The Bermuda Monetary Authority (BMA) published a consultation paper on a proposed Payment Services Act (PSA) that would create a new licensing and supervisory regime for payment services business conducted in or from Bermuda and repeal the Money Service Business Act 2016. The proposed framework would apply proportionate requirements across areas including Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF), conduct of business, prudential standards and cyber risk management, with additional obligations depending on the entity’s business model. The PSA would define licensable Payment Service Provider (PSP) activities across three categories: Digital Facility Providers, which issue and administer prepaid payment facilities that store funds and support payments or transfers (including stablecoins) while excluding gift and loyalty facilities; Payment-Handling Providers, which receive and administer funds to execute payment transactions and remittances and may only hold client funds as long as necessary to complete a transaction; and Payment Technology Providers, which provide critical non-custodial payment functions such as routing, authentication, encryption and user interfaces, while explicitly excluding decentralised infrastructure providers and general-purpose outsourced technology services. A five-class licensing model is proposed, spanning Class T (testing, up to 12 months), Class M (modified, typically 12 to 24 months), Class F (full), Class F-PG (wholesale-only for businesses, institutional clients or high-net-worth individuals) and Class F-R (reciprocity-based), with unlicensed PSP business treated as a criminal offence; existing money service business licensees would be grandfathered with a one-year compliance grace period, and newly in-scope firms would have to apply within six months of the PSA taking effect and could continue operating once an application is submitted. The paper also proposes exclusions for certain payment infrastructures and internal group treasury “self-to-self” arrangements, sets out a fee schedule including a flat 1,000 fee for Class T and risk-based fees for other classes tied to client receipts, and signals consequential AML/ATF and related legislative amendments. Comments are requested by 13 October 2025, after which the BMA plans to refine the draft legislative proposals and develop supporting rules, codes and guidance under the PSA. The consultation also flags further engagement on a proposed AI Payments Hub within the BMA’s Innovation Hub to address the regulatory treatment of DeFi intermediaries, AI-driven payment arrangements and embedded or programmatic payments.
Bermuda Monetary Authority 2025-08-29
Bermuda Monetary Authority launches consultation on a Payment Services Act introducing tiered licensing for payment service providers
The Bermuda Monetary Authority released a consultation paper on a proposed Payment Services Act, introducing a new licensing and supervisory regime for payment services, replacing the Money Service Business Act 2016. The framework includes requirements for Anti-Money Laundering, Anti-Terrorist Financing, conduct of business, prudential standards, and cyber risk management, with a five-class licensing model for Payment Service Providers. The consultation also explores establishing an AI Payments Hub to address regulatory treatment of DeFi intermediaries and AI-driven payment arrangements.