Bank of Jamaica | Regulatory Framework

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Standards Of Best Practice
As part of its on-going effort to promote principles of sound corporate governance within the supervised deposit-taking community, the Bank of Jamaica has since the mid 1990s, developed and circulated to the industry, Standards of Best Practice in critical areas of licensee’s operations. Essentially, these ‘Standards’ provide clear guidance on supervisory expectations of Board and management in implementing appropriate systems to assess, measure, monitor and mitigate risks in identified operational areas. The Standards issued are:

	Capital Management (issued 1995)
	Credit Risk Management (issued 1995)
	Liquidity Risk Management (issued 1995)
	Securities Portfolio Risk Management (issued 1995)
	Interest Rate Risk Management (issued 1996)
	Foreign Exchange Risk Management (issued 1996)
	Internal Control (issued 1996)
	Real Estate Appraisal Management (issued 1996)
	Anti-Money Laundering Guidance Notes (issued 2000)
	The Management or Investment of Customers' Funds (issued 2002)
	Guidance Notes on the Detection and Prevention of Money Laundering & Terrorist Financing Activities (Revised 2008) (Replaces Anti-Money Laundering Guidance Notes issued in 2000}
	Fit and Proper Guidelines ( issued 2004)
	Country and Transfer Risk (issued 2005)

Supervisory Guidance Notes in Progress
The Central Bank is far advanced in the drafting of other ‘Standards' and policies which include:

AML Guidance Notes

The Bank of Jamaica Guidance Notes on the Detection and Prevention of Money Laundering and Terrorist Financing Activities have been further amended to reflect the provisions of the Proceeds of Crime Act (POCA) and its subsidiary regulations the POCA (Money Laundering Prevention) Regulations.

We are requesting comments/feedback to these draft updated guidelines from all deposit-taking licensees as well as other stakeholders on or before Friday 9 May 2008. Comments may be e-mailed to fisd@boj.org.jm’

Corporate Governance

The Bank of Jamaica has issued a discussion draft, on an overarching governance standard ‘The Standard of Best Practice for Effective Corporate Governance’, to all commercial banks, institutions licensed under the Financial Institutions Act and building societies. This Standard communicates the minimum expectations of the Supervisory Authority regarding the overall governance framework to be established within licensed deposit-taking entities and emphasizes the necessity of important oversight functions within financial institutions viz:

	Board and senior management oversight;
	Independent oversight;
	Independent risk management and audit.

The Bank of Jamaica Guidance Notes on the Detection and Prevention of Money Laundering and Terrorist Financing Activities are being updated to reflect the provisions of the Proceeds of Crime Act (POCA) and its subsidiary regulations the POCA (Money Laundering Prevention) Regulations.

We are requesting comments/feedback to these draft updated guidelines from all deposit-taking licensees as well as other stakeholders on or before Friday 18 April 2008. Comments may be e-mailed to fisd@boj.org.jm

Corporate Governance Standard - Draft Document

Conglomerate Risk Management

The Bank of Jamaica is in the process of developing a Standard of Best Practice and Guidelines on Consolidated Supervision. This will prescribe consolidated capital charges, impose limits in relation to overall banking activities conducted with group members on a consolidated basis, as well as delineate the circumstances where the Supervisor may require restructuring of a group and formation of a separate financial holding company for the financial subsidiaries, to facilitate greater transparency.

Market Risks
A policy document on the management of Market Risks and a Standard of Best Practice on Derivatives Risk Management have been drafted for issue to and discussion with the industry. This will set out how market risks should be identified and measured and the specific capital adequacy calculations and requirements. Qualitative issues such as management and organizational arrangements are also dealt with.

E-banking Guidelines

In response to market developments in the area of e-banking, the Bank of Jamaica is now drafting detailed Guidelines to promote prudent governance and risk management in this area of activity.

Prudential Reporting Requirements
Consistent with the Bank of Jamaica’s prudential reporting requirement regime, and in order to facilitate ease of data collection and compilation, specific schedules and returns have been developed and circulated, along with pertinent Explanatory Notes to the industry. (The Central Bank has also made available to the industry a browser based application to enable the electronic submission of the returns) These returns along with their reporting frequency, are detailed in the table below.

Prudential And Other Return Data Required To Be Submitted By Licensed
Deposit-Taking Institutions To The Bank Of Jamaica

	RETURN NAME	REPORTING FREQUENCY	INSTITUTION TYPE
1	Balance Sheet and Supplementary Information	Weekly	Commercial Banks
2	Claims on and Deposits of Selected and Other Public Entities	Weekly	Commercial Banks
3	Return of Foreign Currency Deposits	Weekly	Commercial Banks
4	Balance Sheet and Supplementary Information	Monthly	Commercial Banks FIA Licensees Building Societies
5	Domestic Currency Cash Reserve and Liquid Assets	Monthly	Commercial Banks FIA Licensees Building Societies
6	Return of Foreign Currency Cash Reserves and Liquid Assets	Monthly	Commercial Banks FIA Licensees Building Societies
7	Profile of Credit and Deposits by Customer Group	Monthly	Commercial Banks FIA Licensees
8	Sectoral Return of Customers' Liabilities in respect of Total Loans, Advances and Discounts	Monthly	Commercial Banks FIA Licensees Building Societies
9	Sectoral Return of Customers' Liabilities in respect of Foreign Currency Loans, Advances and Discounts	Monthly	Commercial Banks FIA Licensees Building Societies
10	Foreign Currency Assets and Liabilities	Monthly	Commercial Banks FIA Licensees Building Societies
11	Distribution of Deposits by Class and Maturity	Monthly	Commercial Banks FIA Licensees Building Societies
12	Interest Rates Paid on Total Deposits and Loans	Monthly	Commercial Banks FIA Licensees Building Societies
13	Interest Rates Paid on Foreign Currency Deposits and Loans	Monthly	Commercial Banks FIA Licensees Building Societies
14	Instalment Credit	Monthly	Commercial Banks FIA Licensees
15	Analysis of Foreign Currency Deposit Flows	Monthly	Commercial Banks FIA Licensees Building Societies
16	Claims on and Deposits of Selected and Other Public Entities	Monthly	Commercial Banks FIA Licensees Building Societies
17	Foreign Currency Claims on and Deposits of Selected and Other Public Entities	Monthly	Commercial Banks FIA Licensees Building Societies
18	Update on Credits and Investments Exceeding Section 13 Limits	Monthly	Commercial Banks FIA Licensees Building Societies
19	Renegotiated Facilities	Monthly	Commercial Banks FIA Licensees Building Societies
20	Earnings and Expenditure	Quarterly & Annual	Commercial Banks FIA Licensees Building Societies
21	Connected Persons Exposure	Quarterly	Commercial Banks FIA Licensees Building Societies
22	Return of Quarterly Financing for Fixed Capital Investment	Quarterly	Commercial Banks FIA Licensees
23	Details of Past Due Loans	Quarterly	Commercial Banks FIA Licensees Building Societies
24	Maturity Profile of Financial Assets and Liabilities	Quarterly	Commercial Banks FIA Licensees Building Societies
25	Breakdown of New Mortgage Advances	Quarterly	Building Societies
26	Sectoral Profile of Past Due Loans	Quarterly	Commercial Banks FIA Licensees Building Societies
27	Capital Adequacy	Quarterly	Commercial Banks FIA Licensees Building Societies
28	Repricing Gap Analysis	Quarterly	Commercial Banks FIA Licensees Building Societies
29	Customer Concentrations	Quarterly	Commercial Banks FIA Licensees Building Societies
30	Investment Profile	Quarterly	Commercial Banks FIA Licensees Building Societies
31	Return of Branch Information	Annual	Commercial Banks FIA Licensees Building Societies
32	Return of Land Acquired in the Satisfaction of Debts	Annual	Commercial Banks FIA Licensees Building Societies
33	Return of Unclaimed Balances	Annual	Commercial Banks FIA Licensees Building Societies