BERMUDA Law and Practice Contributed by: Steven Rees Davies, Kyle Masters, Charissa Ball and Alexandra Fox, Carey Olsen
ber of the Financial Action Task Force (FATF) – and has committed to implementing FATF stand - ards and mandates. Bermuda’s AML/ATF legislation and regulations have been subsequently amended in 2015, 2016, 2017 and 2018 following an International Monetary Fund review of Bermuda’s AML/ATF regime in 2007, a Mutual Evaluation Review by CFATF in 2018, and revisions to the FATF Rec - ommendations in 2012 and subsequent years. The amendments to Bermuda’s AML/ATF regime broadened the range of persons subject to these requirements and granted additional powers to the BMA and other supervisory authorities to enforce compliance. 2.16 Reverse Solicitation The DABA applies to any entity incorporated or formed in Bermuda that carries out digital asset business and any entity incorporated or formed outside Bermuda that carries out digital asset business in or from within Bermuda. Addition - ally, the DAIA applies to any undertaking incor - porated or formed in or outside Bermuda that conducts any digital asset issuance in or from within Bermuda. Provided that the relevant digital asset business activities and/or issuance activities are ultimately conducted and provided from outside Bermuda following “reverse solicitation” request, a licence would not be needed for the entity to conduct the relevant digital assets services. 3. Robo-Advisers 3.1 Requirement for Different Business Models Although “robo-advice” or other types of auto - mated advice are not specifically regulated by
the BMA, DABA licensees and digital asset issuers that adopt robo-advice will need to con - sider the regulation of providing “advice” more broadly. Under the IBA, the giving or offering of invest - ment advice to customers or potential custom - ers in respect of “investments” may constitute investment business, which cannot be conduct - ed in or from Bermuda without being licensed or registered under the IBA (subject to any appli - cable designation as a non-registrable person by Bermuda’s Minister of Finance). What con - stitutes an “investment” under the IBA is broad - ly defined, and includes assets ranging from shares and debentures to options and futures, and therefore can capture digital asset deriva - tives. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers The use of robo-advice as a low-cost alternative advice model has been considered by legacy players in the Bermuda market to give locals access to more affordable advice, particularly by the banking and government sectors. Bermuda’s first robo-adviser platform, known as “iInvest” , was set up by Clarien (a regulated financial ser - vices group that includes Clarien Bank Limited). However, the use of robo-advisers in respect of digital assets has not yet been widely adopted by such legacy players. 3.3 Issues Relating to Best Execution of Customer Trades Licensed investment managers need to com - ply (and ensure that any robo-adviser or other technology it adopts complies) with the Code of General Business Conduct and Practice. This code recommends that an investment provid - er does not transact business for a customer on worse terms than it would expect to obtain
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