Central Bank relaxes SFI requirements due to pandemic

In light of ongoing constraints caused by the COVID-19 pandemic, the Central Bank of The Bahamas (CBOB) is allowing temporary relaxed accommodations to supervised financial institutions (SFIs).

Some of those accommodations include the acceptance of electronic know your client (KYC) documents, the suspension of extraordinary and regular dividend approvals and the suspension of the period of transition in the Register of Beneficial Ownership Act.

“The Central Bank reminds SFIs to adopt a risk-based approach to satisfying their KYC obligations. Essentially, where it is impractical or impossible to obtain sight of original documents from clients, SFIs may accept electronic versions of the original documents, once they have deployed the appropriate level of due diligence to mitigate any associated risk,” the bank said in its guidance notes.

“In the current circumstances, the Central Bank’s view is that the risk of face-to-face contact and mutual handling of physical documents is considerably higher than normal. Accordingly, reliance upon electronic copies will most likely be the more sensible approach.”

The CBOB stated that these guidance notes, which address strengthening the resilience of the financial system and the operational challenges resulting from the pandemic, will remain in effect until rescinded.

Regarding dividend approvals, the CBOB stated that due to the expected negative impact on the Bahamian economy because of the pandemic, it has suspended all exchange control approvals for domestic bank dividends, with a view to determining a medium-term position by September 2020 after periodic review.

The CBOB is also requiring domestic banks to keep extensive emergency loan reporting.

“Given the economic uncertainties surrounding the COVID-19 pandemic, the following information is being requested on a monthly basis from commercial banks, commencing March 2020 and until further notice. This information will enable the Central Bank to monitor the impact of the three months’ payment deferral on commercial banks’ loan portfolio and credit quality: total loans by category; of which, non-performing [i.e. loans which were non-performing before the crisis]; of which, performing but on deferral; of which, new non-performing; and of which, performing and making normal payments,” the guidance notes stated.

“Commercial banks are required to provide this information in both a dollar value and a number of loans basis. Further, this data should be submitted via email in spreadsheet format or other format on or about the fifteenth day of the succeeding month.”

As for matters regarding beneficial ownership rules, the CBOB advised that the suspension of obligations pursuant to the Register of Beneficial Ownership Act, 2018 and the 60 days given after the lifting of the emergency orders allow for institutions to be onboarded to fulfil their obligations after the March 31, 2020 deadline.

“Therefore, SFIs serving as registered agents are requested to continue with the onboarding process as scheduled with the BDO team (consultants to the Office of the Attorney General), which includes uploading your beneficial ownership information. The suspension of the transition period was not intended to halt or delay the onboarding process,” the bank stated.

Late last year, Parliament extended the deadline for compliance under the Beneficial Ownership Act to the end of March, to ensure all financial service providers had sufficient time to onboard under the new regulations which allow for the establishment and maintenance of a secure search system to assess beneficial ownership details for all legal entities registered in The Bahamas.

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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