Abic disappointed EU has grey-listed Bermuda
The Association of Bermuda International Companies (Abic) has expressed its concern that Bermuda will remain on a European Union grey list until October despite having done what was needed to satisfy the OECD’s Forum for Harmful Tax Practices (FHTP).
Abic was one of several organisations apparently surprised by the EU decision, considering Bermuda’s contribution to the EU and support of the initiatives of the EU Code of Conduct group.
Richard Winchell, Abic executive director, said: “We are very disappointed to see that the EU Code of Conduct group has placed Bermuda on Annex II.
“Bermuda is an internationally preferred domicile, our companies meet and exceed economic substance measures, we are a world leader in AML/ATF scoring and we are committed to transparency.
“We understand that the OECD FHTP Forum will, during their next meeting in April, review Bermuda’s progress with a view to removing the recommendation pertaining to the exchange of information.
“It is then anticipated that Bermuda’s commitment to address the recommendation will be removed from Annex II during the next EU Council meeting scheduled for October.“
Abic was just one of the local business groups commenting today on the surprise development.
Martin Laframboise, executive director, Bermuda International Long-Term Insurers and Reinsurers (Biltir), said: “Bermuda’s life sector has experienced healthy growth in recent years, thanks to the island’s strong regulatory environment that protect our cedants and policyholders.
“Bermuda has been globally recognised as a premier financial jurisdiction, evidenced by its full Solvency II equivalency since 2016, National Association of Insurance Commissioners (NAIC) Qualified Jurisdiction status since 2015, and NAIC Reciprocal Jurisdiction status since 2019.
“Bermuda has been consistently recognised for its transparency and adherence to global tax reporting, AML/ATF, and economic substance compliance requirements.
“Biltir fully supports the actions of the Bermuda Government in addressing the FHTP recommendations. We anticipate a positive response from the FHTP, as Bermuda continues to co-operate with the Code of Conduct Group and comply with the EU’s tax governance criteria.”
John Huff, CEO of Association of Bermuda Insurers and Reinsurers (Abir), said: “Bermuda’s leading insurers and reinsurers support the priority of people and processes to fulfil international commitments on governance and transparency and anticipate international recognition of Bermuda’s progress.
“As the initial Bermuda group encouraging an economic substance regime, Abir members appreciate Bermuda’s rich tradition of leading on international standards and the benefits to the Bermuda economy of the elimination of less than compliant entities.
“Abir members have led the Bermuda economy with $8.5 billion of economic substance contribution in the last decade driven by salaries, services and physical presence on island and look forward to full economic substance implementation to further support the local economy.”
Following the decision by the Code of Conduct Group to include Bermuda on its grey list, one step removed from the black list, the Bermuda Business Development Agency (BDA) was facilitating the reaction from various business groups.
The BDA noted that Bermuda is committed to co-operation and compliance in relation to global tax standards.
The association said: “Although inclusion on Annex II (the grey list) has no penalty consequences, nor does it trigger any EU measures unlike Annex I (the black list), the BDA looks forward to being removed at the next meeting.”
The BDA acknowledged that Bermuda fulfilled all the commitments related to the required exchanges of information recommended by the OECD FHTP and looked forward an April recommendation that would have Bermuda reinstated to the white list by October.
David Hart, BDA CEO, said, “Bermuda prides itself on being a blue-chip financial services jurisdiction, particularly around global (re)insurance, and is committed to co-operation and compliance in global tax standards.
“According to the Bermuda Monetary Authority’s (BMA) 2020 Annual Report, Bermuda’s (re)insurance market was home to more than 1,100 (re)insurers writing gross premiums of roughly $197.5 billion and holding capital and surplus of roughly $313.5 billion.
“As a result, Bermuda is an active contributor to the EU, and is a global leader in regulation and technical compliance.”
“According to commercial market claims data collected in June 2021 by the BMA, Bermuda (re)insurers paid out $29.3 billion to EU policyholders and cedants for property and casualty losses and life insurance claims during the five-year period from 2016 to 2020.
“In addition, a 2017 survey by the BMA showed that during the 20-year period from 1997 to 2016, Bermuda (re)insurers paid out $35.9 billion to EU policyholders and cedants.
“These two surveys, when taken together, show that Bermuda (re)insurers paid out over $60 billion to EU policyholders and cedants since 1997.
“In November 2015, the European Commission declared the BMA’s commercial (re)insurance regulatory regime to be fully equivalent to the EU’s Solvency II framework — one of only two third countries deemed to be fully equivalent across all three areas of Solvency II.
“In addition, in January 2020, Bermuda was confirmed as a global leader in Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) after our regulatory regime was assessed by the Caribbean Financial Action Task Force (CFATF), and the global inter-governmental Financial Action Task Force (FATF).
“Out of the more than 75 Mutual Evaluation Reviews (MERs) published at that time, Bermuda ranked first against the technical compliance requirements, with 39 of the 40 FATF Recommendations rated as compliant or largely compliant; was in the top six for overall level of effectiveness; and was one of only two jurisdictions with a high level of effectiveness in relation to its risk assessment and domestic coordination mechanisms.”