Financial Crime World

Bermuda Monetary Authority: Enhancing Financial Regulatory Framework

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Hamilton, Bermuda - The Bermuda Monetary Authority (BMA) has undergone a comprehensive review of its laws and regulations to strengthen its financial regulatory framework. An international team of experts conducted the review to assess the effectiveness of the BMA’s supervisory powers and identify areas for improvement.

Review Findings

The review found that while the BMA has made significant progress in establishing a robust regulatory framework, there are still some areas that require attention. Specifically, the review highlighted concerns about:

  • The potential impact of the Minister of Finance’s power to provide policy directions and approve the BMA’s budget on its operational independence.
  • The need for a more systematic approach to estimating resource requirements for banking supervision, taking into account the limited number of banks and deposit companies operating in Bermuda.

Recommendations

To address these concerns, the review recommended that:

  • The legislation be reviewed to ensure that the BMA’s autonomy is not compromised.
  • The BMA adopt a more systematic approach to estimating its resource requirements for banking supervision.
  • The BMA strengthen its powers to address compliance with laws and safety and soundness concerns.

Compliments

The review also commended the BMA on its comprehensive framework for licensing and ongoing supervision of persons conducting a deposit-taking business in or from within Bermuda. This framework includes:

  • The Second Schedule
  • Statement of Principles

These provide clear minimum standards that institutions must meet, while allowing for prudential rules to be set administratively.

Key Features

The review noted the following key features of the BDCA (Bermuda Deposit Companies Act):

  • Range of information requirements
  • Powers to obtain information and reports
  • Formal offenses and penalties for breaches and non-compliance
  • Regulatory tools enabling the BMA to intervene when particular concerns may arise

Implementation

In response to the review’s findings, the BMA has committed to implementing several recommendations aimed at enhancing its financial regulatory framework. These include:

  • Reviewing legislation to ensure greater operational independence
  • Adopting a more systematic approach to estimating resource requirements
  • Strengthening powers to address compliance with laws and safety and soundness concerns

Stakeholder Response

The BMA’s commitment to continuous improvement is welcomed by stakeholders in the financial sector, who recognize the importance of having a robust regulatory framework in place to protect depositors’ interests and maintain public confidence in the banking system.