The objective of bank supervision in The Bahamas is to promote and maintain the safety, soundness, and integrity of the Bahamian banking and financial sector, while promoting confidence in the financial system. In achieving this objective, the Bank Supervision Department is responsible for the licensing, regulatory and supervisory functions of the Central Bank.
The department utilizes a risk-based approach to supervise banks, banks and trust companies, trust companies, co-operative credit unions, private trust companies and their registered representatives, non-bank money transmission service providers, payment service institutions and their agents. The supervisory and regulatory framework includes the implementation of policies and standards that are in keeping with international best practices; and involves ongoing consultation with the industry and other interested public parties.
Built on the three pillars of off-site surveillance, on-site examination and policy development, the Bank Supervision Department’s underlying functions are carried out by seven (7) distinct but inter-related units: the Domestic Financial Institutions Unit (DFIU), International Firms Unit (IFU), Authorization & Administration Unit (AAU), On-site Examination Unit (OEU), Analytics Unit (AU), Policy Unit (PU), and Resolution and Deposit Insurance Operations Unit (RDU).
- The DFIU focuses on the off-site surveillance of commercial/retail banking institutions, along with their group entities, as well as Cooperative Credit Unions, Payment Service Providers (MTBs and PSIs), and the Credit Bureau. The Unit conducts risk assessments of these Supervised Financial Institutions (SFIs); and prepares cyclical analysis of financial data and other supervisory returns to assess compliance with the Central Bank’s policy guidelines, the regulatory framework and international best practices.
- The IFU is charged with the responsibility for all aspects of offsite surveillance relative to the governance, legal, regulatory and prudential compliance of all licensed international bank and/or trust companies. Similar to DFIU, the Unit’s core focus is preparation of risk-based assessments of SFIs, and cyclical analysis of financial data and supervisory returns to assess compliance with the Central Bank’s policy guidelines, the regulatory framework and international best practices.
- The AAU executes its responsibility via two functional arms. The authorization arm has the primary function of conducting the necessary due diligence associated with the issuance of licences, including the vetting and processing of applications and supporting documents of proposed owners, executives and directors. Responsibility for all supervisory-related applications and oversight of Private Trust Companies (PTCs) and Non-Licensee Registered Representatives of PTCs are also vested in the AAU. The administrative arm of the AAU ensures the proper operational functioning and back office support for supervisory activities, inclusive of correspondence management, issuance of notifications to licensees, processing of fees and maintaining the licensee database.
- The OEU is responsible for conducting, at the premises of SFIs, inspections of their operations. Inspections are risk-based and may vary from special focus to full scope examinations. They are also performed in coordination with the DFIU and IFU. Reports of Examinations are prepared and the progress monitored until directives and recommendations have been fully addressed and remediated.
- The PU is responsible for the research, development and implementation of supervisory policies which are consistent with international best practices. The Unit is also instrumental in the implementation of key supervisory initiatives, such as industry preparation for the adoption of the capital framework (Basel II and III), emerging risks, and updating existing guidelines.
- The AU is responsible for the development and administration of the Risk Based Supervisory Framework; the maintenance of the supervisory cycles; and the research, collection and analysis of data to assess trends and impacts to the financial services industry on a macro-level. The unit has three (3) arms, namely:
- AML Analytics, which is responsible for the Anti-Money Laundering supervisory framework and related analytics, and conducts ML/TF Risk Assessments of SFIs
- AML Outreach is responsible for coordinating the Central Bank’s external engagement with assigned domestic and international counterparts for financial crime matters and
- Financial Data Analytics team focuses on monitoring of SFIs financial soundness and prudential limits and other regulatory compliance at a macro-level and via an annual supervisory cycle.
- The RDU is responsible for the development and implementation of resolution plans with respect to SFIs in consultation with other domestic regulatory or supervisory authorities. The Unit also manages the operations of the DIC and is charged with oversight of technical assessments relative to deposit insurance payouts, building up the target size of the Deposit Insurance Fund and the development of public awareness programs.
