Exchange Control Regulations Enforcement Guide 2023

Summary

This is guidance issued by the Bermuda Monetary Authority (acting as Controller of Foreign Exchange) explaining how it will exercise its formal enforcement powers under Regulation 49B(5) of the Exchange Control Regulations 1973. It sets out the principles, decision-making process, notice procedures and civil penalty methodology the Authority follows when responding to non-compliance by persons making filings under the ECR (referred to as Filers).

• Scope: Applies to any 'Filer' - an individual, company, partnership or similar entity required to submit notifications or filings under the Exchange Control Regulations 1973.
• Enforcement principles: Enforcement action is risk-based, proportionate, transparent, consistent, and aimed at protecting Bermuda's foreign exchange reserves and reputation, preventing unauthorised activity, fraud, money laundering and financial crime.
• Referral process: Breaches of Part IV of the ECR are automatically referred to the Enforcement Team; other potentially serious matters are referred at the Controller's discretion, with the Enforcement Team then assessing the breach and deciding whether to escalate.
• Notice procedure: Most enforcement actions (especially civil penalties) require a warning notice giving the Filer an opportunity to make written representations, followed by a decision notice; a right of appeal exists.
• Enforcement options: The Authority may impose directions, impose a civil penalty, or refer matters involving criminal conduct to the Bermuda Police Service.
• Civil penalty methodology: Annex A sets out a structured process (starting point, aggravating/mitigating factors, ability to pay) for calculating civil penalties, with discretionary ranges per breach: up to 6,000 dollars (minor), 6,000 to 15,000 dollars (moderate), and 15,000 to 25,000 dollars (major), subject to a 25,000 dollar statutory maximum per breach.

The guide took effect from its date of publication in June 2023 and applies generally whenever the Authority considers enforcement action under the ECR, though it does not apply where an ECR provision addresses matters other than enforcement.

Key obligations

• Filers must comply with all ongoing ECR filing and notification obligations even while an enforcement referral or investigation is in progress.
• Filers must take prompt remedial action to address compliance concerns raised by the Controller or Enforcement Team within a reasonable time.
• Filers must produce information and documents reasonably required by the Authority under its formal information-gathering powers; failure to do so without reasonable excuse is a criminal offence.
• Filers or individuals who receive a warning notice must make any written representations, with reasons and supporting information, within the specified period (not less than 28 days under the ECR, unless extended by agreement).

Applies to

Filers (individuals, companies, partnerships and similar entities submitting required notifications or filings under the Exchange Control Regulations 1973)

Deadlines

• not less than 28 days: Minimum period given to a Filer or individual to make written representations after receiving a warning notice under the ECR (extendable by agreement).
• date of publication (June 2023): The ECR Guide takes effect from its date of publication.