What is a deposit-taking business?
Section 4 of the Act defines a deposit-taking business as:
a) in the course of the business, one lends money received by way of deposit to others; or
b) one finances any other activity of the business wholly or to any material extent, out of the capital of or the interest on money received by way of deposit.
Section 3 of the Act also goes further in defining the meaning of deposit to provide the context under which a business may be viewed as receiving deposits.
Who is required to be licensed?
Section 11 of the Act states:
(1) “Subject to the provisions of section 12, no person shall carry on a deposit-taking business in or from within Bermuda unless that person is a company incorporated in Bermuda and is for the time being licensed by the Authority under this Act.”
Any person who contravenes this section is guilty of an offense and liable to both monetary penalties and/or imprisonment.
Minimum Licensing Criteria
Before a bank or deposit company is granted a licence, the Authority needs to be satisfied that all criteria, as set out in the second schedule to the Act, are capable of being fulfilled by the applicant on an ongoing basis.
The Authority must be satisfied of the following:
a) The controllers and officers of the applicant are fit and proper persons;
b) The business is conducted in a prudent manner, including but not limited to, maintaining minimum net assets, adequate liquidity, adequate accounting and other records, adequate systems of control and adequate insurance;
c) The position of the undertaking within the structure of any group to which it belongs or its links with related companies shall be such that it will not obstruct the conduct of effective consolidated supervision; and
d) The business of the institution is or, in the case of an institution which is not yet carrying on a deposit-taking business, will be carried on with integrity and professional skills appropriate to the nature and scale of its activities.
General Summary of Information Required in Connection with Licence Applications
Anyone seeking to obtain a For further information on the banking licence, review the following guidance note:
Deposit Taking Licence - Information for Applicants and Guidance Notes
All relevant documents detailing the Authority’s regulatory framework may be found here:
https://www.bma.bm/document-centre/policy-and-guidance-banking
