The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

FINANCIAL institutions should give themselves “a pat on the back” for slashing the time taken to “cure” regulatory deficiencies to just 11 months, the Central Bank’s top inspector said yesterday.

Charles Littrell, its head bank and trust company overseer, told a webinar organised by Next Level Solutions that the Bahamian financial services industry has “lifted their game accordingly” on the time taken to respond to Central Bank directives requiring them to address weaknesses in their regulatory make-up.

He added that the “average time to cure” a Central Bank directive/requirement had been reduced from three years in 2017 to just 11 months now. Mr Littrell, who is due to step down this July when his contract ends, added: “This is about where we want it. It’s hard to get it down much more than nine months, given the cycle of audit and board approval that’s often required.”

Asserting that the Bahamian financial services industry should “give itself a pat on the back”, he said: “The industry has lifted their game accordingly; they are get better at fixing them. So, wherever we thought we were in 2017- 2018, we’re much better off now in terms of the routine risk management functions of our businesses.

“In the coming year, we will heighten our focus on on-time reporting. We started this project at about 75 percent ‘on time’ for documents and financial returns. Now, depending on the item in question, we’re around 85 percent to 87 percent. We want to push that to 98 percent.

“We sort of ask people to get half-way there, and the second half of that will require a bit more coercion, but we don’t really want to hear the excuse that the person who knows how to do this went on leave and we didn’t make alternate arrangements,” Mr Littrell added.

“You really need to send your material in on time. And we’re going to continue building AML (anti-money laundering). This is something that takes years and decades to get good at.”

The Central Bank is also focusing on “financial crime suppression supervision”, with Mr Littrell saying this will be as important as financial soundness. “We’ve made a lot of progress, but we have a long way to go,” he said. “In 2019, you’ll recall, we had a hurricane. In 2020 and 2021 we had a COVID-19 outbreak.

“We follow the philosophy that said what the industry is doing in terms of its regulations is not terrible. We can afford to wait. So while all this change impacted the industry, we can sort of just rest on our laurels a little bit. We completed documents and we did analysis, but we didn’t impose timelines to change the rules. But I have to say that it’s sort of caught up to us now.

“I would say in terms of our analysis, nothing we’re doing creates a major balance sheet impact. At some point it’s conceivable that the liquidity rules, which are going to be coming out somewhat later, will but the capital rules don’t, and the other rules are typically not about the balance sheet.”