Notice - Consultation Paper Amendments to the Third Schedule (2022-05-18)

Summary

This is a Bermuda Monetary Authority (BMA) notice summarizing stakeholder feedback on its August 2020 Consultation Paper concerning amendments to the Third Schedule of the Banks and Deposit Companies Act 1999 (BDCA), and setting out the Authority's final policy positions and next steps.

• Customer base expansion: The Third Schedule will be amended to allow restricted banks to provide services to overseas customers and to Bermuda residents and businesses who are unable to access any of the services described under Section 14(5)(a) of the BDCA.
• Guidance to follow: The Authority will issue guidance on what restricted banks may consider when determining that a Bermuda resident or business is unable to access traditional banking services.
• Minimum net assets reduced: Section 7 of the Second Schedule of the BDCA will be amended to reduce the minimum net asset requirement for restricted banks at the time of licensing from $10 million to not less than $5 million.
• Basel III confirmed: Restricted banks will be required to comply with Basel III requirements once such requirements come into effect, confirming the position originally stated in the Consultation Paper.
• Ongoing risk based supervision: The Authority will continue to apply BDCA requirements, including AML/ATF and sanctions obligations, and adjust regulatory requirements as a restricted bank's risk profile evolves.

The notice does not itself enact legislation; it announces that the Authority will proceed with recommending these amendments to the Second and Third Schedules of the BDCA and will publish further guidance in due course.

Key obligations

• Restricted banks will be required to comply with Basel III requirements once such requirements take effect
• Restricted banks may only offer expanded services to Bermuda residents or businesses who can demonstrate they are unable to access services under Section 14(5)(a) of the BDCA, pending forthcoming Authority guidance
• Restricted banks must continue to comply with Bermuda laws, including AML/ATF and sanctions requirements, when serving overseas or expanded customer bases
• Restricted banks must maintain minimum net assets of not less than 5 million dollars at the time a licence is granted, once the Second Schedule amendment takes effect

Applies to

restricted banks, banks licensed under the Banks and Deposit Companies Act 1999