MOUS With Foreign Regulatory Authorities Part of the Process
Pursuit of the highest possible professional standards in an environment which facilitates the efficient operation of financial services guides the regulatory and supervisory approach in The Bahamas.
In this regard, The Central Bank of the Bahamas, the country’s regulatory authority for banking and trust operations, is empowered to enter into Memoranda of Understanding (MOUs) with like foreign regulatory authorities as a means of facilitating international co-operation on regulatory matters and effective consolidated supervision.
The MOUs, which are reciprocal in nature, facilitate access by Home and Host supervisors to information required for the conduct of consolidated supervision of banking groups. As Host supervisor for a number of banks, the Central Bank would be concerned with the supervision of branches and subsidiaries of banking groups headquartered in other jurisdictions and would seek to ensure, inter alia, that they comply with international operating and prudential standards, and with established group policy as approved by the Home regulator.
"It is the culture of settling for nothing less than the highest standards in the governance of our financial services industry that will continue to make The Bahamas attractive to reputable investors, no matter the vicissitudes of the global financial system," says the Hon. Alfred Sears, Attorney General of the Bahamas. He adds, "Regulation and supervision will continue to be the cornerstone of national efforts, if we are to ensure that the frontline operators in financial services industry adhere to best market practices."
Any MOU entered into by the Central Bank for regulatory cooperation on bank supervision matters is guided by principles for cooperation between banking supervisors as established by the Basel Committee’s Core Principles for Effective Banking Supervision, developed in 1977. It follows therefore that "supervisory information" as defined in the MOUs does not generally include information on assets under management and individual customer deposit accounts and transactions.
The Central Bank has signed MOUs with the banking supervisors of Brazil, Costa Rica, Guatemala, Panama, Barbados, Belize, Trinidad and Tobago, Jamaica, Netherlands Antilles, the Cayman Islands, the British Virgin Islands and the Turks & Caicos Islands. In each case these agreements set out the areas and terms of cooperation, including (i) provision of supervisory information (ii) off-site supervision and (iii) on-site inspections.
The Central Bank’s Governor, Wendy Craigg, points out that the framework for these MOUs allows for exchange of such information to the extent reasonable and subject to national statutory provisions, including those restricting disclosure. Specifically, a request may be denied wholly or partially if The Bahamas determines that the fulfillment of the request will violate its national legislation, or that it may harm significant national interests or that it would interfere with an ongoing investigation. She added, "The confidentiality of supervisory and other information and documents will be ensured pursuant to the requirements and restrictions of relevant national laws."
The International Monetary Fund (IMF), in its latest review of "Financial Sector Regulation and Supervision" in The Bahamas, assessed the country’s effective regulatory regime. The IMF report documented the extent to which the regulatory and supervisory arrangements in The Bahamas complied with certain internationally accepted standards and measures of good practice. The scope of the assessment included the banking, securities, trust and company service sectors.
The IMF report further stated that this progress is not only reflected in the body of legislation that has been enacted since December 2000, but also in the structural and operational arrangements put in place by the agencies that have been entrusted with supervisory responsibilities. The Central Bank of The Bahamas and the Securities Commission of The Bahamas were both given high marks by the IMF, primarily owing to their strong leadership and professional, dedicated staff.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
