On 12 November 2019 the Bermuda Monetary Authority (BMA) released a notice (Notice) in response to an increase in enquires in respect of licencing to re/insure cannabis related risk and the recent legalization of cannabis in Canada. The Notice outlines the BMA's favourable view towards such licencing.
In the Notice, the BMA confirmed that it will not object to BMA-supervised entities conducting cannabis business with a licenced cannabis cultivator, processor or seller, so long as the conduct of the cannabis business is legal at all levels within the country in which it is operated. The Notice stresses that it is the BMA-supervised licenced entity's responsibility to understand the application of foreign laws and be in compliance therewith.
In the conduct of its business, the BMA-supervised licenced entity must continue to adhere to Bermuda's legal and regulatory requirements, including in respect of anti-money laundering and anti-terrorism financing, including performing risk assessments of clients, fulfilment of the obligation to file Suspicious Activity Reports to the Financial Intelligence Agency and completion of source of funds enquiries. In the Notice, the BMA confirms its requirement that source of funds enquiries are sufficient to establish that funds derive from activities that do not predate the legalization of the cannabis related activities.
Obtaining adequate insurance remains problematic for those conducting business in the cannabis sector, with many insurers remaining reluctant to insure cannabis related risk, it is therefore an industry that can benefit from captive insurance. Bermuda is the leading domicile for captives globally. As of December 2018, Bermuda had 711 registered active captives with insurance premiums totalling USD$40 billion. Insuring risk through a captive enables businesses to obtain customized solutions to their risk needs, while centralizing costs and administration.
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