Embracing ERM to navigate Bermuda's payment services revolution

The Bermuda Monetary Authority's (BMA) consultation on the proposed Payment Services Act 2025 signals a significant evolution in the regulation of payment services in Bermuda.

For organizations considering entry into this rapidly evolving sector, understanding the embedded risk management requirements is about more than compliance. It's about competitive advantage and sustainable growth.

An evolution in payment services regulation

The proposed framework will regulate Digital Facility Providers, Payment Handling Providers, and Payment Technology Providers under a modern, risk-based regulatory approach that reflects international best practice, while encouraging technological advancement. 
 
This risk-based philosophy modernizes Bermuda’s approach to supervision, establishing clear, proportionate standards that evolve with the payments landscape. It embeds governance and risk management as central pillars of authorization, ensuring that innovation is matched by accountability. 
 
Applicants with strong business models and mature governance and risk management capabilities may qualify for direct access to full authorization – a clear indication of the value regulators place on enterprise risk management (ERM). 
 
The consultation also proposes an AI Payments Hub, underscoring Bermuda’s commitment to responsible innovation. The hub will serve as a platform for exploring how artificial intelligence, decentralized finance and programmable payments can be supervised effectively. 
 
Together, these developments position Bermuda at the forefront of global payment services regulation, combining innovation with risk maturity to create a credible, forward-looking ecosystem. For organizations, success will depend on how effectively they embed risk management and governance into every aspect of their operating model.

Going beyond basic compliance

The Minimum Criteria for Licensing establish comprehensive requirements that extend far beyond traditional compliance. All Payment Services Providers (PSP) must satisfy these criteria both at the application stage and when licensed: 

• Fit and proper requirements: every controller or officer must demonstrate integrity, competence, and financial soundness.
• Prudent business conduct: PSPs must demonstrate adherence to anti-money laundering and counter-terrorist financing measures, including know-your-customer procedures and transaction monitoring. They must also comply with international sanctions and any codes issued by the Authority covering cybersecurity, operational resilience, and conduct of business. 
• Corporate governance: Policies and procedures must be tailored to each organization's specific characteristics and risk profile. This includes establishing appropriate board oversight structures, clear lines of accountability, and comprehensive risk governance frameworks that integrate across all business functions and risk domains.

Effective capital management also depends on integrated risk assessment capabilities that accurately capture operational, credit, market, and liquidity risks across diverse payment service models. The BMA’s approach ensures that capital requirements are proportionate to the specific risks and business models of each provider.

Building sustainable competitive advantage

Organizations that view ERM as strategic enablement rather than just a regulatory burden will capture disproportionate advantages:

• Faster licensing: comprehensive risk frameworks enable direct qualification for higher license tiers from the outset
• Operational efficiency: integrated risk management reduces operational losses and regulatory friction
• Stakeholder confidence: robust governance frameworks enhance customer, partner, and investor confidence
• Scalability: proper risk foundations enable sustainable growth and business model evolution
• Regulatory relationships: proactive risk management fosters collaborative relationships with supervisors through risk-based supervision 

Preparing for licensing success

To meet the Bermuda Monetary Authority’s proposed expectations under the Payment Services Act 2025, firms should take early action to assess and strengthen their risk frameworks. Key priorities include:

• Governance readiness: ensure board oversight and accountability for payment service operations.
• Operational resilience: review systems, data protection, and third-party dependencies.
• Technology governance: align AI and automation risk management with emerging regulatory expectations.
• Capital adequacy: model scenarios to demonstrate risk-based capital adequacy.
• Compliance integration: embed AML/CFT and cybersecurity measures into enterprise-wide ERM processes.

Early alignment with regulatory principles can streamline licensing timelines and strengthen supervisory trust.

Looking ahead

Success in this new environment requires more than innovative technology or compelling business models. It demands sophisticated risk management that demonstrates to regulators, customers, and stakeholders that innovation and prudence can coexist. 
 
Bermuda's payment services revolution is underway. Organizations that combine innovation with exemplary risk management will help shape the sector's future. 
 
To discuss how your organization can align ERM with the BMA’s evolving framework, contact Grant Thornton Bermuda’s Risk Advisory team.