Investment Funds Regulation in Bermuda

Today it is difficult to imagine a global investment industry without one of its key centers - Bermuda.

More than 600 different investment funds are registered and successfully operate in this jurisdiction. But these are only registered funds. In addition to them, there is also an immeasurable number of unregulated investment funds in the Bermuda Islands. Their exact number has not been determined since such funds are not registered with the Bermuda Monetary Authority (BMA) and are primarily limited liability partnerships or closed investment companies.

Is it difficult to establish an investment fund in Bermuda?

The answer to this question is NO. For an investment fund to work fully in Bermuda, it must register in full compliance with the Investment Funds Act (IFA).

Investment funds in Bermuda are usually formed as mutual partnerships or limited liability partnerships. The structure of investment funds depends on a number of factors, including the number of investors.

If the fund is established by less than 20 founders, then it is considered private and must be authorized accordingly in the Office of Monetary Circulation. A characteristic feature of this fund is that it is a closed-end fund, where the offer of participation is limited, and no wide offer is made.

Requirements for establishing an investment fund in Bermuda

It is possible to open a company in Bermuda only after obtaining authorization from the local Registrar and the Office of Monetary Circulation. The latter is the main body responsible for the regulation of investment funds in Bermuda.

Although the two oversight bodies do not govern the creation of a mutual investment fund in Bermuda, if you want to establish such a fund, the first thing you should do is contact the BMA. Obtaining permission to issue shares in Bermuda is carried out only with the consent of the regulator.

Compliance with AML / CFT Rules in Bermuda

The AML / CFT program in Bermuda clearly outlines the requirements for all investment market participants whose purpose is to withstand the risks and prevent illegal activities. Market participants must comply with the requirements for:

• due diligence for clients;
• control of internal operating activities;
• accounting;
• risk assessment and management.

One should keep in mind that risk markets remain volatile, and risk management issues are still among the priorities.

Conclusion

Bermuda as a jurisdiction is very sensitive to changing market needs. Looking ahead, key stakeholders, including the Government of Bermuda, the financial regulator, are working intensively and fruitfully to amend legislation to further attract foreign entrepreneurs who would be interested in setting up an investment fund in Bermuda. It is believed that this position of openness can strengthen Bermuda's reputation as one of the leading island jurisdictions for private equity funds.