Enforcement Guide - Statement of Principles and Guidance on the Exercise of Enforcement Powers (September 2018)

Summary

This Enforcement Guide sets out the Bermuda Monetary Authority's published Statement of Principles on how it exercises its formal enforcement powers under the Regulatory Acts and the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 (SEA). It explains when enforcement action will be considered, how the enforcement decision-making process works, the range of enforcement options and appeal rights, information exchange with other regulators, and how civil penalties are calculated. It replaces the BMA's 2010 and 2012 statements of principles, which no longer have effect.

• When enforcement is considered: Matters are typically referred from Supervision to Enforcement where there are breaches of Minimum Criteria for Registration/Licensing, solvency/liquidity failures, fitness and propriety issues, governance failures, AML/ATF non-compliance, failed remediation plans, possible fraud, repeated failures to file statutory returns, unauthorised business, sanctions non-compliance, or insolvency.
• Decision-making process: The Chief Enforcement Officer assesses whether there is a prima facie breach, its materiality, and fit with enforcement priorities, and the RFI is typically notified of the referral and outcome, with a Warning and Decision Notice procedure used for formal action.
• Enforcement options and appeals: The Guide describes the range of formal enforcement tools available to the Authority and the process for appealing enforcement decisions.
• Civil penalties: Annex A sets out a four-tier (minor, moderate, major, critical) framework for determining discretionary civil penalties, based on nature of breach, risk of loss, cooperation, reputational risk, risk of financial crime, conduct and remediation, with prudential penalties capped at 500,000 dollars and SEA (AML/ATF) penalties capped at 10 million dollars.
• Publicity and information sharing: The Authority's policy is to publish all enforcement actions, including the RFI's name, absent exceptional reasons, and it may exchange information with national and international regulators and enforcement bodies.

The Guide is a statement of regulatory policy and process rather than a source of new substantive obligations on regulated entities; it applies generally across Bermuda's regulated financial sector, including AML/ATF regulated financial institutions, and took effect from its date of publication (10 September 2018).

Key obligations

• RFIs are expected to act promptly to complete remedial action agreed with supervisors following identification of non-compliance
• RFIs must comply with AML/ATF requirements under the SEA and with international sanctions obligations, as failures in these areas will typically be referred to Enforcement
• RFIs are expected to be compliant with the Minimum Criteria for Registration/Licensing applicable under their Regulatory Act

Applies to

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