Notice - Draft Statement of Principles on the Use of Enforcement Powers (2012-05-10)

Summary

This is a draft Statement of Principles (SoP) published by the Bermuda Monetary Authority explaining how it intends to use its enforcement powers once new powers under amendments to the Insurance Act 1978 (and, prospectively, similar amendments to other regulatory Acts) come into force. It is a consultation/explanatory notice, not yet a final adopted policy, intended to help industry understand the proposed enforcement framework before enactment.

• Scope: Covers enforcement powers under the Insurance Act 1978 and anticipated similar amendments to the Banks and Deposit Companies Act 1999, Investment Business Act 2003, Trusts (Regulation of Trust Business) Act 2001, Investment Funds Act 2006, and the planned Corporate Service Provider Act.
• Process: Describes how supervisory departments identify breaches, refer matters to the Enforcement Committee, and how that Committee decides whether and how to take enforcement action.
• Enforcement options: Lists available tools: directions, restrictions and conditions; civil penalties (up to $5,000 per week for late statutory filings, or up to $500,000 per breach of an obligation); injunctions; public censure; objections to controllers; prohibition orders against directors/officers; licence revocation; winding up; and referral to police.
• Decision factors: Sets out the factors the Authority will weigh in deciding whether to act, which option to choose, and whether to publish an enforcement decision (e.g. gravity, culpability, systemic risk, licensee resources, deterrence, compliance history).
• Appeals: Confirms that revocation, controller/director actions, prohibition orders, civil penalties, licence conditions and public censure carry a right of appeal to a Tribunal, and that Authority decisions remain effective unless a Tribunal orders a stay.

Because this is a draft issued to assist interpretation of pending legislative amendments, it does not itself create binding obligations on licensees; the Authority states the SoP will only be formally adopted and posted on its website upon enactment of the underlying legislation.

Applies to

insurers and insurance licensees under the Insurance Act 1978, banks and deposit companies, investment business licensees, trust companies (licensed under the Trusts (Regulation of Trust Business) Act 2001), investment funds and fund-related licensees, corporate service providers (once the new Corporate Service Provider Act is enacted)