Today, I will discuss the means employed by the BMA to ensure that licensed entities have their house in order, including prudential meetings and on-site visits.
To recap, regulated entities (including those licensed under the Investment Business Act 2003, the Investment Funds Act 2006 and the Insurance Act 1978) must meet certain minimum criteria. Such entities must make an annual filing with the BMA, certifying that the entity has met these minimum criteria. Consequently, entities should evaluate the minimum criteria regularly (at least annually) and create a plan and timeline for any deficiencies found by their internal review or audit.
The minimum criteria include (but are not limited to):
Fit and proper person test.
Whether business is conducted in a prudent manner.
In addition, certain regulated entities may be required to:
Have a policy of insurance to cover risks inherent in the operation of its business of an amount that is commensurate with the nature and scale of operations.
Maintain adequate accounting and other records of its business and systems of control of its business and records.
Maintain minimum net asset, capital and liquidity requirements.
To ensure that regulatory requirements are being satisfied, senior management should audit and periodically test the entity’s policies, procedures and controls for effectiveness and must be made aware of the potential personal liability if legal obligations are not being met. Senior management must address in a timely manner any shortcomings revealed by the independent internal audit.