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Bermuda Monetary Authority

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Bermuda Monetary Authority
Logo
Logo
HeadquartersHamilton, Bermuda
Established20 February 1969 (1969-02-20)
ChairmanDonald Scott
Central bank ofBermuda
CurrencyBermudian dollar
BMD (ISO 4217)
Websitewww.bma.bm

The Bermuda Monetary Authority (the Authority) is the integrated regulator of the financial services sector in Bermuda. It is not a central bank, and does not provide lender of last resort facilities.

A world leading re-insurance hub and a popular offshore jurisdiction, Bermuda is generally considered a mature jurisdiction with robust financial and regulatory environment. However, the regulator faces multiple accusations of corruption and is involved in numerous legal battles.

History

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The Bermuda Monetary Authority (BMA) was created by the Bermuda Monetary Authority Act 1969 and became fully operational in 1970. On 6 February 1970 it issued the first Bermudian dollar, valued at BMD 2.40 to Bermudian £1. British notes and coins that had circulated previously were demonetised in June 1970. In mid-1972 Bermuda adopted the United States dollar as its anchor currency, and the BMA assumed responsibility for exchange control. That role was expanded in 1974. On 22 May 1981 the Bermudian dollar was formally fixed as "equivalent to one dollar in the currency of the United States of America".[1]

The Act was amended in 2019, adding a new statutory objective "to establish and administer an innovation hub to facilitate the development of innovative business in Bermuda" (s. 3(1)(bf)).[2]

Profile

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Bermuda Monetary Authority

Bermuda has no central bank, and the BMA does not provide lender of last resort facilities.[3] Instead, the Authority supervises, regulates and inspects financial institutions operating in or from the jurisdiction. It issues the Bermudian dollar, administers exchange-control transactions, assists other domestic agencies in detecting and preventing financial crime, and advises the Government on banking, monetary and financial matters.[4]

The BMA applies risk-based regulation to Bermuda's banks, trust companies, investment businesses, investment funds, fund administrators, money-service businesses and insurance companies. It also licenses companies and oversees the Bermuda Stock Exchange.[5]

As at 31 December 2023 the Authority employed 273 staff and reported a total comprehensive loss of US $3.53 million for the year.[6]

Central bank

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Although the BMA is not a central bank, it is Bermuda's sole note-issuing authority. In 2024 its vertical BMD 5 banknote won the International Bank Note Society's "Bank Note of the Year Award". The pink note, accented with purple, shows a blue marlin, dolphins, a tuna and the effigy of King Charles II on the obverse, while the reverse features butterflies, native flowers, Horseshoe Bay and a boat passing under Somerset Bridge.[7]

Financial regulator

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In the 1980s, Bermuda began positioning itself as an international insurance centre.[8] By 2022 more than 1,200 captive insurers were registered on the island,[9] and by 2025 the market accounted for roughly 35 percent of global reinsurance capital.[10]

In May 2000, the jurisdiction signalled an "advanced commitment" to OECD tax-transparency standards.[11] Its asset-management sector has grown in parallel: by 2005 hundreds of offshore funds with net assets exceeding US $133 billion were domiciled in Bermuda, rising to US $216.2 billion by 2022.[12]

In October 2022, Bermuda was removed from the EU's tax "grey list" (Annex II of the ECOFIN list of non-cooperative jurisdictions)[13] and placed on the list of fully cooperative jurisdictions.[14] In March 2023, Toby Mason became the BMA's Chief Operating Officer.[15] As of 2019 the Authority had registered 66 fintech companies.[16]

In 2023 Parliament adopted a 15 percent corporate income tax—aligned with the OECD's global minimum-tax initiative—for multinational enterprises with annual revenues of €750 million or more.[8][17][18] Premier David Burt stated that, as of 2023, Bermuda held the world's sixth-highest anti-money laundering rating.[18] International assessments generally describe the jurisdiction's regulatory framework as mature and robust.[19]

Regulation continues to evolve. In April 2025 the BMA proposed stricter prudential standards for corporate service providers. The draft of the new regulation included raising the minimum net assets to $12,000 and $50,000 for CSPs with limited and unlimited licenses. It also introduced new obligations such as to segregate client funds, hold regular reconciliations and undergo annual independent reviews.[20]

Controversy

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Bermuda is widely regarded as a leading offshore jurisdiction.[21] Prior to 2000, the island's corruption levels were described by some commentators as "legendary".[22] One study estimated that of roughly US $450 billion in offshore reserves held by U.S. entities, more than 80 percent were booked through Bermuda.[23]

The Bermuda Monetary Authority itself has been named as a defendant in several lawsuits alleging maladministration or corruption, including actions by Stonebridge Capital Hedge Fund Ltd. and the cryptocurrency exchange Bittrex Global..[24][25]

Newpoint Financial Corp lawsuit

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In December 2022, Delaware-registered Newpoint Financial Corp. filed a US $25 million suit against the BMA, claiming "intentional bad faith" after the Authority refused to approve its purchase of a controlling stake in Citadel, a Bermuda insurer. A BMA letter dated 26 July had asserted that Newpoint was not a "fit and proper" controller and cited multiple compliance failures, all denied by the plaintiff.[26][27]

777 Re collapse

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In 2023 the Bermuda-based reinsurer 777 Re, part of the 777 Partners group, attempted to fund an acquisition of Everton FC with the reinsurer's assets. British football authorities discovered the firm had not filed audited financial statements, an exceptional breach for an insurer. Under scrutiny caused by a public scandal, multiple cases of financial impropriety, including fraud and unpaid bills, were revealed.[28][29] 777 Partners have been sued by multiple organizations for unpaid debts and contract breaches with lawsuits describing their financial practices as a "house of cards"[30][31][32] and a "sprawling fraudulent enterprise".[33][34] The BMA revoked 777 Re's licence in October 2024 [35] and later imposed tighter reporting rules on insurers’ investment portfolios, [36] though critics questioned why the investigation began only after the failed football club bid.[35][36] However, questions were raised why the regulator commenced the investigation only after the football team bid.[29][37]

Custodian Life Limited vs BMA

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The investment bond insurer Custodian Life Limited (CL) came under BMA enforcement in 2021 and was placed in provisional liquidation. Media reports allege that the Authority suspended CL's business despite a history of clean KPMG audits.[38][39] CL sought an independent tribunal but says it received no response for 11 months, delaying completion of the 2021 audit.[40] Joint provisional liquidators appointed by the BMA reportedly billed the owners about US $1 million every six months.[41] Custodian Life has sued the Authority, while a group of policyholders has asked the Ministry of Finance and the Bermuda Ombudsman for an inquiry, arguing that the BMA ignored its statutory duty to protect end clients.[39]

See also

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Sources

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  • Stanton, John (2022). "The currency board monetary system over 100 years in Bermuda (1915-2015)". Journal ofEconomics and Political Economy. 9 (3): 208–221.
  • Elmalki, Fawaz (2005). "Establishing Private Equity Funds in Bermuda". Canadian International Lawyer. 6 (2): 104.
  • Haberly, Daniel (2023). "Corruption, Shell Companies and Financial Secrecy". CSC Working Papers. 16.
  • Hoffman, Taylor Morgan (2001). "The Future of Offshore Tax Havens". Chicago Journal of International Law. 2 (2).

References

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  1. ^ Stanton 2022, p. 209.
  2. ^ "Bermuda Survey" (PDF). The City UK. Retrieved 28 June 2025.
  3. ^ "Banking Laws and Regulations 2025 – Bermuda". Global Legal Insights. 11 March 2025. Retrieved 28 June 2025.
  4. ^ "The Bermuda Monetary Authority". BMA. Retrieved 28 June 2025.
  5. ^ "The Bermuda Monetary Authority Annual Report 2024". Government of Bermuda. 30 May 2025. Retrieved 22 June 2025.
  6. ^ Hall, Duncan (15 July 2024). "BMA reports loss of $3.53m". The Royal Gazette. Retrieved 22 June 2025.
  7. ^ "Bermuda 5-Dollar Note wins 2024 IBNS Bank Note of Year Award". Numismatic News. 15 April 2025. Retrieved 19 June 2025.
  8. ^ a b Araullo, Kenneth (9 October 2024). "Bermuda's 15% corporate tax unlikely to impact re/insurance hub status – S&P". Insurance Business Magazine. Retrieved 19 June 2025.
  9. ^ Stanton 2022, p. 218.
  10. ^ Araullo, Kenneth (11 June 2025). "Bermuda's re/insurance sector not a systemic threat - report". ReInsurance Business. Retrieved 19 June 2025.
  11. ^ Hoffman 2001, p. 514-515.
  12. ^ Elmalki 2005, p. 104.
  13. ^ "Bermuda "white listed" by the European Union". Aima Org. 11 October 2022. Retrieved 19 June 2025.
  14. ^ "Bermuda's 'White List' status confirmed by the EU and applauded by industry". Business Development Agency Bermuda. 18 February 2020. Retrieved 19 June 2025.
  15. ^ Pugh, Alex (13 March 2023). "Toby Mason joins Bermuda Monetary Authority as COO". Fintech Futures. Retrieved 22 June 2025.
  16. ^ "Bermuda allows local fintechs to play in US". Retrieved 19 June 2025.
  17. ^ "Bermuda Parliament passes legislation to enact a 15% corporate income tax". EY Global. 22 December 2023. Retrieved 19 June 2025.
  18. ^ a b "Premier Burt: Incoming OECD tax 'will not' erode Bermuda's domicile appeal". The Insurer. 5 October 2023. Retrieved 19 June 2025.
  19. ^ "The Cook Islands". Captive Insurance Times. Retrieved 22 June 2025.
  20. ^ Shefchik, Claire (29 April 2025). "BMA proposes stricter rules for corporate service providers". Royal Gazette. Retrieved 19 June 2025.
  21. ^ Haberly 2023, p. 3, 8.
  22. ^ Hoffman 2001, p. 514.
  23. ^ Hilton, John (18 March 2025). "Offshore reinsurance: Rising popularity. Rising risk?". Insurance News Net. Retrieved 22 June 2025.
  24. ^ "Stonebridge Capital Hedge Fund Ltd.: Liquidation Notice (Bermuda)". Offshore Alert. 9 May 2025. Retrieved 22 June 2025.
  25. ^ Fox, David. "Bittrex Global sues the BMA". The Royal Gazette. Retrieved 22 June 2025.
  26. ^ Hall, Duncan. "Bermuda Monetary Authority sued for $25 million". Royal Gazette. Retrieved 20 June 2025.
  27. ^ "NEWPOINT FINANCIAL CORP. V. BERMUDA MONETARY AUTHORITY, ET AL., No. 23-3197 (9th Cir. 2025)". United States District Court for the Central District of California. 17 December 2024. Retrieved 20 June 2025.
  28. ^ Slater, Matt. "Fresh questions over Everton takeover with 777 set to lose major source of funding". The NY Times. Retrieved 20 June 2025.
  29. ^ a b Walsh, Mary (23 May 2024). "The 777 Saga". News Items. Retrieved 20 June 2025.
  30. ^ Obra Capital Management LLC v 777 Partners LLC and Steven W. Pasko (New York Supreme Court), Text.
  31. ^ Slater, Matt. "Would-be Everton owners 777 described as 'crumbling house of cards' in lawsuit". The Athletic. Retrieved 15 March 2024.
  32. ^ Dolmetsch, Chris; Tan, Gillian (13 March 2024). "Would-Be Everton Owner 777 Partners Faces Lawsuit Over Asset Transfers". Insurance Journal. Retrieved 15 March 2024.
  33. ^ "The reinsurer under fire over owner's football team bid". www.insurancebusinessmag.com. Retrieved 15 March 2024.
  34. ^ "The Mystery Company With One Foot in the Premier League". The New York Times. 10 October 2023. Retrieved 15 March 2024.
  35. ^ Araullo, Kenneth (27 May 2025). "A-Cap and regulators pause legal action to mediate 777 Re fallout". ReInsurance. Retrieved 20 June 2025.
  36. ^ Harris, Lee (21 May 2025). "US life insurers' offshore reinsurance liabilities breach $1tn". Financial Times. Retrieved 19 June 2025.
  37. ^ "How did so many Americans' retirement money end up in Bermuda?". The Washington Post. 12 April 2024. Retrieved 22 June 2025.
  38. ^ "Ongoing Saga: Custodian Life: Bermuda update". St Vincent Times. 21 September 2024. Retrieved 22 June 2025.
  39. ^ a b "IFA's & policyholders call for Bermuda Govt enquiry into capricious BMA actions". St Vincent Times. 18 March 2025. Retrieved 22 June 2025.
  40. ^ Cooke, Ernesto (15 October 2024). "Bermuda Regulator Breaks Insurance Law, MOF Summoned". St Vincent Times. Retrieved 22 June 2025.
  41. ^ LaSur, Lee Yan (9 September 2024). "BERMUDA REGULATOR CALLED OFFSIDE BY INVESTOR POLICYHOLDERS". St Vincent Times. Retrieved 22 June 2025.
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