Regulatory and compliance updates for Bermuda Q3 2023
Our latest regulatory report for Bermuda will bring you up to speed on relevant regulatory updates and developments that took place during the third quarter of 2023.
We cover updates, which apply to Bermuda, on financial sanctions from the Bermuda Monetary Authority (“BMA”); suggested amendments to the Investment Business Act (“IBA”); proposed enhancements to the regulatory regime and fees for commercial insurers; revised 2024 Bermuda Solvency Capital Requirement models for insurance companies; 2023 requirements for the Bermuda Insurance Code of Conduct (“the Code”); reports, forms, notices, and guidance published by the BMA; a public consultation period for introducing a corporate income tax, which would apply to Bermuda businesses that are part of Multinational Enterprise Groups (“MNE”) by the Government of Bermuda; updates on data protection, and more.
BMA - Financial sanctions updates (International sanctions - BMA):
- Financial sanctions updates have been published by the BMA for: Democratic People's Republic of Korea; Myanmar Regime; Russia and the Russia Regime; Iran (Human Rights) Regime; Syria Regime; Central African Republic; Mali; Sudan; ISIL Daesh and Al-Qaida; Belarus; Mali; and Cyber Sanctions.
- BMA – IBA (Bermuda legislations discussion and consultation papers - BMA):
- Consultation Paper - Proposed amendments for the regulation of investment exchanges and clearing houses and other additional changes to the IBA:
- Further to recent updates to the IBA 2003 to enhance Bermuda’s investment business regulatory framework, the BMA has developed proposals to update the regulation of investment exchanges and clearing houses, primarily through enhancements intended within Part IV of the IBA.
- The BMA also proposes additional minor updates in the IBA, to clarify existing requirements applicable to investment providers.
BMA – Digital assets updates:
- Digital asset business exemption form added (Digital Asset Business - BMA)
Insurance updates, notices, and reminders:
Consultation paper - proposed enhancements to the regulatory regime and fees for commercial insurers, including revised draft rules and guidance notes (Insurance - discussion/consultation papers - BMA):
Revised 2024 BSCR models (published on August 22 2023) - see Insurance - Discussion/Consultation papers - BMA:
- For insurance groups and insurers that have exposure to lapse risk, the BSCR models have been re-released to reflect the revised category proposed in the second release of the consultation paper “Proposed enhancements to the regulatory regime and fees for commercial insurers” (see the link above).
- For insurers that do not have such exposure, they can continue to use the previous BSCR models.
- Insurance groups and insurers that have exposure to credit and surety business will note that the second release of the consultation paper and supporting BSCR models offer two different calculation options for credit and surety catastrophe loss within the man-made catastrophe risk sub-module. Insurance groups and insurers with such exposures are asked to populate both options for their field-testing submissions.
Discussion paper – Disclosure of climate change risks for commercial insurers (see Insurance - Discussion/consultation papers - BMA):
- The revisions to the Code, effective from September 1 2022, brought about detailed enhancements to sections 1 to 7 of the Code and a new section 8 was introduced as part of these revisions (see Insurance - Policy and guidance - BMA).
- Insurers were required to achieve compliance with the revised the Code by the following deadlines:
- For sections 1 to 7 (which pertain to corporate governance, risk management frameworks, governance mechanisms, and outsourcing), compliance is required by September 1, 2023.
- For section 8 (related to the conduct of business), compliance should have been achieved by March 1, 2023.
Reports and guidance published on the BMA website:
- Anti-money laundering and anti-terrorist financing (“AML-ATF”) Ministerial Advisory 2/2023 - Money Laundering and Terrorist Financing – The Minister of Legal Affairs and Constitutional Reform advises the regulated sector and relevant persons of the requirement to apply Enhanced Due Diligence (EDD) for higher risk jurisdictions, based on the FATF statements regarding jurisdictions with strategic deficiencies in their AML/CFT regimes that were published in June 2023 - see High-risk jurisdictions subject to a call for action - June 2023 (fatf-gafi.org) and Jurisdictions under increased monitoring - 23 June 2023 (fatf-gafi.org)/ATF - Policy and guidance - BMA) – The Minister of Legal Affairs and Constitutional Reform advises the regulated sector and relevant persons of the requirement to apply Enhanced Due Diligence for higher risk jurisdictions, based on the Financial Action Task Force (“FATF”) statements regarding jurisdictions with strategic deficiencies in the anti-money laundering and counter financing of terrorism regimes that were published in June 2023 - see High-risk jurisdictions subject to a call for action - June 2023 (fatf-gafi.Org) and Jurisdictions under increased monitoring - 23 June 2023 (fatf-gafi.org)
Regulatory update April - June 2023 (Regulatory updates - BMA):
- Corporate income tax regime proposal for Bermuda (see Bermuda considers introducing a corporate income tax | Government of Bermuda (www.gov.bm):
- The Government of Bermuda announced that it issued a public consultation paper as part of its considerations on introducing a corporate income tax to apply to Bermuda businesses that are part of MNEs with annual revenue of €750M or more to accommodate the Organisation for Economic Co-operation and Development's (“OECD”) Pillar Two tax framework.
- The first of the series of consultation periods began on August 8, 2023, with a deadline of September 8, 2023 (see First-public-consultation.pdf (www.gov.bm) for the first consultation paper).
- The proposed corporate tax would be expected to be effective for 2025.
- For more information visit: forum.gov.bm
Data protection update:
- The Governor of Bermuda provided assent for the Personal Information Protection Amendment Act (see Personal Information Protection Amendment Act 2023 (bermudalaws.bm) on July 18 2023.
- On October 15-20, 2023, the 45th Annual Global Privacy and Data Protection Summit of the Global Privacy Assembly is due to take place in Bermuda.
- BMA - Notices and press releases – see Notices (bma.bm) and News and Press Releases - BMA:
- The BMA and White Rock Bermuda jointly agree to take action to address alleged fraud at Vesttoo
- BMA levies civil penalties on Acadia Life Limited and Acadia Life International Limited
Deadlines for 2023:
- December 31, 2023: Economic Substance Declarations – Bermuda Registrar of Companies.
- December 31,2023: Statement of Compliance (six months after year-end) - BMA