The Corporate and Trust Service Providers Act, 2015 (“CTSPA”) was proclaimed into law and is slated to be fully implemented by November 1, 2015. Barbados has long been well recognized as a well-regulated Financial Services Centre therefore, the CTSPA codifies and clarifies what is, for the most part, already the existing practice. The CTSPA is in line with international standards and therefore helps to enhance Barbados’ reputation in the international Financial Services arena.
The Act seeks to regulate corporate and trust service providers. The stated purpose of the Act is promoting and maintaining high standards of conduct, ethics and competence in the provision of corporate and trusts services, ensuring that service providers adhere to international standards and international best practices, including procedures and policies to enable them to know and be able to identify, and verify the identity of their clients and exercise due diligence in the provision of corporate and trust services and enable the protection of the interests of specified entities (as defined by the CTSPA), and of service providers.
The CTSPA empowers the Director of International Business (the “Director”) to, among other things, monitor and examine the business of corporate and trust service providers to determine whether they are in compliance with the CTSPA and to receive and investigate complaints made against such service providers and take appropriate action in respect of such complaints.
Fit And Proper Person
All corporate and trust service providers must prove to be fit and proper persons to be licensed and must apply for (pay the requisite fees) and obtain a licence under the Act. A fit and proper person must satisfy the Director that he has the financial standing necessary to carry on the business of providing the service, has a representative resident in Barbados and is not a specified entity. The Director may also require certain documents in order to determine whether an applicant is a fit and proper person and will take into account the applicant’s educational and professional qualifications, membership in any professional association or relevant body, his knowledge of the legal and other professional responsibilities assumed and the procedures used to determine the suitability of potential clients, along with a host of other factors such as whether the applicant has committed any offence involving violence or conducted himself in a deceitful, oppressive or improper manner.
When a firm, society or company applies to be licensed the Director would need to be satisfied that each of the controlling partners, managers, members, directors and officers is a fit and proper person to hold the position he holds or is likely to hold.
It is possible to obtain either, a Corporate Service Provider Licence, a Trust Service Provider Licence, or a Corporate and Trust Service Provider Licence. All licensees must maintain internationally acceptable standards of professional practice.
Any person providing corporate or trust services without the prescribed licence will be guilty of an offence and liable on summary conviction to a fine of $50,000 or 2 years imprisonment or both and, to a further fine of $8,000 per day or part thereof, if the offence continues. The Director is empowered to examine, the books and records of Licensees to ascertain whether they are in compliance with the CTSPA and Anti Money Laundering Legislation.
If the Director becomes aware that a Licensee obtained his license by concealing or misrepresenting facts or contravened the CTSPA or Anti Money laundering Legislation, is charged or convicted with an offence which involves violence or is in some other way carrying on business in an imprudent or unlawful manner, the Director can warn or reprimand the Licensee, give him a directive to take remedial action within a specified time frame, or suspend or revoke his licence.
Corporate Services And Trust Services
Corporate Services is defined as providing these services to the specified entities with the exception of International Trust and Private Trust Companies:
- Acting as agent for the formation, registration or licensing of;
- Providing the services of a registered office or otherwise acting as a person authorised to accept service or correspondence for;
- Filing statutory forms, resolutions, returns and notices on behalf of;
- Acting as, or fulfilling the function of, or arranging for another person to act as or fulfil the function of, an officer, a director or a secretary, alternate, assistant or deputy secretary of or in a similar relationship to;
- Acting as a shareholder or a quota holder of, or providing other services involving the control of the whole of or a substantial part of the assets of.
Trust Services are these same services when provided to International Trusts and Private Trust Companies.
Service Providers Duties
Services Providers are required to:
- Display their licence at their principal office.
- Ensure that all their advertisements fairly and accurately describe their services and are not damaging to Barbados’ good reputation.
- Conduct their business in a manner that is not detrimental to the interest of their clients or the public.
- Have written and executed service agreements with each of their clients addressing how fees are calculated, charged and recovered, the payment of interest on clients’ money, and the conditions of termination of services and refund of fees.
- Keep clients’ monies and assets in a separate and designated client account.
- Avoid conflicts of interest, give written notice to clients should conflicts of interest arise, and unless each client concerned agrees, cease to provide services to ALL the clients concerned.
- Acknowledge record and promptly and thoroughly investigate all complaints received, and record the actions taken.
- Purchase and maintain an insurance policy sufficient to cover the risk of losses in respect of the conduct of their business and generally make adequate arrangements to address disruptions.
- Give the Director written notice at least one month in advance of any change in circumstances such as the departure of a partner, manager, director or officer or a change in the name or address of the business, or ownership of majority shareholding.
- Give the Director written notice if, among other thing, legal action is taken against any partner, manager, member, director, officer or employee or if there is a civil judgment or conviction for any offence which involves the position they hold in the business or any offence involving violence.
- Give the Director written notice with a brief summary of the case, if any criminal proceedings are initiated against any client, director, officer of or ultimate owner of any client or any such person is convicted of an offence.
- Give the Director written notice within one week if a person ceases to be their client.
- Declare annually their gross revenue and assets and provide audited accounts if their gross revenue or assets exceed $1,000,000.
As with every new piece of legislation there are kinks to be smoothed out. As it stands the CTSPA appears to be a bit intrusive. It is unclear how some of the proposed inspections and verification would be carried out and there are increased costs and time factors for service providers to consider. Other requirements such as reporting if criminal proceedings are instituted against a client or a director, officer or ultimate owner of a client, seem almost impossible, yet corporate and trust service providers are used to dealing with challenges and changes, and are prepared as always to maintain the highest standards of conduct, ethics and competence in the provision of their services.
As H. G. Wells said “Adapt or perish, now as ever, is Nature’s inexorable imperative.”