Regulatory AlertsCentral Bank of Solomon Islands Prudential Guideline No. 12 on Related Party Transactions
The Central Bank of Solomon Islands issued Prudential Guideline No. 12 to regulate financial institutions' dealings with related parties, requiring all transactions to be conducted on an arm's length basis to prevent capital transfer or undue preference. The guideline mandates that boards establish robust risk management frameworks, adhere to strict prudential limits of 10% for individual exposures and 35% for aggregate exposures, and obtain prior regulatory approval for transactions exceeding these thresholds. Additionally, financial institutions must implement comprehensive internal policies, ensure transparent reporting, and face enforcement measures including penalties for non-compliance with these governance standards.
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