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

markttoegang-bes@dnb.nl 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

info@dnb.nl or tel. +31 20 524 911 DNB Information Desk