Fintech 2025

BERMUDA Law and Practice Contributed by: Steven Rees Davies, Kyle Masters, Charissa Ball and Alexandra Fox, Carey Olsen

regulated either by the BMA or by a regulator in another jurisdiction that applies standards that are at least equivalent to those applied in Ber - muda. Any foreign entity providing outsourced functions to Bermuda-regulated entities must comply with the requirements under Bermuda’s AML/ATF laws and regulations. In January 2025, the BMA issued a consultation paper on operational resilience, which propos - es a specific outsourcing code and associated guidelines applicable to all regulated sectors in Bermuda. Final versions of the code and guide - lines will be published after the 60-day consulta - tion period. 2.9 Gatekeeper Liability The AML/ATF regulations imposed on DABA licensees mandate thorough onboarding (includ - ing background checks) of customers and the ongoing monitoring and reporting of suspicious activities by customers in respect of the use of the DABA licensee’s products and/or services. A person licensed under the DABA as an electronic exchange can apply to become an “accredited digital asset exchange” under the DAIA. This accreditation effectively turns the exchange into “gatekeeper” for digital asset issuances. This means that it can authorise digital asset issuances without the issuer being required to file an issuance document with the BMA. 2.10 Significant Enforcement Actions The BMA has wide powers under the DABA and the DAIA in relation to enforcement, including the power to: • compel the production of information and documents, with criminal sanctions for failing

to produce such information/documentation or for making false or misleading statements; • compel a licensee to submit to an investiga - tion conducted by a third party appointed by the BMA, with the licensee being responsible for payment of all expenses of (and incidental to) the investigation; • issue directions for the purpose of safeguard - ing the interests of a licensee’s customers where a licensee is in breach of the DABA or any other rules or regulations applicable to it; • impose conditions and restrictions on licenc - es, such as: (a) requiring a licensee to take certain steps or to refrain from adopting or pursuing a particular course of action; (b) restricting the scope of a licensee’s busi - ness activities in a certain way; (c) prohibiting or imposing limitations on the acceptance of business; (d) prohibiting a licensee from soliciting busi - ness, either generally or from prospective customers; (e) prohibiting a licensee from entering into any other transactions or class of transac - tions; (f) requiring the removal of any officer or con - troller; and/or (g) specifying requirements to be fulfilled otherwise than by action taken by the licensee. In the event a licensee fails to comply with a condition, restriction or direction imposed by the BMA or with certain requirements of the DABA, the BMA has the power to: • impose fines or civil penalties of up to USD10 million; • seek criminal convictions to impose fines and/or imprisonment;

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