Consultation Paper - Enhancement of the Enforcement Process (2020-08-14)

Summary

This is a BMA consultation paper proposing changes to how the Authority investigates and disciplines regulated financial and non-financial institutions (RFIs). It responds to the Government's removal of the Appeal Tribunal (appeals will now go to the Supreme Court) and to CFATF feedback that BMA should use its enforcement tools more fully. It sets out a revised enforcement process and invites industry comment; it is not yet in force.

• Case management: A clearer, staged handover from supervision to Enforcement, with a defined three-stage process (disclosure and document verification, case review, Enforcement Committee hearing) so RFIs know when they are formally under enforcement review.
• Settlement procedure: Introduction of a formal settlement process allowing RFIs to acknowledge breaches early in exchange for a graduated discount on civil penalties (the discount percentage is not yet fixed); settlement discussions are without prejudice and available at defined stages up to the first Enforcement Committee meeting.
• Decision making: The Enforcement Committee (senior officers, including the CEO) is formally designated as the decision making body, replacing the CEO's delegated authority; members involved in day to day supervision of the RFI concerned are excluded from deciding that case.
• Appeals: Appeals will be heard by the Supreme Court rather than an Appeal Tribunal; the Authority proposes the Court also have power to remand matters back to BMA with directions to reconsider specific facts.
• Legislative changes flagged: Amendments are contemplated to the Regulatory Acts and the Proceeds of Crime (AML/ATF Supervision and Enforcement) Act 2008 to remove the mandatory Warning Notice requirement where a settlement is reached, and to harmonise appeal rights across sectors.

The paper is a consultation only: no rule changes take effect from this document itself. BMA invited industry feedback on the proposals, and the Statement of Principles and Enforcement Guide (2018) and relevant legislation will be amended later once the revised process is finalised.

Applies to

Regulated Financial Institutions (RFIs) under the Insurance Act 1978, Banks and Deposit Companies Act 1999, Trusts (Regulation of Trust Business) Act 2001, Investment Business Act 2003, Investment Funds Act 2006, Credit Unions Act 2010, Corporate Service Provider Business Act 2012, Money Service Business Act 2016, and Digital Asset Business Act 2018

Deadlines

• 11 September (2020): Deadline for industry stakeholders to submit consultation feedback to Policy@bma.bm