Banks and Deposit Companies Code of Conduct (August 2022)

Summary

This Code of Conduct, issued by the Bermuda Monetary Authority under section 8A of the Banks and Deposit Companies Act 1999, sets out conduct-of-business standards for all institutions licensed to carry on deposit-taking business under section 14(5) of the Act. It covers legal compliance, integrity and ethics, conflicts of interest, customer information handling, internal management controls, customer disclosures, and cooperation with regulators. Failure to adhere is not itself an offence but is a factor the Authority considers in assessing whether business is conducted prudently, and persistent non-compliance can lead to formal enforcement action or licence revocation.

• Legal and AML/CFT compliance: Institutions must comply with all applicable laws, including the Proceeds of Crime Act 1997, the Proceeds of Crime (AML/ATF) Regulations 2008 and the Anti-Terrorism (Financial and Other Measures) Act 2004, verify customer identity on an ongoing basis, verify the source of customer funds, and maintain a documented new-customer acceptance policy.
• Governance and controls: Institutions must document conflict-of-interest policies, keep adequate staffing and training records (including AML/ATF training), maintain systems and controls over new products and customer assets, and maintain a documented disaster recovery and business continuity plan tested at least annually.
• Customer treatment and disclosure: Institutions must assess suitability before contracts are signed, disclose fees, rates, penalties and risks in clear language prior to service, remind customers of their responsibilities, provide periodic written statements and closing statements, and notify customers of material changes in a timely manner.
• Advertising and licence disclosure: Advertisements must be clear, fair and not misleading, and institutions must publish their licensed status and licence type on their website and in advertisements and correspondence.
• Regulatory cooperation: Institutions must alert the Authority to material extensions or reductions of business, proposed non-deposit-taking activities, and significant developments such as staffing changes, material insurance claims, criminal proceedings, corporate structure changes, or issues affecting compliance with minimum licensing criteria.

The Code applies proportionately according to each institution's nature, scale and complexity, and is intended to be read alongside the Authority's Statement of Principles and Enforcement Guide.

Key obligations

• Comply with the Proceeds of Crime Act 1997, the Proceeds of Crime (AML/ATF) Regulations 2008 and the Anti-Terrorism (Financial and Other Measures) Act 2004
• Verify the identity of each customer on an ongoing basis and verify the source of customer funds
• Establish a documented policy on new customer acceptance and retain records of declined relationships
• Establish and document policies and procedures to manage or avoid conflicts of interest and keep records of conflicts
• Advise relevant persons in writing upon engagement, and remind them periodically, of privacy obligations regarding customer information
• Keep and preserve required records in Bermuda, accurate and current, and ensure timely accessibility
• Maintain suitable numbers of trained, competent staff with clear responsibilities and provide ongoing training including on AML/ATF and the Code
• Maintain a documented disaster recovery and business continuity plan, tested at least annually, with issues tracked and remediated
• Have policies for review and approval of new products, activities, processes, systems and material changes to existing products
• Assess suitability of products/services against customer circumstances before a contract is signed
• Disclose interest rates, fees, charges, penalties and barriers to switching in writing before providing services
• Provide customers with periodic written statements covering value, composition, transactions, fees and interest earned
• Provide a closing statement when a customer relationship is terminated, unless prohibited by law
• Notify customers within a reasonable time of material changes to products, services, or contractual terms, or of intent to transfer debt to a collection agency
• Ensure advertisements are clear, fair, not misleading, and identifiable as advertisements
• Publish licensed status and licence type on the institution's website and disclose it in advertisements and correspondence
• Alert the Authority to material extension or reduction of business, proposed non-deposit-taking business, and significant developments such as staffing changes, material insurance claims, criminal proceedings, corporate structure changes, or licensing criteria issues

Applies to

institutions licensed to carry on deposit-taking business under section 14(5) of the Banks and Deposit Companies Act 1999 (banks and deposit companies)

Deadlines

• at least annually: Disaster recovery and business continuity plans must be tested at least annually, with results documented and issues remediated

Related documents

• This document is made under Banks and Deposit Companies Act 1999