New Style! The Central Bank Of Curacao And St Maarten To Get ‘Penetrating’ Higher Supervision: Willemstad – “Focused and penetrating.” That is the core of the change in supervision by the Central Bank of Curaçao and Sint Maarten (CBCS). “Focused means that we have a quick overview of the most important problems and shortcomings in supervision and know which institution or institutions are affected, so that we can take targeted action before there is any damage,” said the explanation. By penetrating we mean that we intervene quickly and firmly and continue to push for improvements until they are actually realized. There is more: “Intrusive also means that the CBCS takes increasingly strict supervisory measures if the repair by the institution takes too long.” The Central Bank says it does this “in a consistent manner” with “extra attention to clear communication of our expectations” through consultation, practical guidance and policy statements. “This makes us more predictable in our actions and as a learning organization we are open to feedback.” This is stated in the brochure “New Style” Supervision” of the Central Bank in Scharloo. Why? The CBCS itself gives the following answer: ,, The aim of the change is that an institution that has shortcomings will again meet the requirements as soon as possible, so that the negative impact for the individual customer and our society as a whole is kept to a minimum. ” The CBCS supervises all financial institutions that are active in the financial sector on Curaçao and Sint Maarten. These are not only credit institutions, insurers and pension funds, but also exchange offices, trust offices, asset managers, investment institutions and the stock exchange. In addition, the CBCS also supervises insurance intermediaries and consumer lenders. By the end of 2020, 442 institutions will be under supervision. These are 60 credit institutions, 35 lenders, 5 money transfer and exchange offices, 50 insurers, 59 insurance brokers, 12 pension funds, 83 trust service providers, 97 exemption holders trust services, 10 asset managers, 6 stock brokers, 13 investment institutions, 11 administrators investment institutions and 1 stock exchange . The supervision focuses on promoting the financial soundness of the institutions and on the adequate treatment by those institutions of their clients. In addition, the CBCS ensures that institutions meet their obligations with regard to the prevention of money laundering and terrorist financing via the financial sector in the countries. The CBCS has “scrutinized” the organization of supervision, according to the brochure. “The result of this is that supervision will change in the coming years.” The supervision is carried out proportionally. That is to say, the CBCS explains, “that we take into account the nature, size and complexity of the institutions under supervision”. “We are aware that internal governance and risk management at smaller institutions in particular is still under development and expertise on the islands is scarce.” That is why the Central Bank conducts “a lot of its own research” in the supervision of such institutions, in addition to the use of formal reports and of signals and investigations by third parties, such as the external auditor. The ambition is to get the governance and risk management of the institutions to a higher level, so that this can be increasingly supported in supervision. “We realize this is a long-term process,” the new brochure said. The focus will be on so-called “significant institutions”. The intensity of supervision differs from institution to institution. “The more important an institution is for society, the more intensive it is supervised. The reason is that with a highly significant institution the negative impact on society is greater if it has damage. ” Indicators with which the CBCS determines the significance are, for example, the size of the institution, the market share, the number of customers, the products they offer and their relevance to the local financial infrastructure. The highly significant institutions also run the risk of being ‘too big to fail’. If such an institution falls, the negative social consequences will be so great that it must be prevented with all possible effort. That is why we continuously keep a finger on the pulse at these institutions and we have an overview of the current risks. ” As an institution becomes less significant, the intensity of supervision of the institution decreases, but this is still sufficient for the CBCS to be able to determine whether the institution complies with the legal requirements. Priority
is available at “more risky institutions”, according to the brochure “New Style Supervision”. “We also pay more attention to institutions that are more risky. Then the chance of damage, problems and legal shortcomings is greater. ” This concerns all risks that can have a material impact on the business operations of the institution. In addition to identifying the various risks that an institution runs, the Central Bank also wants to determine to what extent the institution itself knows and controls those risks sufficiently and takes the correct measures to cover the risks so that damage is prevented. This requires that we have continuous insight into the current risk profile of the institution. ” The internal process at the CBCS has been redesigned for this purpose. In the past this was “more reactive and focused on compliance and identified shortcomings”, now it is “more proactive and risk based”. The internal processes that can be distinguished are data collection, risk identification, risk assessment and risk mitigation and intervention and enforcement.
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