SUPERVISION by De Nederlandsche Bank in the BES as from July 2012

1. SUPERVISION by De Nederlandsche Bank in the BES as from July 2012 Information meeting / Roundtable St. Maarten – 6 February 2012 – Paul van den Berg – Legal Services Division – Supervision & Regulation– Marijn Ridderikhof – Expert Centre Culture, Organisation & Integrity EN

2. Introduction – Outline • Which financial enterprises fall under the scope of DNB supervision ? • What is expected of these enterprises ? • As from when will the supervisory requirements apply ? • What is the supervisory approach of DNB ?

3. Allocation of tasks to DNB and AFM– overview of «ongoing supervision» – * At present, there are no registered collective investment schemes or portfolio managers in the BES

4. Scope of supervision by DNB ?– overview – X= DNB grants the required licence

5. Scope of supervision by DNB – market access credit institutions – •  legal entity with registered office in BES  licence of DNB •  via branch in BES < USD 90 million in deposits per end of previous financial year  licence of DNB  location of registered office: CUR or SXM •  by provision of services in BES  licence of DNB  location of registered office: CUR or SXM

6. Scope of supervision by DNB– market access insurers – •  legal entity with registered office in BES licence of DNB •  via branch in BES < USD 5 million in gross premium income in previous financial year  licence of DNB  location of registered office: CUR or SXM •  by provision of services in BES notification to DNB [ new! ]  location of registered office: CUR or SXM

7. Scope of supervision by DNB – provision of incoming services by insurers – •  definition of «provision of incoming services» ‘initiative test’ •  requirements notification (sect. 2:23 Wfm BES) •  registered office CUR or SXM / legal personality •  licensed / entitled to exercise insurance business •  compliance with solvency requirements •  1 July 2012: one-off full notification to DNB of all incoming insurance services in BES

8. Scope of supervision by DNB – special provisions concerning market access – •  Financial markets register (Wfm BES) •  Enforcement action against ‘illegal’ enterprises •  Other special prohibitions •  prohibition on the use of the word «bank» •  prohibition on raising callable funds (or acting as a broker)

9. Scope of supervision by DNB – credit institutions & credit unions – •  legal entity with registered office in BES Wfm BES (prudential req. & integrity) Wwft BES & Sanctions Act •  via branch office in BES  Wfm BES (integrity), Wwft BES & Sanctions Act •  by provision of services in BES  Wwft BES & Sanctions Act

10. Scope of supervision by DNB– life insurers – •  legal entity with registered office in BES Wfm BES (prudential req. & integrity) Wwft BES & Sanctions Act •  via branch office in BES  Wfm BES (integrity), Wwft BES & Sanctions Act •  by provision of insurance services in BES  Wfm BES (section 2:23), Wwft BES & Sanctions Act

11. Scope of supervision by DNB– non-life insurers & funeral insurers (BiK) – •  legal entity with registered office in BES Wfm BES (prudential req. & integrity) Sanctions Act •  via branch office in BES  Wfm BES (integrity), Sanctions Act •  by provision of insurance services in BES  Wfm BES (section 2:23), Sanctions Act

12. What is expected of financial enterprises?– reporting requirements – •  legal entity with registered office in BES •  banks  reference to (New) Charts of Accounts of CBCS & transitional provisions on implementation of Basel II •  insurers  reference to reporting framework / forms of CBCS (National Ordinance for insurance industry CUR / SXM) •  ‘small’ branch offices in BES •  banks / insurers  ‘turnover’ of branch office in BES must show from the annual accounts of the registered (head-)office •  foreign banks / insurers •  separate bookkeeping of activities in BES

13. What is expected of financial enterprises?– integrity requirements in the Wfm BES (1) – personal conflicts of interest insider trading misuse of information Personal integrity internal fraud Aspects of integrity bribery / corruption money laundering organizational c.o.i / harm 3rd parties interests Organizational integrity Relational integrity financing of terrorism tax fraud external fraud

14. What is expected of financial enterprises?– integrity requirements in the Wfm BES (2) – integrity supervision does the institution have control over its integrity risks ? Ensure trustworthiness of integrity sensitive functions DNB fit & proper tests  policymakers + internal supervisors Personal integrity Tone at the top Focus on aspects of integrity Governance structure Internal procedures Costumer due diligence (CDD) Relational integrity Organizational integrity Line / Compliance / Risk Counterparty due diligence Management of incidents Fraud control ‘Integrity-conscious culture’

15. What is expected of financial enterprises?– integrity requirements in the Wfm BES (3) – • Rules on financial enterprises with establishment (= registered office / branch) in BES: •  proper & sound operation of business (“integere bedrijfsvoering”) •  policy - procedures - measures  systematic analysis of integrity risks •  arrangement of compliance function •  client acceptance •  protected bank accounts (credit institutions) •  ‘back to back positions (credit institutions)

16. What is expected of financial enterprises?– integrity requirements in the Wfm BES (4) – • Further aspects of proper & sound business operations (“integere bedrijfsvoering”) •  duty to report incidents •  integrity sensitive functions •  conflicts of interests •  measures to comply with AML/CFT-regulations in Wwft BES (credit institutions / life insurers) •  measures to comply with Sanctions Act

17. As from when will the regulations apply ? •  In effect largely since the introduction and subsequent changes of National Ordinances of the former Netherlands Antilles + Procedures & Guidelines of BNA (CBCS) •  Formally as from 10/10/2010 via Wtbk 1994 BES, Wtv BES, Wid BES, Wet MOT BES, Sanctions Act + ministerial regulations  Final regulatory framework as from01/07/2012 via Wfm BES, Wwft BES and Sanctions Act + decrees, by-laws & regulations

18. Overview of Acts & regulations – final regulatory framework from 01/07/2012 –

19. The supervisory approach of DNB •  Supervisory approach: risk based •  Enforcement policy / Supervisory instruments •  Information www.bes.dnb.nl regulations on sanctions  News Service DNB (subscriptions via www.dnb.nl) updates ‘FATF high risk jurisdictions’(please be aware: no announcements in writing!) •  No permanent presence of DNB Supervision in BES

20. Cooperation DNB – CBCS (1) •  Reporting framework & -formats •  credit institutions  (New) Charts of Accounts CBCS •  insurers  reporting framework / forms CBCS (National Ordinance insurance industry CUR / SXM) •  Ongoing supervision  trustworthiness testing of policy-makers (exchange of information) •  implementation of Capital Accord Basel II (credit institutions)

21. Cooperation DNB – CBCS (2) •  Council of Supervisors of the Kingdom • participants: AFM, CBA, CBCS en DNB Working Group on the Harmonisation of • Integrity Supervision • “harmonisation of the requirements concerning proper & sound • business operations (“integere bedrijfsvoering”) – specifically • AML/CFT – and the supervision thereof, aimed at reaching a • ‘level playing field’ within the Caribbean part of the Kingdom” •  Bilaterally, in various fields, such as: •  support in research •  support in the drafting of guidelines

22. Contact & Information •  markttoegang-bes@dnb.nl •  questions about licensing or market access  remarks or reports on financial enterprises that are active in BES without the required licence or authorisation •  Via your regular contact person at the Supervisory department(s) of DNB •  info@dnb.nl or tel. +31 20 524 911 •  DNB Information Desk