BMA: financial institutions must be more operationally resilient
The Bermuda Monetary Authority has issued a consultation paper designed to gather feedback on the organisation’s proposed operational resilience standards for financial institutions.
The island’s financial services regulator said these standards are designed to strengthen the sector’s capacity to prevent, adapt and manage, and recover and learn from operational disruptions, whether they arise within the organisation or from third-party service providers engaged by the organisation.
It said the aim is to ensure that critical services for customers can continue operating without delays or interruptions.
The proposed standards are detailed in the Operational Resilience and Outsourcing Code, supported by the Operational Resilience and Outsourcing Guidance Notes, both of which are included in the 51-page consultation paper.
The BMA said it intends to introduce a final version of the Code during 2025 after a 60-day consultation period.
The “relevant entities” to be governed by the Code are wide-ranging.
They include corporate service providers, trust businesses, money service businesses, investment businesses, fund administration provider businesses, banks and deposit companies, digital asset businesses, commercial insurers, IIGB and IILT insurers, insurance managers, insurance brokers, and insurance marketplace providers and agents.
The BMA said: “The primary objective of the Code is to bolster the resilience of [relevant entities] and the broader financial sectors in Bermuda against operational disruptions.
“This objective extends beyond mere recovery from disruptions; it encompasses proactive measures to assist in preventing such disruptions and ensure the continuity of critical business services for customers.
“REs are expected to implement robust systems and processes that can withstand operational shocks, thereby maintaining the stability and integrity of their services.
“This not only aids in safeguarding the individual REs but also contributes to the overall resilience of Bermuda’s financial services sector.”
Impacted financial institutions will be given a transitional period before being required to adhere to the Code’s requirements.
Most relevant entities will be required to adhere by March 31, 2028.
However, relevant entities licensed under the Banks and Deposit Companies Act will be required to adhere to the requirements by March 31, 2026.
The BMA said: “The variation in transitional periods is based on the critical role the local banking industry plays in the overall financial sector and its extensive customer base, both retail and commercial.
“It is important to note that any existing legislation or guidance will remain applicable until the Code becomes effective.”
• Industry and other stakeholders are invited to provide feedback on the proposals outlined in the paper and its attachments by e-mailing their comments to policy@bma.bm by the close of business on March 14.
• For the full paper, see Related Media
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