The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Amendments to the Banks and Trust Companies Regulations Act will “tighten” Central Bank oversight and bring this nation into full compliance with international banking’s best supervisory practices, the Minister of State for Finance said yesterday.

Michael Halkitis said the legislative proposals had been benchmarked against jurisdictions like Bermuda, Switzerland and Canada.

“We bear in mind that we have an obligation to maintain international standards of best practice, and that we balance that against making sure that our financial services sector remains competitive,” Mr Halkitis said, adding that the Central Bank would be initiating a 30-day public consultation period after further revisions are made to the draft legislation.

“The specific amendments being proposed seek to clarify the requirements for the formation of a corporate entity for licensing purposes,” Mr Halkitis said.

“These proposals also seek to enhance the first and proper requirements for controllers, directors and officers of licensees. They introduce reporting requirements  relating to the fitness and propriety of directors and senior executive officers of licensees. They introduce powers to the Central Bank to impose prohibition orders, and they enhance the Central Bank’s powers to impose administrative monetary penalties.”

Mr Halkitis said the amendments would seek to enhance the powers of the Central Bank to ensure that the issuance of shares to a new or existing investor, or an increase in their equity holdings,w as fit and proper, and that the institution continued to be managed prudently.

“There is currently no provision in the Act that specifically empowers the Central Bank to remove a shareholder or require a shareholder’s reduction in ownership of a licensee,” he added.

“The proposed new provisions will empower the Central Bank to issue a notice of objection to controllers of licensees, to direct the transfer or disposal of all or any of the shares or other securities in a licensee held by a person or associate of such person within such time or subject to such conditions as the Central Bank considers appropriate.

“They will  restrict the transfer or disposal of shares or other securities in a  licensee, and they can also make such other direction as the Central Bank considers  appropriate.”

Mr Halkitis said that in 2012, the Bahamas underwent a financial sector assessment programme (FSAP) that included a review of this nation’s compliance with the Basel Core Principals for Effective Banking Supervision.

“Among the recommendations coming from that review was that banks inform the Central Bank if they become aware of any information which may negatively affect the fitness and propriety of a Board member or senior management,” said Mr Halkitis.

  He added that the proposed legislative changes would empower the Central Bank to issue prohibition orders against any person if it is satisfied  they have ceased to be a fit and proper person to perform a regulated function for a licensee, or other persons subject to the supervision of the regulator.

The amendments to the Act, Mr Halkitis said, are intended to consolidate, strengthen and clarify the Central Bank’s monetary enforcement regime, particularly its ability to impose fines.

Breach of a specified provision by an individual could generate fines from $2,500 for a minor contravention; $5,000 for a serious contravention, and $10,000 for a serious breach.

For companies, the maximum penalty for a minor breach would be $10,000; $50,000 for a serious breach; and $100,000 for a very serious infraction.

“We have a set of proposals  that will enhance the effectiveness of our banking supervisory practices and ensure that we are adhering to standards considered appropriate for the conduct of both banking and trust businesses. The ultimate objective is the protection of the public and the protection of the reputation of this jurisdictions,” said Mr Halkitis.