Bermuda: Committed to Transparency and Quality

Bermuda is a jurisdiction committed to sound regulation, high standards of compliance, transparency and international cooperation – and those who think otherwise are mistaken, says Cheryl-Ann Lister, Acting Financial Secretary for the Government of Bermuda.

The reality is that the island’s robust regulation, longstanding beneficial ownership record-keeping and large tax information exchange network mean that Bermuda meets the highest international standards of financial transparency, she added.

Ms Lister said: “We try to ensure that the businesses that come here meet a high standard of integrity and ethics.”

Bermuda has taken numerous steps to ensure that the island is not a place where money – and particularly the proceeds of crime – can be hidden, she added. The island has 41 bilateral Tax Information Exchange Agreements (TIEAs) and more than 125 multilateral treaty partners. “We have had a tax agreement with the United States since the 1980s,” she said. “We exchange information on a regular basis with jurisdictions around the world, as needed, and some of it is done on an automatic basis.”

Bermuda’s track record on “Know Your Customer” records is also impressive. “Unlike many other jurisdictions, Bermuda has had in place for more than 70 years a framework and a register to record the beneficial ownership of companies that wish to come here,” Ms Lister said.

“In fact, we do more than recording. We require the information about the ultimate beneficial owner and then that information is vetted by the Bermuda Monetary Authority (BMA), the financial-services regulator. That aspect is unique, actually.”

As international requirements on beneficial ownership registers evolve, Bermuda will adapt its own framework to ensure it meets the very highest standards, she added. For example, the Bermuda Government has committed to legislation that would make the register accessible to the public by 2023.

Bermuda also has one of the most effective Anti-Money Laundering (AML) and Anti-Terrorist Financing (ATF) regimes in the world. Ms Lister, who chaired the National Anti-Money Laundering Committee from 2008-2021, said the mutual evaluation report published in 2020 by the Caribbean Financial Action Task Force (CFATF) had confirmed the high quality of Bermuda’s AML/ATF systems and framework.

“In terms of technical compliance, Bermuda rated among the highest in the world, found to be either largely or fully compliant with 39 out of 40 FATF recommendations. And on the effectiveness side, we were in the top seven jurisdictions of all the countries that had been evaluated at that point, which was close to 100. So, not only can we say we meet the highest standards, it has also been verified independently.”

Ms Lister stressed that Bermuda has a genuine, thriving international business sector comprising companies with true economic substance – employing staff, occupying office space, buying goods and services locally, and pursuing core activities and decision-making on island – with an economic cluster effect that has attracted expertise and spurred growth over time.

“It has the feel of the City of London in that it’s easier to do business because of the proximity of all the corporate support you need – such as high-calibre lawyers and accountants – and the infrastructure to enable business to be done efficiently,” Ms Lister said. “The Government itself has been very accommodative in trying to ensure that the economic climate is conducive to doing quality business here.”

The best example of that substance is Bermuda’s insurance and reinsurance industry, which has repeatedly proven its value to the world over several decades in paying out tens of billions of dollars in claims that have helped communities recover from natural disasters. A wave of insurance start-ups in 2020, which brought new business models and solutions to cover emerging global risks, illustrated the island’s enduring appeal to risk capital and industry innovators.

Ms Lister, a former Chair and Chief Executive Officer of the BMA, said the island’s regulation, which is robust yet pragmatic, was the major attraction for the industry, as well as the business services infrastructure. “Our high quality of insurance regulation has been recognised by the EU, in terms of Solvency II equivalence. And on the US side, the National Association of Insurance Commissioners has given Bermuda qualified jurisdiction status, which is only applied to regimes deemed to meet the highest standards.”

As Bermuda seeks to attract new investment, the Bermuda Business Development Agency (BDA) plays a key role, working as a strategic partner of the Ministry of Finance, Ms Lister said. “The BDA has been an effective conduit between ourselves and the business community, ensuring that there’s appropriate communication, collaboration and taking on the ideals that we all embrace together to make them a reality in their work with the business community.”

The COVID-19 pandemic tested the island’s resilience, both as a community and an international business centre, but Bermuda has come through the challenge with flying colours on both levels. “Maybe because we’re a small community and we have had to deal in the past with critical incidents or challenging times, we know how to come together and we know how to focus,” Ms Lister said. The Government has constantly adjusted restrictions to meet the evolving situation, while the BMA activated its disaster plan and companies adjusted seamlessly to working virtually.

“Many of the companies were able to move into virtual mode quite easily, because they are used to operating from various jurisdictions and being able to link up. It did not prove to be as challenging as it might have been in many other jurisdictions that were less nimble.”
As Bermuda looks to the future, one of the most significant developments may be an Organisation for Economic Co-operation and Development (OECD)-led overhaul of the global tax system, which could require some multinational companies to pay a global minimum rate of corporate tax. Ms Lister said the island has proactively participated in the tax discussions, as a member of the OECD/G20 inclusive framework on base erosion and profit shifting.

“As we are committed to ensuring we are compliant with international standards, whether it relates to tax or regulatory matters, we try to ensure that we’re able to influence those discussions,” she said. “We have looked at the potential impact that that could have, and we’re still in the process of determining how we would most effectively address that.”

Whatever transpires, Ms Lister is confident Bermuda has a bright future.

“Bermuda has always been resilient,” she said. “We’ve always been innovative and creative. We’ve always tried to find opportunities even through difficult times. Even though this initiative requires us to look at the world through a different lens, I’m sure that we will come up with a construct that will be appropriate for the business community that we serve here.
“Although history is not necessarily a predictor of the future, Bermuda’s history has indicated that we are strong, we’re resilient, we’re fighters, that we do what it takes to make a positive impact. I don’t believe that that spirit has gone anywhere.

“The younger generation has embraced that and they’re looking to build on the strong and robust foundation that has been laid in the past to ensure that we will succeed.

“And we’ll move from strength to strength, both from a business and economic perspective, and we’ll continue to be a strong and vibrant place that attracts quality business.”