Notice - Statement of Principles on the Use of Enforcement Powers

Summary

This Notice sets out the Bermuda Monetary Authority's draft Statement of Principles describing how it will use its enforcement powers. It was originally prepared in connection with proposed amendments to the Insurance Act 1978, but the Authority intends the same Statement of Principles to be adopted under the Banks and Deposit Companies Act 1999, Investment Business Act 2003, Trusts (Regulation of Trust Business) Act 2001, Investment Funds Act 2006, and the new Corporate Service Provider Act. It is a policy document explaining the Authority's internal process and discretionary approach rather than a document that imposes new day to day compliance duties on licensees.

• Initial handling: Breaches identified through normal supervision are first raised with the entity/senior management/board; only if unresolved, or if the breach is grave or wilful, is the matter referred to the Enforcement Committee.
• Core principles: Enforcement powers will be used transparently, proportionately, fairly and consistently, focused on cases of material non-compliance.
• Decision factors: The Enforcement Committee weighs factors such as nature and gravity of the breach, impact, stakeholder interests, compliance history, deterrence, and Bermuda's reputation when deciding whether and how to act.
• Enforcement options: Available tools include directions/conditions/restrictions on a licence, civil penalties, injunctions, public censure, objections to controllers, prohibition orders against directors/officers, licence revocation, winding up, and referral to police.
• Civil penalties: A penalty of up to $5,000 per week may be imposed by supervisory departments directly for late lodgment of statutory filings; a separate penalty of up to $500,000 per breach may be imposed by the Enforcement Committee for breaches of obligations under the relevant Act.
• Publication: The Authority may publish details of enforcement decisions (including penalty amounts) on its website with a press release, after notifying the licensee, having weighed public interest factors.
• Appeals and alternate resolution: Licensees or individuals may appeal certain enforcement actions (e.g. licence revocation, civil penalties, public censure, director prohibition orders) to a Tribunal, and may propose alternative resolutions before the Enforcement Committee reaches its decision.

Because this is presented as a draft/explanatory Statement of Principles tied to legislation that was, at the time, still before Parliament, it primarily describes the Authority's own decision making framework and discretionary powers rather than creating new standalone filing or reporting duties for regulated entities.

Key obligations

• Entities or individuals wishing to propose an alternative resolution to enforcement action must submit the details of that proposal before the Enforcement Committee makes its decision, as the Committee cannot revisit a decision once made.
• Licensees remain expected to be fully compliant with their existing regulatory obligations under the relevant Acts, as failure to do so may trigger referral for enforcement action.

Applies to

insurers, banks and deposit companies, investment business licensees, trust companies, investment funds, corporate service providers