The Bermuda Monetary Authority is consulting the financial sector on a new code of practice to build resilience within businesses or from outsourced third-party service providers.
The Operational Resilience and Outsourcing Code will apply to banks, trust businesses, corporate service provider businesses, investment businesses, digital assets businesses and others, setting standards for managing dependencies on third parties to reduce risks associated with outsourcing.
Providers will remain accountable for the resilience of their operations wherever their operations are conducted.
"These standards are designed to strengthen the sectors’ 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. The aim is to ensure that critical services for customers can continue operating without delays or interruptions", the statement from the regulator said.
The BMA intends to introduce a final version of this Code during 2025 after a 60-day consultation period.
Impacted financial institutions will be given a transitional period before being required to adhere to the Code's requirements. Relevant Entities (REs) will be required to adhere to its requirements by 31 March 2028.
The only exception to this will be for REs licensed under the Banks and Deposit Companies Act (BDCA), which are required to adhere to the requirements by 31 March 2026.
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 this paper by the close of business on 14 March 2025.
The regulator further said the backdrop to the new regulations is of financial service providers becoming increasingly interconnected across global networks as they cater to a diverse and expansive customer base via innovative technologies.
"This interconnectedness reflects the growing integration of financial markets and services worldwide, where transactions and operations often span multiple countries and time zones. As a result, the delivery of financial services has evolved into a continuous, non-stop operation—available 24 hours a day, 365 days a year.
"Customers expect and rely on real-time access to financial services, whether trading globally, transferring funds or using online banking. This constant demand underscores the critical importance of Op Res, as even brief disruptions can have significant impacts, undermining consumer trust and potentially threatening financial stability."
