Late filings could cost banks $10m under BMA proposals
Banks that submit important regulatory filings late could face a penalty of up to $10 million under proposed amendments to banking legislation — a 20-fold increase from the existing maximum penalty of $500,000.
The proposed change appear in a consultation paper published by the Bermuda Monetary Authority, which argues that modernisation of banking rules that have remained largely unchanged for 27 years, is necessary.
The Banks and Deposit Companies Act 1999 forms the backbone of Bermuda’s banking regulatory framework. The BMA said the legislation has undergone only limited updates despite major changes in global banking, technology, risk management and financial services.
The BMA said the updates are designed to ensure that banking rules are “resilient, adaptive and equipped to meet the needs of stakeholders”.
Penalties for late filings are inconsistent under present rules, creating potential for regulatory gaps and unequal accountability among institutions, the paper states.
“Additionally, the $500,000 cap on civil penalties for non-filing breaches is inadequate given the systemic importance and scale of the banking sector,” the BMA states. “To address this, the BMA proposes introducing late fees for statutory returns and for audited financials.”
The paper continues: “Another proposal is to increase the maximum penalty from $500,000 to $10 million for breaches of the Act that are not subject to a late fee to underscore the critical role and systematic importance of banking entities in maintaining a resilient financial system.”
The paper also argues for expanded powers for the BMA to enforce prudential and technical standards set out in guidance rather than legislation. The regulator would also gain greater flexibility to impose, amend or revoke conditions on banking licences.
The consultation also addresses operational resilience and outsourcing risks, reflecting growing concerns internationally about cyberthreats, service disruptions and third-party providers.
New rules would require banks and deposit companies to notify the BMA before outsourcing important business services and to report within 24 hours if key operational resilience thresholds are breached.
The consultation paper also proposes administrative changes aimed at aligning the banking legislation with other laws overseen by the BMA. These include consolidating fee structures payable under two different Acts into a single annual fee.
The changes would also expanding the BMA’s powers to petition for a winding-up order in cases where institutions surrender licences.
Industry and other stakeholders are invited to provide feedback on the proposals by e-mailing their comments to policy@bma.bm by July 3.
• For theconsultation paper, see Related Media
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