A recent amendment to charities legislation in Bermuda has enhanced the island's anti-money laundering and anti-terrorist financing (AML/ATF) protections.
The Charities Amendment Act 2018 (Amendment Act), which received Royal Assent and became operative on August 10, amends the Charities Act 2014 (Charities Act) to bring certain charities that are privately funded within the scope of the Charities Act, thereby enhancing Bermuda's AML/ATF legislative framework for charities that are privately funded.
Previously, the Charities Act did not address the requirements for privately funded charities. However, the Amendment Act now ensures that Bermuda's legislation governing charities complies with international AML/ATF standards.
The Amendment Act introduces a definition for a "charity that is privately funded". This is "a charity that does not solicit funds from the Bermuda public, does not receive funding from the Bermuda Government or from Bermuda public sources". Previously, only charities that intended to solicit funds from the public were required to apply to be registered as a Bermuda charity. Now, any Bermuda charity that intends to be privately funded must notify the Registrar-General of its establishment and, depending on the charity's structure, apply to be registered as a public or private Bermuda charity.
A new section 17A has been inserted into the Charities Act. This provides that when a privately funded charity is established, the charity trustees have one month, to (a) notify the Registrar of the establishment of the charity and (b) provide the name of the charity, its date of establishment and explain whether the charity trustees believe that the charity is an exempted charity. If the charity trustees believe that the charity is exempt (in accordance with the new section 18(4) of the Charities Act) they will need to (i) specify the condition by which the charity qualifies for an exemption from registration and (ii) supply the Registrar with the required documentation and information confirming compliance with that condition.
The Amendment Act clarifies the conditions that a charity must fulfil to be exempt from the requirements to be registered as a charity. A charity that is privately funded will either need to (a) in the case of a trust, have at least one trustee licenced under the Trusts (Regulation of Trust Business) Act 2001 or (b) in the case of a company or other legal person, have a registered office with and be subject to compliance by a person licenced under the Corporate Service Provider Business Act 2012, with regard to applicable laws, regulations or other requirements.
Licenced trust companies and corporate service providers already comply with Bermuda's AML/ATF regulations and therefore have the knowledge and resources to ensure that the privately funded charity complies with those regulations as well.
Existing charities that are privately funded and are no longer exempt from registration, have three months from the commencement date to apply to the Registrar to be registered as a Bermuda charity. Existing privately funded charities that believe they possess the conditions to be exempt from the requirements to be registered, have one month from the date of commencement to write to the Registrar setting out the reasons upon which they should be, or continue to be, exempt from the registration requirements.
Understandably, many charities that are privately funded (together with their trustees, settlors and donors) are concerned with confidentiality and privacy often for security and other reasons. It is important to note that the Amendment Act requires the Registrar to keep a separate part in the charities register for charities that are privately funded that will not be available for public inspection. Currently, the public has the right to inspect the register of charities, together with each registered charity's statement of accounts and annual reports. Section 21(1)(a) of the Amendment Act provides that: "The following are to be open to public inspection at all reasonable times – (a) the register (including the entries cancelled when entities are removed from the register but not including any entry relating to a charity that is privately funded)."
The Amendment Act also addresses access to information through the Public Access to Information Act 2010. Section 17(A)(3) provides that:
"Notwithstanding any provision of the Public Access to Information Act 2010, no person who—
(a) obtains, receives or otherwise becomes aware of information or documents relating to a charity that is privately funded; or
(b) receives a request under the Public Access to Information Act 2010 for such information or documents, shall disclose the request or such information or documents so requested."
Charity trustees of privately funded Bermuda charities should be aware of the new legislation. Following the commencement of the Amendment Act, charity trustees of existing charities that require registration under the new requirements have three months to comply and those that believe they are exempt have one month to notify the Registrar of such. Assurances have been provided that any details submitted to the Registrar will be maintained in a separate part of the charity register on a confidential and private basis.
Article first published in The Royal Gazette, Legally Speaking, August 2018
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