The Bermuda Monetary Authority has revised its policy direction on digital identity regulation, deciding not to pursue the proposed standalone prudential licensing regime for Digital Identity Service Provider businesses at this stage. Following consultation and further analysis, it will instead target enhancements to Bermuda’s existing Anti-Money Laundering and Anti-Terrorist Financing framework, focusing on how regulated financial institutions may use digital identification for onboarding and customer due diligence. The authority found limited evidence that Bermuda’s market could sustain a domestic licensed provider ecosystem, given implementation costs, market size and unresolved international interoperability issues. Planned supervisory guidance will address identification and verification, reliability and assurance assessments, foreign digital identity frameworks, record-keeping and identity lifecycle considerations. The approach will remain principles-based and technology-neutral, with financial institutions responsible for determining whether a solution is reliable, independent and appropriate for the risks, rather than relying on a formal BMA approval, certification or equivalence regime. The authority will conduct a targeted review of the AML/ATF framework and may consult on proposed guidance. It will also monitor international developments in digital identity, assurance and interoperability and may reconsider other policy options as the global framework evolves.

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