Enforcement Guide: Statement of Principles & Guidance on the Exercise of Enforcement Powers (September 2018)

Summary

This is the Bermuda Monetary Authority's Enforcement Guide (September 2018), a Statement of Principles required under Bermuda's Regulatory Acts and the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 (SEA). It explains when and how the BMA will use its formal enforcement powers against regulated financial institutions, and replaces the 2010 and 2012 statements of principles, which no longer have effect.

• Purpose: Sets out the principles guiding the Authority's use of enforcement powers and explains the decision making process, from supervisory referral through to enforcement outcomes.
• Triggers for referral to Enforcement: Includes breaches of Minimum Criteria for Registration/Licensing, solvency/liquidity breaches, fitness and propriety concerns, corporate governance failures, AML/ATF non-compliance, failed remediation plans, suspected fraud or financial crime, repeated failures to file statutory returns, unauthorised business, sanctions non-compliance, and insolvency.
• Enforcement options: Covers the range of formal tools available to the Authority (discussed in Part 4), including civil penalties, and describes an appeals process (Part 5).
• Civil penalty framework: Annex A sets out a four step process for determining civil penalties (assessing seriousness, applying a discretionary range table from Minor to Critical, considering ability to pay, and determining the final penalty), with prudential penalties capped at 500,000 dollars and SEA-related penalties capped at 10 million dollars.
• Information exchange and use of revenue: Describes the Authority's cooperation with domestic and international regulators/enforcement bodies and how enforcement revenue is used (Parts 6 and 7).

The Guide does not itself impose new statutory duties beyond existing regulatory requirements, but it clarifies the Authority's expectations that regulated entities remain compliant at all times, cooperate with supervisors and enforcement staff, and remediate identified issues promptly. It took effect from its date of publication and applies generally across all Regulatory Acts and the SEA.

Key obligations

• RFIs are expected to comply with all of their regulatory obligations at all times, including the Minimum Criteria for Registration/Licensing.
• Where remedial action is agreed with supervisors outside of formal enforcement, the RFI is expected to act promptly to implement that remediation within a reasonable time period.
• RFIs must comply with AML/ATF requirements under the SEA and international sanctions obligations, as breaches will be treated as potentially serious and typically referred to Enforcement.
• RFIs should cooperate openly with the Authority during supervisory and enforcement processes, as the degree of cooperation is a factor considered in determining civil penalties.

Applies to

Regulated Financial Institutions (RFIs), banks and deposit companies, insurers, trust companies, investment businesses, investment funds, credit unions, corporate service providers, money service businesses, digital asset businesses, non-licensed AML/ATF regulated financial institutions (NLPs)

Deadlines

• date of publication (September 2018): The Enforcement Guide takes effect from its date of publication.