The proposals represent the most substantial overhaul of the BDCA since its enactment 27 years ago, targeting four key objectives: enforceability of standards, implementing operational resilience obligations, introducing late fees and recalibrating civil penalties, and effecting consequential amendments.

Winding-up

The BMA proposes to amend Section 19 of the BDCA to broaden the circumstances in which the BMA may present a petition to the court for the winding-up of a company. Under the proposed new wording, the BMA may petition for winding-up where an institution is operating, or has been operating, in contravention of any provision of the BDCA — removing the current requirement that the licence first be revoked.

Formalisation of prudential and technical standards

The BMA proposes amending Section 36A to expand its rule-making powers beyond statutory returns to include binding prudential and technical standards — standards which currently exist only in non-enforceable guidance notes. The areas covered include:

• Capital adequacy
• Liquidity
• Large exposures
• Annual returns of controllers, directors, and senior executives
• Statutory returns (quarterly, semi-annual, and annual)

Licensees will be permitted to apply for exemptions from, or modifications to, prudential or technical standards, subject to a $1,500 application fee. Separately, licensees may apply for extensions of filing deadlines, subject to application fees ranging between $500 and $1,000 depending on the licence class. Applications for filing deadline extensions must be made not less than five business days before the end of the relevant filing period.

The BMA may impose conditions on any exemption or modification and may subsequently revoke or vary such grant, subject to a notice and representations procedure. The proposals also empower the BMA to take any action necessary to protect the public or clients where the nature, scale, complexity, and risk-profile of the institution warrants, after giving notice and considering representations.

Expanded conditions power

Amendments to Section 14(5A) would extend the BMA's power to impose, vary, or revoke licence conditions across all classes of BDCA licence, rather than being limited to restricted bank licences as at present.

Enhanced licensing criteria

The BMA proposes amending Section 13 of the BDCA to expand the criteria against which licence applications are assessed from ‘nature and scale’ to ‘nature, scale, complexity, and risk-profile’. Corresponding amendments to the Second Schedule will ensure consistent application of these expanded criteria across regulatory assessments.

Material changes in business notification

A new notification regime will require licensees to obtain BMA "no objection" prior to effecting any material change, including:

• Changes to authorised products and services under Section 14(5)(a)
• Outsourcing of important business services or material outsourcing of risk management, compliance or internal audit functions, including appointment or replacement of outsourcing service providers
• Material changes to the most recent business plan submitted to the Authority

The BMA will have a 30-day determination period, which is tolled where further information is requested. A preliminary notice procedure applies where the Authority is minded to object, affording the licensee 28 days to make representations.

Operational resilience reporting

To underpin the BMA's Operational Resilience and Outsourcing Code (effective for BDCA licensees from 1 January 2027), a new Section 35A will require licensees to notify the Authority within 24 hours of becoming aware of a breach of any operational resilience impact tolerance threshold. The Operational Resilience Framework requires licensees to establish at least one impact tolerance for each important business service, with Maximum Tolerable Period of Disruption as the minimum required metric. Further guidance on setting impact tolerances is set out in Part XI of the Operational Resilience and Outsourcing Code. Key definitions, including "outsourcing", "outsourcing provider", "material outsourcing", "important business service" and "operational resilience impact tolerance threshold" are to be incorporated directly into Section 2 of the BDCA.

Penalty recalibration

The proposals introduce a tiered enforcement model:

• Late filings of statutory returns and audited financial statements will attract a fixed late fee of $1,000 per week (or part thereof), replacing civil penalties for administrative non-compliance
• Breaches of prudential or technical standards and failures to report operational resilience tolerance breaches will remain subject to civil penalties
• The civil penalty cap under Section 49A increases from $500,000 to $10,000,000, reflecting the systemic importance of the banking sector
• Late fees may be recovered by the BMA as a civil debt

Consequential amendments

The Banks and Deposit Companies (Fees) Act 1975 is to be repealed with effect from 1 January 2027, with legacy annual fees consolidated under the Bermuda Monetary Authority Act 1969. As part of this consolidation, the annual fee payment date will be aligned with existing BDCA provisions, moving from 31 January to 31 March. Section 24 will also be amended to require Gazette publication, in such form as the BMA may think fit, upon voluntary surrender of a licence.

The proposed amendments bring the BDCA into alignment with other BMA-administered supervisory frameworks and signal a marked shift toward proactive, enforceable regulation of Bermuda's banking sector.

BMA’s consultation paper can be accessed here.