Supervision of Remittance Service Providers (RSPs)

Transcription

1 Supervision of Remittance Service Providers (RSPs) Presented by Ms. Terry Smith Manager of International Business Corporations and Non-Banking Financial Institutions Caribbean Remittances Forum March 24 25, 2011 Venue: Mona Lodge University of the West Indies Kingston, Jamaica

2 OVERVIEW OF PRESENTATION 1. The competent authority responsible for supervision of Remittance Service Providers (RSPs) 2. Off-Site monitoring of RSPs/MSBs 3. On-Site monitoring of RSPS/MSBs 4. Sanctions imposed on the RSPs/MSBs by the Financial Services Regulatory Commission (FSRC) 5. Challenges being faced by the FSRC 2

3 BRIEF OVERVIEW OF THE FSRC International Business Corporations Act CAP 222 ("the IBCA") Antigua and Barbuda's international financial services sector began with the enactment of the IBCA in Initially, the IBCA was administered by the Ministry of Finance. 3

4 BRIEF OVERVIEW OF THE FSRC Creation of the Financial Services Regulatory Commission By 1990, the country's financial services industry had grown significantly and the government, encouraged by this growth, sought to position the country as a premier international financial centre. Subsequently, a series of major amendments to the IBCA, ending in 2002, created the Financial Services Regulatory Commission as it is now known. 4

5 BRIEF OVERVIEW OF THE FSRC Regulatory Oversight The FSRC currently regulates the following: 5

6 BRIEF OVERVIEW OF THE FSRC Single Regulatory Unit In addition to the above, this amendment brought Antigua and Barbuda in line with current international trends toward consolidating the regulation and supervision of financial services under a single regulatory body. 6

7 BRIEF OVERVIEW OF THE FSRC Organizational Structure The Commission is a statutory body which is self funded with a staff complement of fifty- two (52). It is governed by a four (4) member board of directors who are appointed by the Cabinet of Antigua and Barbuda. The current members comprise prominent persons from the private and public sector. 7

8 BRIEF OVERVIEW OF THE FSRC Organizational Structure The Commission is managed by seven (7) statutory managers, (two positions are currently vacant) and two (2) non-statutory managers (one (1) position is currently vacant). Management is supported by forty-six (44) members of staff. 8

9 BRIEF OVERVIEW OF THE FSRC Organizational Structure 9

10 BRIEF OVERVIEW OF THE FSRC Mission Statement "To pursue excellence, in effectively and efficiently registering, monitoring, licensing, supervising and regulating Antigua and Barbuda s Financial Services Sector." 10

11 BRIEF OVERVIEW OF THE FSRC Vision Statement The FSRC is committed to effective regulation and supervision of Antigua and Barbuda s financial services sector, by upholding international standards of compliance, thereby positioning the jurisdiction as the preeminent financial center in the financial services arena." 11

12 OFF-SITE MONITORING OF RSPs Following the implementation of the MSBA a number of MSBs were grandfathered under the legislation which brought about the need for offsite reviews during the application process. Off-site reviews are conducted on money services businesses on a continual basis based on the risks associated with the institution. However, various compliance issues are addressed during the renewal of each licence. Accordingly, the FSRC collects and analyses a number of information to confirm that the RSPs/MSBs, its management and officers are compliant with the requirements mandated by the MSBA. 12

13 OFF-SITE MONITORING OF RSPs Monitoring Tools Offsite monitoring typically encompasses reviewing specific aspects of the licensees business by utilizing the following tools: Risk Assessment Matrix Quarterly Declaration Forms Quarterly Returns Annual Financial Statements 13

14 OFF-SITE MONITORING OF RSPs Risk Assessment Matrix The risk assessment matrix measures the level of risk inherent to the RSP/MSBs by assessing: The general AML, CFT and MSB policies, practices and procedures Role of the designated compliance person Written risk assessment procedures in place Written AML Program in place Types of independent reviews conducted AML/CFT Staff screening and Training in place Risk Factors Internal Control systems in place Reportable transactions Transaction monitoring 14

15 OFF-SITE MONITORING OF RSPs Risk Assessment Matrix Business practices Transactional dollar limits established Recordkeeping systems in position Segregated bank accounts Customer Monitoring CDD policies and procedures EDD policies and procedures Products and Services Number of Services offered Nature of services 15

16 OFF-SITE MONITORING OF RSPs Risk Assessment Matrix Agents and Sub-licensee relationships Locations SARs activity monitoring and reporting Overall compliance Periodic on-site visits training The risk factors are scored and weighted for each individual item listed above in accordance with the below scoring. High Risk (H) = 0 3 Medium Risk (M) = 4 6 Low Risk (L) =

17 OFF-SITE MONITORING OF RSPs Quarterly Declaration Form The Quarterly Declaration forms review and assess information submitted on a quarterly basis. The review involves assessing information furnished on: Corporate Documents Changes in principle address registered office Banking information Nature of the Business Changes in the financial condition product and services being offered (Licence Change) 17

18 OFF-SITE MONITORING OF RSPs Quarterly Declaration Form Shareholders and Directors Changes in ownership increase in shares issued (10%) Changes in fit and properness in terms of financial status, qualifications, integrity, reputation and reliability Management Structure Changes in management, Changes in fit and properness in terms of financial status, qualifications, integrity, reputation and reliability, competency and experience Designated Compliance Officer Changes in competency responsibilities 18

19 OFF-SITE MONITORING OF RSPs Quarterly Declaration Form AML/CFT Compliance Manual Changes in contents legislative amendments or updates in respective to the MLPA, CFTA and MSBA policies and procedures Authorized Locations Changes in the number of locations listing of requisites approvals for opening or closing of locations Fees paid in regards to the above Authorized Sub-licensees Changes in the number of sub-licensees listing and details on sub-licensees requisite agreements in place due diligence conducted 19

20 OFF-SITE MONITORING OF RSPs Quarterly Declaration Form External Auditor Changes in external auditor Approval of external auditor Independent Audit Report Submission of independent AML/CFT audit report to the supervisory authority (September 30, of each year). Training Program Review of training program in place Regulatory Information: Compliance with other regulatory agencies locally, regionally and internationally 20

21 OFF-SITE MONITORING OF RSPs Quarterly Returns Quarterly returns comprise four (4) forms that focus on different aspects of the entity s operations during that quarter: FORM 1: Statement Of Revenues and Expenses Records revenues Records expenses Shows net profit/(loss) FORM 2: Uncollected Remittances (Payables To Customers) Days past due number of accounts amount of each transaction Total past due 21

22 OFF-SITE MONITORING OF RSPs Quarterly Returns FORM 3: Foreign Exchange Transactions Country of residence of customers exchanging currency in the ECCU Region (Antigua, Anguilla, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines) Country of residence of customers exchanging currency in the Non-ECCU Region (Jamaica, Dominican Republic, USA, Guyana, UK, Europe, Canada, Other) Rates used for FX Number of transactions Value of transactions 22

23 OFF-SITE MONITORING OF RSPs Quarterly Returns FORM 4 (A): Receiving Activities/Form 4 (B): Sending Activities Country of residence of customers receiving/sending transactions in the ECCU Region (Antigua, Anguilla, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines) Country of residence of customers receiving transactions in the Non-ECCU Region (Jamaica, Dominican Republic, USA, Guyana, UK, Europe, Canada, Other) Number of transactions Value of transactions Ten (10) largest transactions sent/received 23

24 ON-SITE MONITORING OF RSPs Pre-Examination Planning On-Site monitoring of the RSPS includes: Pre-Examination Planningto Determine Scope of Examination Review of MSBs licensing requirements Review of financial information Review of prior examination program and supporting documentation Review of independent reports Conducting a risk assessment Letter of Request for information (including a risk assessment questionnaireto be done by the entity) 24

25 ON-SITE MONITORING OF RSPs On-Site Examination Process The on-site process assesses the MSB s compliance with the MSBA, MLPA and CFTA by reviewing the following areas. On-Site Visit Conduct entrance meeting Interview management and appropriate personnel Confirm organizational/management structure in place Review and assess AML Compliance Program Review and assess internal controls, policies and procedures Review monitoring of locations and sub-licensees Review correspondent relationships Evaluate staff awareness by reviewing the MSB s training program Conduct transaction testing Evaluate compliance with record keeping requirements Review suspicious activity monitoring Review filing of source of funds declaration forms 25

26 ON-SITE MONITORING OF RSPs Developing Conclusion and Finalizing The Examination Finalizing the Examination Comments and observations on areas of concern are discussed internally Preparation of work papers Report Preparation highlighting the findings of the examination Closing Meeting Hold meeting with the board of directors of the RSP to share the findings of the examination Discussion of action plan derived from the findings of the examination with the management and board of directors with time-frame Post-Examination Procedures Finalization of Examination report Submission of Examination report to Management and Board of RSP/MSB 26 Monitoring of action plan/sanctions based on severity of findings

27 Sanctions imposed on the RSPs/MSBs by the FSRC include: Fines SANCTIONS IMPOSED ON RSPS Three (3) RSPs were fined for several offences that include: Lateness in prudential reporting (Audited Financial Statements); and Failure to comply with directives of the FSRC within the stipulated time frame. 27

28 SANCTIONS IMPOSED ON RSPS Suspension of licence One (1) RSP/MSB had its licence suspended in 2010 Revocation of licence One (1) RSP/MSB had its licence revoked in 2010 Denial of licence One (1) RSP s/msb s application for licence to conduct money services was denied in

29 CHALLENGES FACED BY THE FSRC Legislative limited (Non-existent) restrictions on administrativepenalties; Regulations; and Guidelines; Resources - limited RSPs /MSBs have weak management structures Limited financialresources Limited human resources Weak to nonexistent record keeping systems limited knowledge of the products Lack of training and understanding of the sector; weak compliance regime; Language Barriers 29

30 THE END Thank You Financial Services Regulatory Commission 30