Statement of Principles on the Use of Enforcement Powers (2012-12-13)

Summary

This is a Statement of Principles issued by the Bermuda Monetary Authority in December 2012 explaining how it will use its enforcement powers under the Insurance Act 1978, the Banks and Deposit Companies Act 1999, the Investment Business Act 2003, the Trusts (Regulation of Trust Business) Act 2001, and (by analogy) the Corporate Service Provider Act. It is a policy/guidance document rather than a rule that creates new filing or reporting duties; it sets out the Authority's internal decision-making process and the factors it will weigh when deciding whether, and how, to take enforcement action against a licensee.

• Initial handling: Compliance issues identified through normal supervision will usually first be raised with senior management/the board before any referral to the Enforcement Unit.
• Decision making: The CEO, advised by the Enforcement Unit and an Enforcement Committee, has delegated authority to decide what enforcement action, if any, to take.
• Enforcement options: Directions, restrictions and conditions; civil penalties (up to $5,000 per week for late statutory filings, or up to $500,000 per breach); injunctions; public censure; objections to controllers; prohibition orders against directors/officers; licence revocation; winding up; and referral to the Police.
• Publicity: The Authority may publish details of a Decision Notice, including a summary and any penalty amount, after notifying the licensee, based on deterrence, stakeholder protection and public interest factors.
• Alternate resolution and appeals: Licensees may propose alternative resolutions before a decision is made (not after), and certain enforcement actions (revocation, controller/director actions, prohibition orders, civil penalties, licence conditions, public censure) carry a right of appeal to the relevant Tribunal.

The document does not itself impose new substantive compliance obligations on licensees beyond the pre-existing regulatory Acts; rather it describes how BMA will exercise powers those Acts already grant it, and notes that alternate-resolution proposals must be submitted before a final decision is made.

Key obligations

• Licensees seeking to propose an alternative to enforcement action must submit details of that proposal before the Authority makes its decision, as the Authority cannot revisit a decision once made.
• Licensees are expected to remain fully compliant with their regulatory obligations under the relevant Acts, as non-compliance may trigger the enforcement process described.

Applies to

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