Banks and Trust Companies Administrative Monetary Penalties Regulations 2016

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 Arrangement of Sections Section

1. Citation................................................................................................................2
2. Interpretation........................................................................................................2
3. Designation of contraventions..............................................................................2
4. Classification........................................................................................................3
5. Penalties for late or erroneous filings...................................................................3
6. Repeals.................................................................................................................3 FIRST SCHEDULE (REGULATIONS 3-5) 4 ADMINISTRATIVE MONETARY PENALTIES 4 SECOND SCHEDULE (REGULATION 6) 17 REPEALS 17

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 BANKS AND TRUST COMPANIES REGULATION ACT (CHAPTER 316) BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 The Governor of the Central Bank of The Bahamas, in exercise of the powers conferred by section 24(A) of the Banks and Trust Companies Regulation Act makes the following regulations —

1. Citation. (1) These Regulations may be cited as the Banks and Trust Companies (Administrative Monetary Penalties) Regulations, 2016. (2) These Regulations shall come into force on the 5th day of September,
3. Interpretation. In these Regulations — "licensee" means a person holding a licence under the provisions of the Banks and Trust Companies Regulation Act (Ch. 316); ''Money Transmission Agent'' means a person registered by the Central Bank pursuant to section 3A(b) of the Act; ''Money Transmission Service Provider'' has the meaning ascribed in section 2 of the Act; "person" means a natural person or a company; ''Private Trust Company'' has the meaning ascribed in section 2 of the Act; ''Registered Representative'' has the meaning ascribed in section 2 of the Act; "the Act" means the Banks and Trust Companies Regulation Act (Ch. 316).
4. Designation of contraventions. (1) Pursuant to section 24(A) of the Act — Page - 2

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 (a) the breach by a person of a provision of the Act or of a regulation set out in the second and third columns of the First Schedule are designated contraventions of the Act or of the regulation respectively; and (b) the non-compliance of a person with a direction issued or order made or any conditions and limitations imposed under a provision of the Act or a regulation set out in the second and third columns of the First Schedule are designated contraventions of the Act or of the regulation respectively. (2) A contravention set out in the First Schedule may be proceeded with under section 24(B) of the Act. 4. Classification. A contravention shall be classified as a minor, serious or very serious contravention, as indicated in the fourth column of the First Schedule. 5. Penalties for late or erroneous filings. (1) Subject to paragraph (2), the penalty in respect of a contravention that is classified as minor — (a) which consists of a late or erroneous filing; and (b) which is listed under items 3, 13, 14, 15, 16, 34, 35, 36, 57, 63, 69, 75, 84, 89 and 90 of the fourth column of the First Schedule, shall be two hundred and fifty dollars. (2) A minor contravention referred to in paragraph (1) which is continued for more than one day shall, pursuant to subsection (3) of section 24(A) of the Act, be subject to — (a) a penalty of two hundred and fifty dollars for each day or part of a day during which the contravention continues; and (b) an aggregate maximum penalty of ten thousand dollars. 6. Repeals. The regulations specified in the first column of the Second Schedule are repealed to the extent indicated in the second column of the Second Schedule. Page - 3

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 FIRST SCHEDULE (Regulations 3-5) ADMINISTRATIVE MONETARY PENALTIES No. Description of Contravention Act or Regulation Classification BANKS AND TRUST COMPANIES REGULATION ACT 1 Carrying on a business without being licensed, approved or registered by the Central Bank. Sections 3(1), (2) and (3), 3A(a) and (b) Very Serious 2 Failure of a specified person or class of persons to comply with the terms and conditions of an exemption granted by the Central Bank. Sections 3(4) and 6(1) Very Serious 3 Failure by a licensee to forthwith notify the Central Bank in writing of any change in the licensee's principal office in The Bahamas. Section 4(5)(a) Minor 4 Failure by a licensee to notify the Central Bank in writing of any change in the officers designated by the licensee pursuant to paragraph (a)(ii) or (iii) of subsection 4(4) of the Act. Section 4(5)(b) Very Serious 5 Failure by a licensee to obtain approval of the Central Bank to establish outside of The Bahamas a subsidiary, branch, agency or representative office. Section 5 Very Serious 6 Failure by a company which is a licensee under the Act to obtain the prior approval of the Central Bank to issue, transfer or dispose of its shares, or any other securities of such licensee. Section 6(1) Very Serious 7 Failure by a person referred to in section 6A(1) (a) or (b) to obtain the approval of the Central Bank before acquiring shares or other securities in a licensee. Section 6A(1)(a) or (b) Very Serious Page - 4

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 8 Failure by a person referred to in section 6A(1)(a) or (b) to comply with any condition imposed by the Central Bank. Section 6A(3) Very Serious 9 Failure by a person referred to in section 6A(1)(a) or (b) to comply with any notice of objection issued by the Central Bank. Section 6B(3) Very Serious 10 Failure by a person referred to in section 6A(1)(a) or (b) to comply with any direction issued by the Central Bank. Section 6C(2) Very Serious 11 Failure by a person to obtain the Central Bank's approval to use or continue to use a "prohibited word" in contravention of section 7(l)(a) and or (b) of the Act. Section 7(1)(a) and or (b) Serious 12 Failure to obtain the Central Bank's approval to solicit or receive deposits from the public. Section 7(1)(c) Very Serious 13 Failure by a licensee to publish a true and full yearly statement of its accounts on time. Section 8(1) Minor 14 Failure by a licensee to provide a copy of its annual audited financial statements to the Central Bank on time. Section 8(4) Minor 15 Failure to furnish the Central Bank with information at the time or in the form specified. Section 9(1) Minor, if the contravention relates to information required as part of periodic reports. Serious, in any other case. 16 Failure by a licensee to notify the Central Bank of an auditor's Section 12(1) Minor Page - 5

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 appointment on time. 17 Failure by a licensee to replace an auditor on the request of the Central Bank. Section 12(2) Serious 18 Failure by a licensee to provide an auditor of the licensee access to books, accounts and vouchers of the licensee or with requested information. Section 12(3)(a) Very Serious 19 Failure of an auditor or former auditor to give notice to the Inspector pursuant to section 12(3) (b) and or 12(4) of the Act. Section 12(3)(b) and/or Section 12(4) Very Serious 20 Failure by a licensee to provide the Inspector with access to its books, records, vouchers documents, cash and or securities. Section 13(3)(a) Very Serious 21 Failure to provide the Inspector with such information or explanation, within the time frame required by the Inspector, as the Inspector may reasonably require for the purpose of enabling him to perform his functions under the Act. Section 13(3)(b) Serious 22 Failure by an auditor of a licensee to provide the Inspector with such auditor's reports, working papers, information or explanation within the time frame required by the Inspector, as the Inspector may reasonably require for the purpose of enabling him to perform his functions under the Act. Section 13(3)(c) Serious 23 The making of untrue statements by an auditor in an audit report or the omission of essential facts in such report or the failure of such auditor to request pertinent information from a licensee which is being or has been audited by the auditor or Section 13(3)(d) or Section 13(3)(e) Very Serious Page - 6

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 failure by such auditor to report his findings to the Inspector. 24 Failure of a licensee to notify the Central Bank of any material information that may negatively affect the fitness and propriety of a director or senior manager of the licensee. Section 13B(1) Very Serious 25 Failure by a licensee to permit a foreign Supervisory Authority approved by the Inspector to conduct an inspection. Section 14(2) Very Serious 26 Making an unauthorised disclosure of a confidential report of examination. Section 16 (1) and (2) Serious 27 Failure by a licensee to comply with the terms and conditions of its licence. Section 18(1)(c) Very Serious 28 Failure by a licensee to comply with a direction of the Central Bank. Section 18(1)(h) Very Serious 29 Failure by an individual against whom a prohibition order has been issued pursuant to section 18F(4) of the Act, to comply with the order. Section 18F(4) Serious 30 Disclosure of information relating to (a) the identity, assets, liabilities, transactions or accounts of a customer of a licensee; or (b) any application by any person under the provisions of the Act where such disclosure is made in contravention of section 19(1). Section 19(1) Very Serious 31 Failure by a licensee to transfer dormant account balances to the Central Bank. Section 20(1) Minor 32 Failure by a licensee to keep all signature cards, signing authorities and records relating to dormant account balances transferred to the Section 20(2) Very Serious Page - 7

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 Central Bank. 33 Failure by licensee to expressly and specifically agree charges with customers. Section 21 Serious BANKS AND TRUST COMPANIES (ACQUISITION OF SHARES) REGULATIONS 34 Failure by a licensee to notify the Inspector of the acquisition of three per cent or more of the issued share capital of a publicly traded licensee, on time. Regulation 3(2) Minor BANKS AND TRUST COMPANIES (FOREIGN CURRENCY POSITION) REGULATIONS 35 Failure by a licensee to maintain the larger of the sum of net short or long positions in all foreign currencies including all outstanding spot and forward foreign exchange contracts and all on and off balance sheet assets and liabilities of the licensee at the appropriate spot exchange rates, at ten percent or less of its capital base. Regulation 3 Minor 36 Failure by a licensee to immediately notify the Inspector of a contravention of Regulation 3 in such form as the Inspector shall determine. Regulation 4 Minor 37 Failure by a licensee to take any remedial action required to be taken by the Inspector to ensure compliance with regulation 3. Regulation 5 Serious BANKS AND TRUST COMPANIES (EQUITY INVESTMENTS) REGULATIONS 38 Failure by a licensee to obtain the prior approval of the Bank to acquire or hold the shares, securities or other interests in a related party or to acquire, either Regulation 3 Serious Page - 8

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 directly or indirectly, more than five percent of the shares, securities, or any other interests in any other person. BANKS AND TRUST COMPANIES (PAYMENT OF DIVIDENDS) REGULATIONS 39 Failure by a licensee to obtain the prior approval of the Central Bank to declare or pay out dividends on its shares in the circumstances described in regulation 3. Regulation 3 Very Serious 40 Failure by a licensee to comply with restrictions imposed by the Inspector on the payment of dividends. Regulation 4 Very Serious BANKS AND TRUST COMPANIES (NEW APPOINTMENTS) REGULATIONS 41 Failure by a licensee to obtain the prior approval of the Central Bank for the appointment or replacement of a director or executive officer or to provide the specified information in relation thereto. Regulations 3 and 4 Serious BANKS AND TRUST COMPANIES (LARGE EXPOSURES) REGULATIONS 42 Incurring exposures on an aggregate basis to any individual counter-party or group of connected parties which exceed twenty-five percent of the licensee's capital base. Regulation 3(1) Serious 43 Holding non-capital investments in securities of a single issuer which exceed ten percent of the licensee's capital base. Regulation 3(2) Serious 44 Incurring exposures to related parties which in aggregate exceed fifteen percent of the licensee's capital base. Regulation 4(1) Serious 45 Incurring large exposures which in aggregate exceed eight hundred percent of the licensee's capital base. Regulation 6 Very Serious Page - 9

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 46 Failure to implement and maintain internal policies and internal limits and or to review internal policies Regulations 9 and 10 Serious 47 Failure by a licensee to report all large exposures to the Inspector when required by the Central Bank and in the manner required by the Inspector. Regulation 11 Very Serious 48 Failure by a licensee to notify the Inspector of any breach of regulations 3, 4 or 6 pursuant to regulation 12. Regulation 12 Very Serious 49 Failure by a licensee to provide the Inspector with particulars of any breach of regulations 3, 4 or 6 in the manner determined by the Inspector, within two working days after breaching the regulations. Regulation 12 Very Serious 50 Failure by a licensee to take immediate action to bring the exposure, which results in a breach of regulations 3, 4 or 6, within established limits, within ten working days of the breach. Regulation 12 Very Serious 51 Failure by a licensee to take any remedial action required by the Inspector to ensure compliance with regulations 3, 4 or 6. Regulation 14 Very Serious BANKS AND TRUST COMPANIES (PRIVATE TRUST COMPANIES) REGULATIONS 52 Failure by a Registered Representative to certify that a trust company for which it provides services qualifies for an exemption under paragraph (1) of regulation 3. Regulation 3(4) Serious 53 Failure by a Registered Representative to notify the Inspector if a private trust company ceases to meet the requirements of Regulation 3(5) Serious Page - 10

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 paragraph (1) of regulation 3. 54 Failure by a private trust company to have a Registered Representative in The Bahamas. Regulation 4(1)(a) Very Serious 55 Failure by private trust company to have at least one Special Director where an officer of a licensee is not its Registered Representative. Regulation 4(1)(b) Serious 56 Failure by a private trust company to maintain at the offices of the Registered Representative a copy of the Designating Instrument pertaining to the private trust company. Regulation 4(1)(c) Serious 57 Failure by a Registered Representative to notify the Inspector of any change in its principal address and or that it has ceased to act as a Registered Representative, on time. Regulation 4(2) Minor 58 Failure by a private trust company to maintain a paid up share capital of not less than $5,000 or be limited by guarantee in the sum of not less than $5,000. Regulation 4(3) Serious 59 Failure by a private trust company to provide its Registered Representative with requested information on time. Regulation 4(4) Serious 60 Amendment by a private trust company of its Memorandum or Articles of Association in a manner inconsistent with the definition of private trust company as set out in the Act. Regulation 4(5)(a) Minor 61 Failure of a Registered Representative, to restrict its business to the provision of Registered Representative services Regulation 6(1) Very Serious Page - 11

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 only. 62 Failure by a Registered Representative to maintain a minimum paid up share capital of $50,000. Regulation 8 Very Serious 63 Failure by a Registered Representative to advise changes in particulars provided in its application on time. Regulation 10 Minor 64 Failure by a Registered Representative to display its approval to act as a Registered Representative on its premises. Regulation 11 Minor 65 Failure of a Registered Representative to obtain possession of a Designating Instrument identifying the Designated Person or Designated Persons in respect of the private trust company for which it acts. Regulation 12(a) Serious 66 Failure by a Registered Representative to reasonably satisfy itself that the private trust company has been established for lawful purposes. Regulation 12(b) Very Serious 67 Failure by a Registered Representative to reasonably satisfy itself that the private trust company shall operate as a private trust company as defined in section 2 of the Act. Regulation 12(c) Serious 68 Failure by a Registered Representative to at all times maintain in The Bahamas copies of the documents specified in regulation 13(1)(a) through (d) and (f). Regulation 13(1) Very Serious 69 Failure by a Registered Representative to obtain from the Regulation 13(2) Minor Page - 12

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 directors of a private trust company a duly completed Compliance Certificate on time. 70 Failure by a Registered Representative that acts as a Bahamas Agent of a private trust company to enter into a service agreement with the private trust company to provide administrative services. Regulation 13(3) Minor 71 Failure by a Registered Representative to (i) verify the identities of persons listed in regulation 13(4)(a)(i) through (iv) and or (ii) make a suspicious transaction report to the Financial Intelligence Unit. Regulations 13(4) (a) and (b) Very Serious BANKS AND TRUST COMPANIES (MONEY TRANSMISSION BUSINESS) REGULATIONS 72 Failure by a Money Transmission Service Provider to have and maintain a minimum capital of $50,000 or such other sum as the Central Bank may require. Regulation 5(1) Very Serious 73 Failure by a Money Transmission Service Provider to have and maintain insurance coverage in such amount as the Central Bank may require. Regulation 5(2) Serious 74 Failure by a Money Transmission Service Provider to have the accounts of its business audited annually or at such other times as the Central Bank may require. Regulation 5(3) Very Serious 75 Failure by a Money Transmission Service Provider to submit its audited accounts to the Inspector on time. Regulation 5(4) Minor 76 Failure by a Money Transmission Regulation 6(3) Very Serious Page - 13

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 Agent to comply with the terms, and conditions of its registration. 77 Failure by a Money Transmission Service Provider and Money Transmission Agent to comply with the provisions of the Financial Transactions Reporting Act and Financial Transactions Reporting Regulations. Regulation 8(a) and (b) Very Serious 78 Failure by a Money Transmission Service Provider and Money Transmission Agent to maintain its head office or registered office in The Bahamas or to obtain the Central Bank's approval to establish its head office or registered office outside The Bahamas. Regulation 8(d) Very Serious 79 Failure by a Money Transmission Service Provider to keep and preserve books, accounts and other records listed in regulation 9(1) for a period of five years. Regulation 9(1) Serious 80 Failure by a Money Transmission Service Provider to keep and preserve books, accounts and other records in the form and manner specified in regulation 9(2). Regulation 9(2) Serious BANKS AND TRUST COMPANIES (TEMPORARY BUSINESS CONTINUITY OPERATIONS) REGULATIONS 81 Carrying on exempted activities, without being registered or failing to apply for registration, on time. Regulation 4(1) Serious 82 Failure by a licensee to notify the Inspector of matters specified in regulation 5(1). Regulation 5(1) Serious 83 An exempt person (i) establishing a permanent place of business in The Bahamas; (ii) carrying on any banking or trust Regulation 5(2)(a), (b) and (c) Very Serious Page - 14

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 business in or from The Bahamas other than the exempted activities; (iii) holding itself out as carrying on any banking or trust business other than the exempted activities. 84 Failure by an exempt person to notify the Inspector of changes in the name, address and occupation of any required person on time. Regulation 5(3) Minor 85 Failure to comply with any conditions of an extension or series of extensions of the time in which exempted activity may be carried out. Regulation 8(d) Minor BANKS AND TRUST COMPANIES (LIQUIDITY RISK MANAGEMENT) REGULATIONS 86 Failure by a licensee to establish and maintain, a liquidity risk management strategy appropriate to the nature, scale and complexity of its activities. Regulation 3 Serious 87 Failure by a licensee to implement its liquidity risk management strategy and or to review the strategy on a regular basis, and at a minimum annually. Regulations 4(a) and 4(b) Serious 88 Failure by a licensee to provide the Inspector with a copy of its liquidity risk management strategy. Regulation 5(1) Minor 89 Failure by a licensee to notify the Inspector of any change to its risk management strategy, on time and to provide the Inspector with a copy of the revised risk management strategy. Regulation 5(2) Minor 90 Failure by a licensee other than a licensee which is subject to section 19 and 20 of the Central Bank of The Bahamas Act to maintain a Regulation 6(1) Minor Page - 15

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 liquidity ratio of not less than twenty per cent. 91 Failure by a licensee to provide the Inspector with such particulars of its liquidity position, in such manner, frequency and form as may be specified by the Inspector. Regulation 9(a) Very Serious 92 Failure by a licensee to immediately inform the Inspector of any concerns it has about its current or future liquidity position as well as plans to address such concerns. Regulation 9(b) Very Serious 93 Failure by a licensee to take such remedial action as the Inspector directs to ensure compliance with paragraph (1) of regulation 6. Regulation 11 Very Serious Page - 16

BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 Schedule SECOND SCHEDULE (Regulation 6) REPEALS Regulations Extent of Repeal Banks and Trust Companies (Private Trust Companies) Regulations Regulation 15 Banks and Trust Companies (Acquisition of Shares) Regulations Regulation 8 Banks and Trust Companies (Equity Investments) Regulations Regulation 5 Banks and Trust Companies (Foreign Currency Position) Regulations Regulation 7 Banks and Trust Companies (Large Exposures) Regulations Regulation 16 Banks and Trust Companies (Liquidity Risk Management) Regulations Regulations 12 & 13 Banks and Trust Companies (Money Transmission Business) Regulations Regulation 12 Banks and Trust Companies (New Appointments) Regulations Regulation 5 Page - 17

Schedule BANKS AND TRUST COMPANIES (ADMINISTRATIVE MONETARY PENALTIES) REGULATIONS, 2016 Banks and Trust Companies (Payment of Dividends) Regulations Regulation 5 Made this day of , 2016 Governor Central Bank of The Bahamas Page - 18