Notice - Draft Statement of Principles on the Use of Enforcement Powers

Summary

This is a draft Statement of Principles (SoP) issued by the Bermuda Monetary Authority describing how it intends to use its enforcement powers once amendments to the Insurance Act 1978 and other sectoral Acts (Banks and Deposit Companies Act, Investment Business Act, Trusts Act, Investment Funds Act, and a forthcoming Corporate Service Provider Act) take effect. It is a consultation draft, published to help interested parties interpret the proposed legislative amendments before the SoP is formally adopted upon enactment.

• Purpose: Sets out general principles and factors the Authority will consider when deciding whether to take enforcement action and which option to use, applying uniformly across insurance, banking, investment business, trust and fund legislation.
• Process: Describes the escalation path from supervisory departments, to referral to the Enforcement Committee, to possible investigation, decision on enforcement option, and appeal rights to a Tribunal.
• Enforcement options covered: Directions, restrictions and licence conditions; civil penalties (including a per-week late-filing penalty up to $5,000 and a per-breach penalty up to $500,000); injunctions; public censure; objections to controllers; prohibition orders against directors/officers; licence revocation; winding up; and referral to police.
• Publication: Explains criteria the Authority will weigh when deciding whether to publicly disclose an enforcement decision, and requires prior notice to the licensee before any publication.
• Appeals: Lists enforcement actions carrying a right of appeal to a Tribunal, including licence revocation, civil penalties, conditions/restrictions, action against controllers/directors, prohibition orders and public censure.

As a draft consultation document, it does not itself impose binding obligations; it previews the Authority's intended approach once the underlying legislative amendments are enacted and the SoP is formally adopted and posted on the BMA website.

Key obligations

• Once enacted, licensees will be subject to civil penalties of up to $5,000 per week for late lodgment of statutory filings, imposed directly by supervisory departments without referral to the Enforcement Committee.
• Licensees found in material breach of an obligation under the relevant Act may be subject to a civil penalty of up to $500,000 per breach, determined according to factors such as resources, deterrence, impact, compliance history and conduct following the breach.
• Entities subject to enforcement action affecting licence conditions, penalties, censure, prohibition orders or revocation have a right of appeal to the relevant sector-specific Tribunal, to be exercised in accordance with tribunal regulations.
• Licensees or individuals wishing to propose an alternative resolution to proposed enforcement action must submit such proposals before the Enforcement Committee makes its decision, as the Committee cannot revisit a decision once made.

Applies to

insurers/insurance licensees, banks and deposit companies, investment business licensees, trust companies (trust business licensees), investment funds, corporate service providers (once the new Act is enacted)