* IMF Publishes Report On Bermuda's Regulatory And Supervisory RegimesThe International Monetary Fund on Tuesday published a two volume review of Bermuda's regulatory and supervisory regimes, which was generally positive, but highlighted some areas where procedures for the combating of money laundering and terrorist financing could be improved.
According to the IMF, the Island's financial, regulatory, and supervisory framework is well developed in banking, the key areas of securities regulation, and anti-money laundering. However, some deficiencies were noted in the assessment of insurance.
The report noted that banking supervision is now largely in conformity with the Basel Core Principles, but suggested that the system could be strengthened by the development of further formal processes and additional systems for on- and off-site supervision supported by additional resources, as well as by greater budgetary independence for the regulator and a reduction in the ministerial power of direction, to reduce the potential threat to operational independence.
It went on to observe that the regulation of investment intermediaries and collective investment schemes, the main activities of the Bermudian securities industry, is working effectively, but that centralization of issuer regulation and shareholder protection would strengthen the system, as would greater oversight of the stock exchange by the Bermuda Monetary Authority.
Planned improvements in legislation would provide the regulator with the required powers, and further staff training would significantly strengthen its supervisory capacity.Some deficiencies were noted in the supervision of the insurance sector, as while the BMA has broad powers to supervise the sector, these are not yet fully realized.
The oversight of the insurance sector is conducted in close cooperation with the insurance industry and its independent auditors, with the industry supporting a very thorough and effective screening function required for entry. Reflecting the sophisticated nature of the industry, the regulatory regime relies on self supervision to a large extent.
The IMF recommended that in order to enhance what has proved to be a flexible system, the authorities should provide additional guidance for the auditor, improve the information provided by the industry, and increase the BMA’s capacity to analyze on-site and off-site information supported by enhanced IT systems.