SUPERVISION by De Nederlandsche Bank in the BES as from July 2012
Information meeting / Roundtable St. Maarten – 6 February 2012
– Paul van den Berg –
Legal Services Division – Supervision & Regulation
– Marijn Ridderikhof – Expert Centre Culture, Organisation & Integrity
EN
Introduction – Outline
Which financial enterprises fall under the scope of DNB supervision ?
What is expected of these enterprises ?
As from when will the supervisory requirements apply ?
What is the supervisory approach of DNB ?
Allocation of tasks to DNB and AFM– overview of «ongoing supervision» –
* At present, there are no registered collective investment schemes or portfolio managers in the BES
Credit Institution
InsurerMoney
transaction office
Company Service Provider(Trust office)
Collective investment scheme *
Portfolio manager *
Broker
Advisor
Credit Provider
Market access DNB DNB DNB DNB AFM AFM
Ongoing prudential supervision of financial enterprises
DNB DNB -- -- DNB --
Ongoing supervision of conduct of financial markets
AFM AFM AFM -- AFM AFM
Integrity Supervision – Wfm BES / Wwft BES (AML/CFT) / Sanctions Act
DNB DNB DNB DNB AFM AFM
Scope of supervision by DNB ?– overview –
Category of financial enterprises Wfm BES
AML/CFT BES
Sanctions
Act
Credit institutions X X X
Electronic money institutions X X X
Insurers – Life X X X
– Funeral (BiK) X X
– Non-life X X
Money transaction offices X X X
Company Service Providers (Trust) X X X
Credit card companies X X
Casinos X XX = DNB grants the required licence
Scope of supervision by DNB – market access credit institutions –
legal entity with registered office in BES licence of DNB
via branch in BES < USD 90 million in deposits per end of previous financial year
licence of DNB location of registered office: CUR or SXM
by provision of services in BES licence of DNB location of registered office: CUR or SXM
Scope of supervision by DNB – market access insurers –
legal entity with registered office in BES licence of DNB
via branch in BES < USD 5 million in gross premium income in previous financial year
licence of DNB location of registered office: CUR or SXM
by provision of services in BES notification to DNB [ new! ] location of registered office: CUR or SXM
Scope of supervision by DNB – provision of incoming services by insurers –
definition of «provision of incoming services» ‘initiative test’
requirements notification (sect. 2:23 Wfm BES) registered office CUR or SXM / legal personality
licensed / entitled to exercise insurance business
compliance with solvency requirements
1 July 2012: one-off full notification to DNB of all incoming insurance services in BES
Scope of supervision by DNB – special provisions concerning market access –
Financial markets register (Wfm BES)
Enforcement action against ‘illegal’ enterprises
Other special prohibitions
prohibition on the use of the word «bank»
prohibition on raising callable funds (or acting as a broker)
Scope of supervision by DNB – credit institutions & credit unions –
legal entity with registered office in BES Wfm BES (prudential req. & integrity)
Wwft BES & Sanctions Act
via branch office in BES Wfm BES (integrity), Wwft BES & Sanctions Act
by provision of services in BES Wwft BES & Sanctions Act
Scope of supervision by DNB– life insurers –
legal entity with registered office in BES Wfm BES (prudential req. & integrity)
Wwft BES & Sanctions Act
via branch office in BES Wfm BES (integrity), Wwft BES & Sanctions Act
by provision of insurance services in BES Wfm BES (section 2:23),
Wwft BES & Sanctions Act
legal entity with registered office in BES Wfm BES (prudential req. & integrity)
Sanctions Act
via branch office in BES Wfm BES (integrity), Sanctions Act
by provision of insurance services in BES Wfm BES (section 2:23), Sanctions Act
Scope of supervision by DNB– non-life insurers & funeral insurers (BiK) –
legal entity with registered office in BES banks reference to (New) Charts of Accounts of CBCS &
transitional provisions on implementation of Basel II
insurers reference to reporting framework / forms of CBCS (National Ordinance for insurance industry CUR / SXM)
‘small’ branch offices in BES banks / insurers ‘turnover’ of branch office in BES must
show from the annual accounts of the registered (head-)office
foreign banks / insurers separate bookkeeping of activities in BES
What is expected of financial enterprises?– reporting requirements –
What is expected of financial enterprises? – integrity requirements in the Wfm BES (1) –
Personal integrity
Aspectsof integrity
Relational integrity
Organizational integrity
organizational c.o.i / harm 3rd parties interests
organizational c.o.i / harm 3rd parties interests
misuse of informationmisuse of information insider tradinginsider trading
tax fraudtax fraudexternal fraudexternal fraud
money launderingmoney laundering
financing of terrorismfinancing of terrorism
personal conflicts of interestpersonal conflicts of interest
bribery / corruptionbribery / corruption
internal fraudinternal fraud
does the institution have control
over its integrity risks ?
Personal integrity
Relational integrity
Organizational integrity
Focus on aspectsof integrity
DNB fit & proper tests policymakers +
internal supervisors
DNB fit & proper tests policymakers +
internal supervisors
Ensure trustworthiness of integrity sensitive functions
Ensure trustworthiness of integrity sensitive functions
Governance structureGovernance structure
Counterparty due diligence Counterparty due diligence
Internal proceduresInternal procedures
Management of incidents Management of incidents
‘Integrity-conscious culture’ ‘Integrity-conscious culture’
Line / Compliance / Risk Line / Compliance / Risk
Fraud control Fraud control
Tone at the topTone at the top
Costumer due diligence (CDD)
Costumer due diligence (CDD)
integrity supervision
What is expected of financial enterprises? – integrity requirements in the Wfm BES (2) –
Rules on financial enterprises with establishment (= registered office / branch) in BES:
proper & sound operation of business (“integere bedrijfsvoering”)
policy - procedures - measures
systematic analysis of integrity risks
arrangement of compliance function
client acceptance
protected bank accounts (credit institutions)
‘back to back positions (credit institutions)
What is expected of financial enterprises? – integrity requirements in the Wfm BES (3) –
Further aspects of proper & sound business operations (“integere bedrijfsvoering”)
duty to report incidents
integrity sensitive functions
conflicts of interests
measures to comply with AML/CFT-regulations in Wwft BES (credit institutions / life insurers)
measures to comply with Sanctions Act
What is expected of financial enterprises? – integrity requirements in the Wfm BES (4) –
As from when will the regulations apply ?
In effect largely since the introduction and subsequent changes of National Ordinances of the former Netherlands Antilles + Procedures & Guidelines of BNA (CBCS)
Formally as from 10/10/2010 via Wtbk 1994 BES, Wtv BES, Wid BES, Wet MOT BES, Sanctions Act + ministerial regulations
Final regulatory framework as from 01/07/2012 via Wfm BES, Wwft BES and Sanctions Act + decrees, by-laws & regulations
Overview of Acts & regulations – final regulatory framework from 01/07/2012 –
ACT Decrees, by-laws & regulations
Decrees & Min. regulations
Supervisory regulations & policy rules of DNB (guidance)
Financial Markets Act BES (Wfm BES)
Decree financial markets BES Regulation financial markets BES 2012
Supervisory Regulation on prudential requirements and integrity 2012 (DNB) Policy Rule of DNB on the application and execution of the Wfm BES 2012
AML/CFT(Wwft BES)
Decree wft BES Regulation wft BES
‘Provisions & guidelines CBCS & Policy rule / Guideline DNB’
Sanctions Act
‘Sanctieregeling BES’ Various Sanctions Reg. (financial transactions) EU Sanctions
The supervisory approach of DNB
Supervisory approach: risk based
Enforcement policy / Supervisory instruments
Information www.bes.dnb.nl
regulations on sanctions News Service DNB (subscriptions via www.dnb.nl)
updates ‘FATF high risk jurisdictions’ (please be aware: no announcements in writing!)
No permanent presence of DNB Supervision in BES
Reporting framework & -formats credit institutions (New) Charts of Accounts CBCS insurers reporting framework / forms CBCS
(National Ordinance insurance industry CUR / SXM)
Ongoing supervision trustworthiness testing of policy-makers
(exchange of information) implementation of Capital Accord Basel II
(credit institutions)
Cooperation DNB – CBCS (1)
Council of Supervisors of the Kingdomparticipants: AFM, CBA, CBCS en DNB
Working Group on the Harmonisation of Integrity Supervision “harmonisation of the requirements concerning proper & sound business operations (“integere bedrijfsvoering”) – specifically AML/CFT – and the supervision thereof, aimed at reaching a ‘level playing field’ within the Caribbean part of the Kingdom”
Bilaterally, in various fields, such as: support in research support in the drafting of guidelines
Cooperation DNB – CBCS (2)
Contact & Information
[email protected] questions about licensing or market access remarks or reports on financial enterprises
that are active in BES without the required licence or authorisation
Via your regular contact person at the Supervisory department(s) of DNB
[email protected] or tel. +31 20 524 911 DNB Information Desk