Is Bermuda on a Grey or Black List? The Real Answer

Bermuda's Standing on the Global Grey and Black Lists: A Consolidated SnapshotCopy link to section

Bermuda sits outside every major grey list and black list maintained by the bodies that assess offshore financial centres. It is absent from the EU list of non-cooperative jurisdictions, off the FATF greylist and blacklist, and recognised by the OECD as a non-harmful tax jurisdiction. For a foreign owner, this means a Bermuda entity does not carry list-triggered penalties when dealing with EU counterparties, correspondent banks, or regulated lenders. The current status of Bermuda on the EU list confirms it appears on neither Annex I nor Annex II.

This clean standing was not always the case. Bermuda spent roughly two months on the EU blacklist in 2019 before moving to the greylist and then exiting both lists by February 2020.

This article explains how each list works, what happened during Bermuda's brief 2019 listing, the practical effects a listing would carry, and the compliance events that lie ahead. It is most relevant to foreign business owners and their advisers weighing whether to incorporate in or hold an entity through this jurisdiction.

How Watchlists Work: The EU, FATF and OECD Bodies That Assess BermudaCopy link to section

Three separate frameworks decide whether an offshore centre carries a listing, and each measures something different. The Financial Action Task Force (FATF), founded by the G7 in 1989, sets the global standard for anti-money laundering, counter-terrorist financing, and counter-proliferation financing through its 40 Recommendations.

FATF runs two lists, updated after each of its three annual Plenary sessions in February, June, and October. The greylist names "Jurisdictions Under Increased Monitoring"; the blacklist names "High-Risk Jurisdictions Subject to a Call for Action," for which FATF urges enhanced due diligence and, in serious cases, counter-measures.

Regional bodies carry out the underlying assessments. The Caribbean Financial Action Task Force (CFATF), a FATF-Style Regional Body, conducts mutual evaluations on Bermuda's behalf.

The EU operates a parallel track focused on tax good governance, not money laundering. Its List of Non-Cooperative Jurisdictions for Tax Purposes, established in December 2017, splits assessed jurisdictions into Annex I (the blacklist of non-cooperative jurisdictions) and Annex II (the greylist of cooperative jurisdictions that have committed to further reforms).

EU criteria are built to align with standards developed in OECD forums. These include the Global Forum on transparency and exchange of information, the Forum on Harmful Tax Practices (FHTP), and the Inclusive Framework on BEPS.

The FHTP, created in 1998, reviews preferential regimes to judge whether they could erode the tax base of other countries. Membership of the OECD/G20 BEPS Inclusive Framework, now exceeding 145 jurisdictions, requires each member to adopt the 2015 BEPS package, including the Action 5 minimum standard on harmful tax practices.

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Bermuda and the EU Lists (Annex I Blacklist and Annex II Greylist): Status and HistoryCopy link to section

Bermuda appears on neither Annex I nor Annex II, and has been fully removed from both since February 2020. The October 10, 2025 Council update listed 11 jurisdictions on Annex I; Bermuda was not among them, and it does not feature in Annex II through the latest reviews into early 2026.

The path to that clean status involved several turns. In March 2019, the EU Council added 10 jurisdictions to Annex I, Bermuda included, citing a failure to implement commitments by the agreed 2018 deadline.

The trigger was narrow. Premier David Burt described the cause as a "drafting error" in the economic substance regulations submitted to the EU, and the blacklisting lasted roughly two months.

By May 2019, the Council moved the island from Annex I to Annex II after it implemented its core commitments. A residual concern over collective investment funds kept it on the greylist rather than removing it outright.

In February 2020, ECOFIN removed Bermuda and 15 other jurisdictions from Annex II once satisfied that the final commitment on collective investment vehicles had been delivered. The Ministry of Finance welcomed the conclusion that the island had fulfilled its taxation recommendations.

A second, briefer Annex II episode followed. In February 2022 the Commission proposed re-adding Bermuda under Criterion 2.2 (zero or nominal corporate income tax) based on commitments made to the OECD, alongside 10 other jurisdictions; the island was removed again, confirmed in the July 2022 cycle, after meeting those commitments.

Bermuda's 2019 Greylisting and Swift Delisting: What Happened and WhyCopy link to section

The pressure for economic substance rules began in 2017, when the Council of the EU set up a Code of Conduct Group for business taxation. Following its assessment, the EU published a list of international financial centres required to address substance concerns or face blacklisting.

After months of negotiation, the major offshore centres, Bermuda among them, enacted broadly similar economic substance legislation to meet the EU's 31 December 2018 deadline. The island was nonetheless placed on Annex I on 12 March 2019 because a drafting error in its regulations missed that deadline.

Senior officials responded directly. Premier Burt and Finance Minister Curtis Dickinson met EU Commissioner Pierre Moscovici on 28 March 2019 to resolve the matter.

By May 2019, the Council confirmed that Aruba and Bermuda had implemented their commitments, removing them from Annex I at the next ECOFIN meeting after the March blacklisting. Placement on Annex II reflected one open issue: the EU's concern about the legislative framework for collective investment funds, which Bermuda committed to address by the end of 2019.

The Bermuda Monetary Authority's collective investment vehicle specialists held several discussions with the Commission, pledging an acceptable substance framework for CIVs by year-end. In February 2020, ECOFIN confirmed the reforms had been delivered ahead of schedule and removed the island from Annex II, completing the journey from blacklist to full removal in under 12 months.

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Bermuda Before the FATF: Mutual Evaluation Outcomes and Listing StatusCopy link to section

Bermuda is not on the FATF greylist or blacklist. It stands as a cooperative, non-listed jurisdiction, with no international sanctions in force against it.

The most recent FATF/CFATF Mutual Evaluation assessed the island's AML/CFT measures as at an on-site visit conducted 24 September to 5 October 2018. The published 2020 report rated it positively against FATF Standards.

The numbers were strong. Bermuda was rated Compliant on 28 and Largely Compliant on 11 of the 40 Recommendations, and Highly Effective on 1 and Substantially Effective on 6 of the effectiveness measures.

Finance Minister Dickinson described these results as placing the island "No. 1 for overall technical compliance and No. 7 in effectiveness" among all mutual evaluations conducted globally to that date. An earlier fourth-round evaluation had placed Bermuda in regular follow-up in November 2007, with removal from follow-up in November 2013.

The underlying AML architecture rests on long-standing statutes. The Proceeds of Crime Act 1997 took effect on 19 January 1998 and, together with the Anti-Terrorism (Financial and Other Measures) Act 2004, established the suspicious activity reporting regime, with reports filed to the Financial Intelligence Agency. Supervision of financial institutions sits with the Bermuda Monetary Authority under the Proceeds of Crime (AML and ATF Supervision and Enforcement) Act 2008.

The next material event is the 5th Round Mutual Evaluation, which commences October 2026. Ahead of it, the National Anti-Money Laundering Committee (NAMLC) published a draft Proceeds of Crime Miscellaneous Act 2025 for consultation.

The OECD Verdict: Economic Substance, BEPS and Harmful Tax Practice ReviewsCopy link to section

The OECD FHTP classifies Bermuda as one of 11 "no or only nominal tax jurisdictions" (NTJs). These centres have exchanged information under the NTJ standard since 2021, supplying data on the substance and activities of entities to the tax authorities of parent and beneficial-owner jurisdictions.

The FHTP has identified 12 NTJs with the domestic legal framework needed to meet the substance standard, Bermuda included. The others are Anguilla, the Bahamas, Bahrain, Barbados, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man, Jersey, the Turks and Caicos Islands, and the UAE.

Approval came in two parts. The FHTP signed off on the legislative framework in its June 2019 assessment, recognising the island as a non-harmful tax jurisdiction, and then began annual monitoring in 2021 to test the substance standard in practice; the latest FHTP results were released in February 2026.

These monitoring outcomes feed back into the EU process. FHTP findings shape the Code of Conduct Group's assessments and can influence updates to the EU list of non-cooperative jurisdictions.

The framework continues to evolve. On 31 March 2026, the Economic Substance Amendment Act 2026 and Economic Substance Amendment Regulations 2026 came into force, amending the Economic Substance Act 2018 and its regulations.

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Reasons Cited and Commitments Made: The Action Plans Behind Each ListingCopy link to section

Each listing or near-listing rested on a specific, identifiable cause rather than a broad finding of non-cooperation. The table below sets out the trigger and resolution for each episode.

The economic substance test that underlies these episodes requires in-scope entities to show real activity on the island. An entity must demonstrate that it is managed and directed there, conducts core income-generating activities there, and maintains adequate premises, adequate qualified full-time staff, and adequate operating expenditure locally.

Bermuda enacted this regime alongside the Bahamas, BVI, Cayman Islands, Guernsey, Isle of Man, and Jersey, with the rules effective from 1 January 2019. The EU's 2019 greylisting specifically required Bermuda, the Cayman Islands, and BVI to extend those rules to collective investment funds.

Practical Consequences for a Non-Resident Owner: Banking, Due Diligence and PerceptionCopy link to section

Because the island is off all major lists, the adverse consequences below do not apply to a Bermuda entity today. They describe what a listing would produce and what owners experienced during 2019 and 2020.

A FATF greylisting changes how banks handle every related transaction. Institutions apply enhanced due diligence, requesting detailed source-of-funds documentation, business-rationale explanations, and ultimate beneficial owner disclosures.

Processing also slows and costs more. Manual review queues can add days or weeks to settlement, and correspondent banking access narrows as institutions serving listed countries face de-risking by their own correspondents, sometimes causing cross-border wires to fail.

Listing acts as a standing disincentive. Regulated firms must devote extra resources to clients from listed jurisdictions, which can lead them to terminate certain relationships outright.

Tax-side effects reach multinational groups. Under the EU's Public Country-by-Country Reporting Directive, companies must report per-country data for jurisdictions on Annex I, or on Annex II for two consecutive years, a heavier transparency burden that would bite if the island were re-listed.

Two effects sit outside the EU framework and merit attention. The Netherlands maintains its own domestic blacklist that includes Bermuda as a zero-tax jurisdiction, independently of the EU list, triggering ineligibility for Dutch advance tax rulings and a withholding tax (25.8% at the 2023 rate) on interest and royalties paid to subsidiaries in Dutch-blacklisted jurisdictions.

• Under EU Regulation 2021/557, securitisation special purpose entities may only be established in third countries not on the EU blacklist.

For advisers, the operative point is straightforward. The island's removal from the EU lists and its clean FATF record since 2020 mean EU-regulated counterparties, lenders, and correspondent banks should not apply list-triggered enhanced due diligence on the basis of jurisdiction risk alone.

Staying Off the Lists: Bermuda's Compliance Track Record and Forward OutlookCopy link to section

The island's record points to a pattern of acting ahead of deadlines rather than reacting to penalties. Finance Minister Dickinson framed the February 2020 EU delisting as "a testament to the hard work that goes into maintaining Bermuda's status as a cooperative jurisdiction and a global leader in international tax transparency."

Several reforms keep the framework current. Information has flowed under the OECD NTJ standard since 2021, and the Economic Substance Amendment Act 2026 took effect on 31 March 2026 to maintain alignment with OECD and EU expectations.

Responsibility for the substance regime has also shifted. Recent amendments transferred oversight from the Registrar of Companies to the Corporate Income Tax Agency.

The anti-money laundering side is being refreshed for the next review. A draft Proceeds of Crime Bill 2025 updates the AML/ATF framework in line with revised FATF standards, and proposed 2025 amendments add legislative requirements for identifying and mitigating proliferation financing risks.

The next material compliance event is the 5th Round FATF evaluation commencing October 2026. A poor outcome could trigger CFATF follow-up or, in extreme cases, greylisting, though nothing in the available record suggests an anticipated adverse result.

Existing industry strength reduces the substance burden for some firms. The EU has expressly recognised the substantive nature of insurance and reinsurance, so compliance with existing regulatory requirements can satisfy the economic substance regime for those activities.

ConclusionCopy link to section

A Bermuda entity stands clear of every major grey list and black list, holds a strong FATF assessment, and carries OECD recognition as a non-harmful tax jurisdiction. For a foreign owner, that means no list-driven banking friction or transparency penalty attaches to the jurisdiction itself, provided the entity meets its own substance and reporting obligations. The one item to track is the 5th Round FATF evaluation beginning in October 2026, the next event capable of affecting that standing. The Netherlands' separate domestic blacklist remains a discrete consideration for structures involving Dutch counterparties.

How Expanship Can Help Your Business in BermudaCopy link to section

Expanship advises foreign owners on what list status means in practice, from confirming that a Bermuda entity attracts no EU or FATF list-triggered due diligence to structuring around the Dutch domestic blacklist where Dutch counterparties are involved. The same team handles the wider set of requirements that keep an entity compliant and operational.

• Company formation and structuring for non-resident owners
• Registered agent and registered office services
• Tax registration and filing, including economic substance reporting
• Ongoing compliance management and statutory upkeep
• Accounting and bookkeeping
• Introductions to banking partners

To discuss your structure or compliance position, contact Expanship Bermuda.

Frequently Asked QuestionsCopy link to section