Economic Substance Law Requires Risk, Due Diligence and Oversight Processes
In December 2019 the Bermuda Finance Minister released final Guidance around Bermuda’s Economic Substance (ES) laws. Firms falling within the scope of the ES laws are required to submit their declaration indicating the level on on-island activity no later than six months after their financial year start date.
Many companies are using third-party relationships to supply outsourced compliance, MLRO and risk functions. Before entering into a contract with a third-party service provider, companies should take into account the need for appropriate risk assessment, due diligence, monitoring, and oversight processes. In particular, companies should review all existing and potential outsourcing arrangements (including those with affiliated entities) and ensure that they address the following Governance and Risk needs:
- Ensuring that effective risk management practices are in place
- Assessing how the relationship with a third-party service provider supports the company’s strategic goals
- Managing the relationship on an ongoing basis.
- Having in place sufficient risk management policies, performance monitoring and oversight processes
- Having access to critical information to properly oversee the risks of the outsourcing relationship, including compliance risks
Well-implemented risk assessment programmes are the best way to help your organisation determine how to focus valuable resources. Oyster Consulting can assist you with identifying and ranking the risks associated with the types of business at your firm and will provide recommendations for policy and procedural enhancements to achieve industry best practices for efficiently controlling those risks.
For more information about how Oyster can help your firm, click here or call (441) 541-5036 and one of our associates will be happy to help you.