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Financial Institutions
Enforced Prudential Guidelines
The Finanical System in the ECCU
Structure of the system
Clearing Banks
Licensed Finance Companies
International Financial Services Sector Regulators
Registrars/Commissioners of Cooperatives
Insurance Sector Supervisors/National Regulators
Proposed Prudential Guidelines
Enforced Prudential Guidelines
Abandoned Property Holders

EXTERNAL AUDITING GUIDELINES
These guidelines seek to provide financial institutions licensed under the Banking Act with minimum requirements in determining external auditors’ suitability for appointment. They highlight key expectations which management should have of external auditors in the conduct of the audit based on international best practices.

These guidelines also seek to increase financial institutions’ awareness of the external auditors’ reporting obligations to the Central Bank regarding transactions or conditions that impinge on the well-being of the financial institution.

INTERNAL AUDITING GUIDELINES
These guidelines seek to provide a framework for the performance and promotion of a broad range of internal audit activities within financial institutions licensed under the Banking Act. Further, they aim to show how the work of the internal audit department/unit could be used to inform improvements in organisational processes and operations.

They establish the basis for measuring performance in the internal audit function and ensuring that the institution’s internal audit activities confirm to international best practices.

GUIDELINES ON CREDIT RISK MANAGEMENT FOR INSTITUTIONS LICENSED TO CONDUCT BANKING BUSINESS UNDER THE BANKING ACT
These guidelines seek to promote sound credit risk management at licensed financial institutions. They outline the minimum requirements of a comprehensive credit risk management programme, which financial institutions should develop and implement in accordance with a defined credit risk strategy. The guidelines are reflective of the Basel Committee’s 17 Principles for Management of Credit Risk (September 2000).

ANTI-MONEY LAUNDERING GUIDANCE NOTES FOR LICENSED FINANCIAL INSTITUTIONS
The ECCB issued these guidance notes in May 1995 to assist financial institutions in developing programmes to combat money laundering. They promote the implementation of adequate anti-money laundering policies, procedures and controls as they relate to customer identification, verification of transactions, record retention, reporting of suspicious activity, recruitment and training of employees and audit reviews.

ECCU member territories subsequently passed more comprehensive legislation and guidance notes, which ECCB’s guidance notes are expected to complement. Where the requirements of ECCB’s guidance notes differ with the individual territory’s guidance notes, regulations or laws, the territory’s guidance notes, regulations or laws would take precedence.

SYNOPSIS OF THE ADMINISTRATIVE GUIDELINES GOVERNING ESTABLISHMENT AND MAINTENANCE OF RELATIONSHIPS BY FINANCIAL INSTUTIONS WITH SHELL BANKS
The administrative guidelines governing the establishment and maintenance of relationships between financial institutions and shell banks seeks to prevent a licensed financial institution from directly or indirectly establishing or maintaining relationships with shell banks.

These guidelines complement the existing Anti-Money Laundering Guidance Notes issued by the ECCB, and the guidance notes, regulations and laws issued by ECCU member governments. Where the requirements of these guidelines differ with the guidance notes, regulations or laws of a territory, the territory’s guidance notes, regulations or laws would take precedence.

SYNOPSIS OF THE PRUDENTIAL CREDIT GUIDELINES
The Prudential Credit Guidelines seeks to establish minimum standards for the administration, measurement and monitoring of credit risk in the portfolios of institutions licensed under the Banking Act. It also sets minimum provisioning requirements and provides guidance pertaining to the suspension of interest, treatment of renegotiated loans and the write-off of loans classified as loss.

SYNOPSIS OF THE PRUDENTIAL GUIDELINES: CONTROLLING RISK IN CORRESPONDENT ACCOUNTS
The Prudential Guidelines on Controlling Risk in Correspondent Accounts seeks to restrict access to financial institutions licensed under the Banking Act by financial institutions not licensed under the Banking Act and/or supervised by the Eastern Caribbean Central Bank.

These guidelines complement the existing Anti-Money Laundering Guidance Notes issued by the ECCB, and the guidance notes, regulations and laws issued by ECCU member governments. Where the requirements of these guidelines differ with the individual territory guidance notes, regulations or laws, the territory’s guidance notes, regulations or laws would take precedence.top ^

LIQUIDITY RISK MANAGEMENT GUIDELINES
The liquidity risk management guidelines seek to provide financial institutions licensed under the Banking Act with minimum standards for the identification, measurement, monitoring and management of liquidity risk. They highlight key principles for the management of liquidity risk and minimum requirements for liquidity risk management programmes.

The guidelines indicate that at a minimum, each financial institution is expected to be able to identify, understand and measure the risks associated with the management of liquidity. The importance of managing funding sources and uses, and foreign currency liquidity is emphasised. The guidelines also advocate the implementation of effective policies and controls and the establishment of a contingency plan. The guidelines speak to the active involvement of the board and management in the management of liquidity and its associated risks.

RELATED PARTY TRANSACTION GUIDELINES
The guidelines seek to ensure that licensed financial institutions are not the subject of improper dealings by related parties and that transactions with related parties are carried out on terms and conditions that are consistent with or substantially the same as with a non-related parties.

The guidelines identify related parties and establish a review process for transactions with such parties. The objective of the review is to ensure that related parties do not improperly use the institutions. The guidelines also seek to ensure adequate disclosure of related party transactions in the financial statements and to the Central Bank to facilitate transparency of operations.

CORPORATE GOVERNANCE GUIDELINES
These guidelines seek to encourage a governance framework that promotes among financial institutions, high standards of professional conduct, prudent and diligent discharge of duties and compliance with applicable laws, regulations and guidelines. Although the guidelines are not intended to be prescriptive, they set out the minimum standards the ECCB expects from financial institutions when implementing processes, structures and information systems used for managing the institution.

The guidelines focus on the responsibilities of shareholders, the board of directors and each director to the overall corporate governance process, given their level of control and influence within the organisation. top ^


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