regulation, the Authority may on an
application duly made in accordance with regulation 5, and after being
provided with all such information as it may reasonably require, grant or
refuse the application for a licence.

(2) The Authority shall not grant an application unless —

(a) the applicant is a company incorporated in Bermuda or
elsewhere; and

(b) it is satisfied that the minimum criteria are fulfilled with
respect to the applicant.

(3) It shall be a condition of every licence issued under these
Regulations that the licensee shall not hold client monies or any other
client assets.

Fees
7 A licensed company shall pay such fees as may be prescribed
under the Bermuda Monetary Authority Act 1969 —

(a) on the grant of the licence; and

(b) on or before 30 April in every year after the year in
which the licence was granted.

Form, display and registration of licences
8 (1) A licence shall be in such form as the Authority may
determine.

(2) A licensed company shall at all times keep the licence on
display in Bermuda at its principal place of business.

(3) The Authority shall publish in the Gazette a notice of every
grant of a licence under these Regulations.

(4) The Authority shall cause to be compiled and maintained a
register containing, in respect of each licence, such particulars as it may
determine.

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Notification of change of director, senior executive and controller
9 (1) A licensed company shall give written notice to the
Authority of the fact that any person has become or has ceased to be a
director, senior executive or controller of the company.

(2) A notice required to be given under paragraph (1) shall be
given within a period of fourteen days after the day on which the
company becomes aware of the relevant facts.

Statement of compliance
10 A licensed company shall, within four months from the end of its
financial year, submit to the Authority —

(a) a statement confirming that it has, with respect to the
preceding financial year, complied with the requirements
of these Regulations; and

(b) (where it has failed to comply with any such requirement
within such period), a statement setting out the
particulars of the breach.

Offences
11 A licensed company that —

(a) holds client monies or other client assets in breach of a
condition of its licence imposed by virtue of regulation
6(3);

(b) fails to display a licence as required by regulation 8(2);

(c) fails to give notice to the Authority of a change in
director, senior executive or controller as required by
regulation 9(1);

(d) fails to give such notice within the period required by
regulation 9(2);

(e) fails to submit a statement as required by regulation
10(a) or (b);

(f) fails to submit such a statement before the end of the
period specified in regulation 10; or

(g) fails to give the particulars required by regulation 10(b);

is guilty of an offence and is liable on summary conviction to a fine of
$30,000.

Surrender of licence
12 (1) A licensed company may surrender its licence by notice in
writing to the Authority.

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(2) A surrender shall take effect on receipt of the notice by the
Authority or, if a later date is specified in the notice, on that date.

(3) A surrender of a licence shall be irrevocable unless it is
expressed to take effect at a later date and before that date the Authority
by notice in writing allows the surrender to be withdrawn.

Directions to protect interests of clients
13 (1) Subject to regulation 15, the Authority may give a licensed
company directions in writing under this regulation.

(2) Directions under this regulation shall be such as appear to
the Authority to be desirable for safeguarding the interests of the
licensed company's clients or potential clients and, without prejudice to
the generality of the foregoing, may in particular —

(a) require the licensed company to take certain steps or to
refrain from adopting or pursuing a particular course of
action;

(b) impose restrictions on the scope of its business in a
particular way;

(c) require the licensed company to remove any of its
controllers or officers.

(3) A direction under paragraph (1) shall be given by notice in
writing and may be varied by a further direction; and a direction may be
revoked by the Authority by a notice in writing to the licensed company
concerned.

Revocation of licence
14 (1) Subject to regulation 15, the Authority may revoke the
licence of a licensed company if the Authority is satisfied that —

(a) any of the minimum criteria is not or has not been
fulfilled, or may not be or may not have been fulfilled, in
respect of the licensed company;

(b) the licensed company has failed to comply with any
provision of these Regulations or is carrying on business
in a manner not authorised by its licence;

(c) the licensed company has failed to comply with any
requirement or contravened any prohibition imposed on
it by a direction under regulation 13;

(d) the Authority has been provided with false, misleading
or inaccurate information by or on behalf of the licensed
company or, in connection with an application for a
licence, by or on behalf of a person who is or is to be an
officer or controller of the licensed company.

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Notice of direction or revocation of licence
15 (1) Where the Authority proposes to give a direction under
regulation 13 or revoke a licence under regulation 14 the Authority shall
give to the licensed company concerned written notice of its intention to
do so.

(2) A notice under paragraph (1) shall state the ground or
grounds on which the Authority intends to act and give particulars of the
company’s rights under paragraph (4).

(3) Where the ground for a proposed revocation is that it
appears to the Authority that the criterion in paragraph 1 of the
minimum criteria is not or has not been fulfilled, or may not be or may
not have been fulfilled, in the case of any person, the Authority shall give
that person a copy of the notice mentioned in paragraph (1), together
with a statement of their rights under paragraph (4).

(4) A licensed company or the person referred to in paragraph
(3), which is given notice under paragraph (1) may make representations
in writing to the Authority within the period of twenty-eight days
beginning with the day on which the notice was given (or such other
longer period as the Authority may allow).

(5) After giving a notice under paragraph (1) and taking into
account any representations made under paragraph (4), the Authority
shall decide whether ⎯

(a) to proceed with the action proposed in the notice; or

(b) to take no further action.

(6) The Authority shall give the company written notice of its
decision and, except where the decision is to take no further action, the
notice shall state the reasons for the decision.

(7) A notice under paragraph (6) shall be given within the
period of twenty-eight days beginning with the day on which the
Authority shall have received from the licensed company representations
pursuant to paragraph (4), or if no such representations have been
received by the Authority, within the period of fifty-six (56) days
beginning with the day on which the notice under paragraph (1) was
given; and if no notice under paragraph (6) is given within that period,
the Authority shall be treated as having at the end of that period given a
notice under that paragraph to the effect that no further action is to be
taken.

(8) The Authority shall publish in the Gazette, in such form as
it thinks fit, notice of every revocation of a licence under these
Regulations.

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Winding up on petition from the Authority
16 (1) The Authority may present a petition to the Supreme Court
for the winding up of a company which ⎯

(a) has been licensed under these Regulations but its
licence has been revoked; or

(b) is carrying on, or has carried on, money service business
in contravention of any provision of these Regulations.

(2) On such a petition, the Court may wind up the company if
it is of the opinion that it is just and equitable that the company be
wound up or the firm dissolved.

(3) Part XIII (Winding Up) of the Companies Act 1981 shall
apply to the winding up of a company under this section.

False documents or information
17 (1) Any person who, for any purposes of these Regulations—

(a) issues a document, or supplies information, which is
false or misleading in a material respect; or

(b) signs a document which is false or misleading in a
material respect; or

(c) takes part in the preparation or issue of a document, or
the supplying of information, which is false in a material
respect,

commits an offence and is liable on summary conviction to a fine of
$50,000 or to imprisonment for two (2) years or to both

(2) It shall be a defence for a person charged with an offence
under paragraph (1) to prove⎯

(a) if an individual, that he had no knowledge of the false or
misleading character of the document or information,
and took every reasonable precaution to ensure its
accuracy; and

(b) if not an individual, that every person acting on its
behalf had no such knowledge, and took every such
reasonable precaution, as aforesaid.

Offences by companies
18 (1) Where an offence under these Regulations committed by a
company is proved to have been committed with the consent or
connivance of, or to be attributable to neglect on the part of, any officer
of the company, or any person who was purporting to act in any such
capacity, they, as well as the company, shall be guilty of that offence and
be liable to be proceeded against and punished accordingly unless such

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person shows that he took all reasonable steps to avoid the commission
of an offence.

(2) Where the affairs of a company are managed by its
members, paragraph (1) shall apply in relation to the acts and defaults of
a member in connection with their functions of management as if they
were a director of the company.

Transitional
19 A company which, on the day of commencement of these
Regulations is carrying on money service business may continue to carry
on such business without a licence under these Regulations ⎯

(a) for a period not exceeding twelve months beginning with
that date; and

(b) if within that period application is made for a licence,
until that application is disposed of or withdrawn.

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SCHEDULE (regulation 6)

MINIMUM CRITERIA FOR LICENSING

Controllers and officers to be fit and proper persons
1. (1) Every person who is, or is to be a controller or officer of the
licensed company is a fit and proper person to hold the particular
position which they hold or are to hold.

(2) In determining whether a person is a fit and proper person
to hold any particular position, regard shall be had to their probity, to
their competence and soundness of judgement for fulfilling the
responsibilities of that position, and to the diligence with which they are
fulfilling or likely to fulfil those responsibilities.

(3) Without prejudice to the generality of the foregoing
provisions, regard may be had to the previous conduct and activities in
business or financial matters of the person in question and, in
particular, to any evidence that they have—

(a) committed any offence involving fraud or other
dishonesty or violence;

(b) contravened any provision made by or under any
enactment appearing to the Authority to be designed for
protecting members of the public against financial loss
due to dishonesty, incompetence or malpractice by
persons concerned in the provision of banking,
insurance, investment or other financial services or the
management of companies or against financial loss due
to the conduct of discharged or undischarged bankrupts;

(c) engaged in any business practices appearing to the
Authority to be deceitful or oppressive or otherwise
improper (whether lawful or not) or which otherwise
reflect discredit on their method of conducting business;

(d) engaged in or has been associated with any other
business practices or otherwise conducted themselves in
such a way as to cast doubt on their competence and
soundness of judgement.

Business to be conducted in prudent manner
2. [1) The licensed company conducts, or, in the case of a
company which is not yet carrying on money service business, will
conduct its business in a prudent manner.

(2) In determining whether a licensed company is conducting
its business in a prudent manner, the Authority shall take into account
any failure by the licensed company to comply with the provisions of
these Regulations and other provisions of law.

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(3) A licensed company shall not be regarded as conducting its
business in a prudent manner unless it maintains or, as the case may
be, will maintain minimum net assets of $50,000.

(4) A licensed company shall not be regarded as conducting its
business in a prudent manner unless it makes or, as the case may be,
will maintain adequate accounting and other records of its business and
adequate systems of control of its business and records.

(5) A licensed company shall not be regarded as conducting its
business in a prudent manner unless it has effected a policy of
insurance to cover risks inherent in the operation of its business of an
amount commensurate with the nature and scale of the company's
operations.

(6) Subparagraphs (2) to (5) are without prejudice to the
generality of subparagraph (1).







Made this 16th day of January, 2007







Minister of Finance

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