Banks and Deposit Companies Amendment Act 2012 (Bill)

Summary

This is a draft Bill that would amend Bermuda's Banks and Deposit Companies Act 1999 to significantly expand the Bermuda Monetary Authority's enforcement toolkit. It introduces a formal civil penalty regime, public censure powers, prohibition orders against unfit individuals, and a warning notice/decision notice procedure for disciplinary action, alongside expanded investigation powers and a new statutory returns regime.

• Civil penalties: The Authority may impose a civil penalty of up to $500,000 on any person who fails to comply with a requirement or contravenes a prohibition under the Act, unless the person took all reasonable steps and exercised due diligence.
• Public censure: The Authority may publish a statement censuring an institution that has contravened a requirement, following a warning notice and decision notice procedure.
• Prohibition orders: The Authority may make prohibition orders against individuals it considers not fit and proper to perform functions in relation to a regulated activity.
• Notices and appeals: Warning notices and decision notices must be given before penalties, censure or prohibition orders take effect, and affected persons gain new rights of appeal to the Banking Appeal Tribunal.
• Investigations: The Authority's investigation powers are broadened (new section 42A) to cover breaches of any requirement under the Act, fitness and propriety concerns, and former licensed institutions; institutions under investigation must bear the Authority's investigation costs unless directed otherwise, and connected persons (directors, controllers, employees, agents, auditors etc.) may be compelled to produce documents and answer questions.
• Statutory returns: A new section 36A empowers the Authority to make Rules requiring institutions to file prudential and other returns (capital adequacy, liquidity, large exposure, foreign currency, and annual returns of controllers and officers), with a default civil penalty for late filing.

As a Bill, this document is a legislative proposal, not yet enacted law; it would take effect only once passed by the Bermuda legislature, assented to by the Governor, and brought into force by Ministerial notice in the Gazette, which may set different commencement dates for different provisions.

Key obligations

• Institutions must file with the Authority prescribed statutory returns (e.g. capital adequacy, liquidity, large exposure, foreign currency, and annual returns of controllers and officers) not later than 28 days after the relevant day specified in Rules made by the Authority.
• An institution that fails to file a return within the prescribed time is liable to a civil penalty not exceeding $5,000 for each week or part of a week it is in default.
• Any person who fails to comply with a requirement or contravenes a prohibition imposed by or under the Act is liable to a civil penalty not exceeding $500,000, unless they can show they took all reasonable steps and exercised due diligence.
• An institution under investigation must pay the Authority's expenses of and incidental to the investigation unless the Authority otherwise directs.
• Persons connected with an investigation (directors, controllers, senior executives, employees, agents, bankers, accountants, auditors, barristers and attorneys) must produce specified documents, attend before the Authority, answer relevant questions, and take such actions as the Authority may direct.

Applies to

banks, deposit companies, institutions licensed under the Banks and Deposit Companies Act 1999, directors, controllers and senior executives of licensed institutions, persons connected with institutions under investigation

Deadlines

• 28 days after the relevant day: Deadline for institutions to file statutory returns prescribed by the Authority under new section 36A.
• such day as the Minister may appoint by notice in the Gazette: Commencement of the Act (different provisions may commence on different days).

Related documents

• This document amends Banks and Deposit Companies Act 1999
• This document amends Banking Appeal Tribunal Regulations 2001