The Trusts (Regulation of Trust Business) Act 2001 will become effective today, replacing existing legislation dealing with licensing of Bermuda companies carrying on trust business, Minister of Finance Eugene Cox said yesterday.

Mr. Cox said: "The need for this new Act emerged during the review which the Ministry, in conjunction with the Bermuda Monetary Authority, has been carrying out to update all the laws dealing with financial services. Bermuda has prided itself on being a premier international financial service centre which provides effective and efficient regulation. We have stood up well under international scrutiny and this new Act will ensure that we continue to be a jurisdiction which attracts sound businesses which comply with international standards."

The scope of the new Act extends beyond that of the existing legislation as currently only trust companies are required to be licensed.

Under the new Act, any individual or partnership which offers trustee services as a business, profession or vocation must also be licensed. However, the scope of the Act is only intended to capture persons who are in the business of acting as a trustee.

Persons who agree to act purely as trustee, for example, for their family or friend are outside of the scope of the Act since they will not be carrying on business within the meaning of the Trust Business Act.

The Act enables the Minister to issue an order exempting persons or classes of persons from the licensing requirements.

The Ministry is presently reviewing with representatives of the trust industry exemptions which may be considered.

In particular, persons who offer certain services of a private nature will not be required to be licensed. For example, private trust companies which provide services exclusively to a family or a group of companies and do not offer services to the public will not be required to be licensed.

Other exemptions are being considered in cases where there is equivalent regulation offered under another regime such as for trustees approved under the Bermuda Monetary Authority (Collective Investment Schemes Classification) Regulations 1998. Likewise, arrangements whereby a trustee is providing services in conjunction with a licensed trustee may be exempted. These exemptions have been carefully considered to ensure that the general public are protected when they hire persons as professional trustees.

Mr. Cox also emphasised that the Act must provide effective regulation suitable for the special nature of trust work, saying: "Trustees are relied upon by families to manage their most private affairs and there must be the flexibility to allow persons to select their own trustees freely."

Persons who now provide trustee services by way of a business or by profession and who are not exempted have until July 25 to take the necessary steps to come into compliance with the Act.