The Banks and Deposit Companies Act 1999 (Act) provides a licensing regime for any person or entity engaging in or wishing to engage in deposit-taking business in or from Bermuda. Section 8 of the Act confers upon the Authority the powers of supervising all institutions it has licensed. Pursuant to section 14 of the Act, the Authority may grant an applicant a banking licence, a deposit company licence or a restricted banking licence.
As a guideline for the ongoing development of the Authority’s regulatory and supervisory frameworks for banks and deposit companies, the Authority refers to the various prudential frameworks issued by the Basel Committee on Banking Supervision (Basel). Along with Basel standards, the Authority works closely with the Ministry of Finance for the continuous evolvement of various pieces of legislation to meet the ever-changing nature of today’s business world. To ensure the highest standards are upheld, the Authority liaises closely with other regulators, both domestically and internationally, to provide the most effective supervision of entities for which the Authority acts as either home or host supervisor.
Supervision of banks and deposit companies involves regular off-site and on-site visits. The Authority assesses each deposit-taking business using a risk evaluation model and, generally, institutions where risks are high or increasing can expect a higher incidence of review.
The Authority’s on-site supervision programme involves conducting routine compliance visits to regulated institutions. The purpose of the on-site visit is to enable the Authority to review compliance with policies and procedures, as well as processes that management has implemented to monitor and control key business risks. On-site supervision involves structured visits to a bank or a deposit company’s offices when, typically, the Authority interviews a range of management and staff and reviews a selection of documentation and files.
The Authority’s policy and guidance framework for banks and deposit companies supervision includes, among other components, final rules around Basel III for Bermuda banks; annual updates on stress testing; corporate governance policy; updated statement of principles; guidance notes and regulation, as outlined in the “Policy & Guidance” section of the Authority’s website.