Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697630469236.pdf (Antigua and Barbuda)
No.

14 of 2005.

The Banking Act, 2005. inn 1 ANTIGUA AND BARBUDA [ L.S. ]

I Assent, James B. Carlisle, Governor-General.

13th September, 2005.

ANTIGUA AND BARBUDA No.

14 of 2005 LL FOR AN ACT to provide for regulating banking business.

[ Published in the Official Gazette Vol.

XXV No.

57 dated 15th September, 2005 ] ENACTED by the Parliament of Antigua and Barbuda as follows: PRELIMINARY 1.
This Act may be cited as the Banking Act, 2005 and shall come into operation on such date as the Minister may, by No- tice published in the Gazette, appoint.

Short title and commencement.

2.

In this Act unless the context other requires — Interpretation.

“Agreement” means the Agreement establishing the East- ern Caribbean Central Bank made on the 5th day of July, 1983, the text of which is set out in the Schedule to the Eastern Caribbean Central Bank Agreement Act; Cap.

142.
142.

“affiliate” in relation to a financial institution means (a) a company which is or has at any relevant time been — (i) a holding company or subsidiary of a finan- cial institution; 2 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (ii) (iii) a subsidiary of a holding company of a finan- cial institution; or a holding company of a holding company or a subsidiary of a subsidiary of a financial insti- tution; or any company over which a financial institution has control; any company over which a financial institution; and any person associated with a financial institution has control; any company which has common ownership with a financial institution.
any company which has the same beneficial owner and share common management and interlinked businesses witha financial institution; (b) (c) (d) (e) and “affiliation” shall be construed accordingly.

“assigned capital” means the net assets derived from the funds of a foreign financial institution that such an institu- tion is required to keep during the term of its licence in Antigua and Barbuda in accordance with the Regulations that the Minister after consultation with the Central Bank may prescribe.
“auditor” means an external auditor that is — (a) (b) a person who holds a practising certificate issued un- der the Accountancy Profession Act, 1992 and is certified to practise as an auditor; any other person approved by the Minister, acting on the recommendation of the Central Bank; “bank” means financial institution whose operations in- clude the acceptance of deposits subject to the transfer of funds by the depositor by cheque; “banking business” means the business of receiving funds through — No.
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The Banking Act, 2005. inn 3 ANTIGUA AND BARBUDA (i) (ii) (iii) the acceptance of monetary deposits which are repayable on demand or after notice or any similar operation; the sale or placement of bonds, certificates, notes or other securities and the use of such funds, either in whole or in part, for loans or investment; and or any other activity recognised by the Central Bank as banking practice and which a finan- cial institution may additionally be authorised to do; “board” means the board of directors or other body re- sponsible for the management of a financial institution; “borrower group” means— (a) (b) (c) (d) (e) a family group comprising an individual and that individual’s spouse, parent, child, brother or sister where each member of the group is substantially dependent upon the same income sources; a company in which the family group indicated in paragraph (a) has control; a group of companies which is under a common control; a group of persons in which the creditworthiness, ability to generate funds or the future viability of each, depends on one or other member of the group; a group of persons in which one member has power directly or indirectly to control the other members; or (f) any other group of persons as may be determined by the Central Bank; “business of a financial nature” includes the collection of funds in the form of deposits, shares, loans, premiums, and the investment of such funds in loans, shares and other securities in the types of businesses set out in Schedule II but does not include banking business; 4 The Banking Act, 2005.
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ANTIGUA AND BARBUDA “Central Bank” means the Eastern Caribbean Central Bank established under Article 3 of the Agreement; “connected” or “related” means where the interest of two or more persons or groups of persons are so interrelated that they should be considered as a single unit or bor- rower group; “control” means the ability of a person to secure, through voting rights or power in a licenced financial institution or other person or by an agreement or other powers con- ferred by the by-laws, articles of association or other docu- ment regulating the operations of the licenced financial in- stitution or other person, that the business and affairs of the licenced financial institution or other person are conducted in accordance with the wishes of that frist mentioned per- son; “Council” means the Monetary Council established un- der Article 7 of the Agreement; “credit institution” means any financial institution other than a bank whose business is that of money lending or the granting of credit facilities; “director” includes any person occupying the position of director of a company by whatever name called and any person in accordance with whose directions or instruc- tions the directors of a company are accustomed to act; “exposure” includes advances, credit facilities, guaran- tees, repurchase agreements, swap agreements, and eq- uity investments; “financial group” means in relation to a financial institu- tion, that financial institution and any affiliate thereof which conducts banking business or business of a finan- cial nature; “financial institution” includes any person doing bank- ing business but does not include a person carring on busi- ness under the International Business Corporation Act and all offices and branches of a financial institution in Antigua and Barbuda shall be deemed to be one financial institu- tion; No.
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The Banking Act, 2005. inn 5 ANTIGUA AND BARBUDA “foreign financial institution” means a financial institu- tion formed under the laws of a country other than Antigua and Barbuda which carries on banking business in Antigua and Barbuda; “holding company” means a body corporate that controls a body corporate; “international financial institutions” refers to the Interna- tional Monetary Fund, the International Bank for Recon- struction and Development, the International Develop- ment Bank, and the International Finance Corporation; “licensed financial institution” means a financial institu- tion licensed under the provisions of this Act; “local financial institution” means a financial institution formed under the laws of Antigua and Barbuda; “Minister” means the Minister responsible for Finance; “Participating Governments” has the meaning assigned to it in the Agreement; “person” includes a public body, company, partnership, trust, association or body of persons whether corporate or unincorporate; “place of business” means any office, including a mobile office, of a financial institution in Antigua and Barbuda; “principal place of business” means, in relation to - (a) (b) a local financial institution, its principal office in Antigua and Barbuda; and a foreign financial institution, the office desig- nated in its licence; “significant shareholder” means a person who either alone or with an affiliate or related or connected person, is en- titled to exercise or control more than 20% of the voting rights at any general meeting of the licensed financial institution or another company of which the licenced fi- nancial institution is a subsidiary;” 6 The Banking Act, 2005.
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ANTIGUA AND BARBUDA “subsidiary” means a body corporate that is controlled by another body corporate; “unsecured” in relation to advances or credit facilities, means — (a) (b) advances or credit facilities granted without security; or in the case of advances or credit facilities against security, any part of such advances or credit facilities which at any given time ex- ceeds the market value of the assets compris- ing the security given, or which exceeds the valuation approved by the Central Bank whenever it deems that no market value ex- ists for those assets.
PART I LICENCES Requirement for licence.

3.

(1) A person shall not carry on banking business or hold himself out as carrying on banking business in Antigua and Barbuda without a licence granted by the Minister.

(2) A financial institution which, at the commencement of this Act, holds a valid licence to carry on banking business in Antigua and Barbuda shall be deemed to have been granted a licence under section 5.
(3) Notwithstanding the provisions of subsection (2), the Min- ister shall, within such period of the commencement of this Act, as the Minister after consultation with the Central Bank may determine, issue to an existing a financial institution which hold a licences under the Banking Act reapeled by section 69 a new licence under this Act.
(4) Any person intending to carry on banking business in Antigua and Barbuda shall, before commencing such business, apply for a licence under the provisions of section 5.

(5) Any person who contravenes the provisions of subsec- tion (1) commits an offence and is liable on summary convic- tion on indictment.

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The Banking Act, 2005. inn 7 ANTIGUA AND BARBUDA Examination of books of person carrying on banking business without a licence.
(a) (b) in the case of a financial institution, to a fine of five hundred thousand dollars, and in the case of a con- tinuing offence, to a further penalty of five thou- sand dollars for each day on which the offence is continued after conviction thereof; in the case of a director or a manager, to a fine of two hundred and fifty thousand dollars or to im- prisonment for a term not exceeding three years or to both such fine and imprisonment; and in the case of a continuing offence, to a further penalty of two thousand, five hundred dollars for each day on which the offence is continued after conviction thereof.
4.
(1) If the Central Bank has reasonable cause to suspect that— (a) (b) any person is carrying on banking business without a licence granted under this Act; and evidence of contravention of subsection (1) of sec- tion 3 is to be found on any premises in Antigua and Barbuda, the Central Bank, after consultation with the Minister, may lay information on oath to a Magistrate, and the Magis- trate may, by warrant, authorize an officer or officers of the Central Bank named in such warrant to enter and search such premises with a police officer and seize any books, accounts, records and other documents, cheques and securities (in this subsection referred to as “the rel- evant documents”) and any cash as may be found on the premises relating to the conduct of banking business, to ascertain whether the person is carrying on banking busi- ness without a licence.
(2) A warrant issued pursuant to subsection (1) may autho- rize: (a) (b) (c) the Central Bank to detain the relevant documents for a period not exceeding 30 days; the officer or officers to make copies of the relevant documents; and the Central Bank to retain copies of the relevant documents.

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ANTIGUA AND BARBUDA (3) An officer of the Centural Bank, in whose name a war- rant has been granted pursuant to subsection (1), in the case of resistance, may break open any door, and force and remove any other impediment or obstruction to such entry, search or seizure.
(4) A person refusing to make available for examination any books, accounts and records having been requested to do so by the Central Bank commits an offence and is liable on summary conviction to a fine not exceeding five thousand dollars or im- prisonment for a term not exceeding six months or to both such fine and imprisonment.
(5) Without prejudice to section 3(5), where a person is found under subsection (1) to be conducting banking business with- out a licence, the Minister may on the recommendation of the Central Bank appoint a receiver for the person under paragraph (f) of section 43.

(6) A person holding funds which the person has obtained by doing banking business without being in possession of a licence granted under this Act shall repay such funds in accor- dance with the directions of the Central Bank.
(7) The Minister may request the Central Bank to undertake the actions under subsection (1) where the Minister has reason- able cause to suspect that the conditions in subsection (1) (a) and (b) exist.

Application for licence.

5.

(1) In order to obtain a licence as a financial institution, a person shall apply in writing to the Minister and submit the documents and other information specified in Schedule I.
(2) In considering an application for a licence the Minister shall, request the Central Bank to conduct such investigation as it may deem necessary to ascertain: (a) (b) (c) the validity of the documents submitted in accor- dance with Schedule I; the financial condition and history of the applicant; the character of the business of the applicant; (d) whether the proposed directors and persons who are to constitute the management of the financial No.

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The Banking Act, 2005. inn 9 ANTIGUA AND BARBUDA institution are fit and proper in accordance with the criteria under section 26; (e) the adequacy of the capital structure; (f) (g) the earning prospects of the applicant; the convenience and needs of the community to be served by the granting of the licence; (h) the suitability of the significant shareholders; (i) (j) the transparency of the ownership structure; the source of initial capital; and (k) whether the proposed legal and managerial struc- tures will hinder effective supervision of the finan- cial institution.
(3) A foreign financial institution that intends to open a branch or an affiliate within Antigua and Barbuda must in ad- dition to submitting the documents and other information re- quired under subsection (1), submit with its application: (a) (b) a certificate showing that the banking supervisor of the jurisdiction in which it was incorporated, formed or organised has no objection to its application for a licence to do business in Antigua and Barbuda; and evidence satisfactory to the Central Bank that it is subject to a comprehensive supervision on a con- solidated basis by the appropriate authorities in the jurisdiction in which it was incorporated, formed or organised.
(4) Within a reasonable time of its receipt of the application for a licence the Central Bank shall make its recommendations to the Minister.
(5) Within 30 days of the receipt of the recommendations of the Central Bank the Minister shall either grant the licence and may attach any conditions as the Minister deems to be prudent in respect of the licence or, if the Minister is of the opinion that it would be undesirable in the public interest to grant the li- cence, he may refuse to grant the licence and inform the appli- cant that he has refused to grant the licence.

ANTIGUA AND BARBUDA Restricted words, names, and practices.
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(6) A financial institution shall not be granted a licence un- der this section unless it fulfills the capital requirements speci- fied in section 13.

6.
6.

(1) No financial institution shall be granted or continue to hold a licence under a name which so closely resembles the name of an existing financial institution in the territories of the Participating Governments or elsewhere as would be likely, in the opinion of the Minister, after consultation with the Central Bank, to mislead the public.
(2) Except with the written consent of the Minister after con- sultation with the Central Bank, no person other than a licensed financial institution shall use the words “bank”, financial insti- tution”, “savings” and “loan”, or any of their derivatives or any mutations thereof in any language, or any other word indicat- ing the carrying on of banking business, in the name, descrip- tion or title under which such person is carrying on business in Antigua and Barbuda; or make any representation to such ef- fect in any other manner whatsoever for the purpose of indicat- ing that such person is carrying on banking business in Antigua and Barbuda: Provided that nothing shall prohibit an association of institu- tions licensed under this Act formed for the pursuit of common interests from using the words “bank”, “financial institution”, “savings”, or “loan” or any of their mutations or derivatives in any language as a part of its name or description of its activi- ties.
(3) No person other than a licensed financial institution shall, except with the written consent of the Minister after consulta- tion with the Central Bank: (a) make or continue to make representations in any billhead, letter, letterhead, circular, paper, notice, advertisement or in any other manner whatsoever that such person is carrying on banking business; (b) in any manner whatsoever solicit or receive depos- its from the public, or any employee of that person; (4) Any person who contravenes the provisions of this sec- tion commits an offence and is liable on conviction on indict- ment to a fine not exceeding two hundred fifty thousand dollars or to imprisonment for a term not exceeding five years or to No.
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The Banking Act, 2005. inn 11 ANTIGUA AND BARBUDA both such fine and imprisonment; and in the case of a continu- ing offence to a further penalty of two thousand dollars for each day on which the offence is continued after conviction thereof.

7.

A copy of the licence granted under this Act shall be displayed and kept displayed in a conspicuous place in the pub- lic part of any place of business of the licensed financial insti- tution.

Display of licence certificate 8.


(1) Any licence granted under this Act shall authorise the licensed financial institution to carry on banking business in Antigua and Barbuda at the place of business designated in the licence and at such other place as the Minister may after con- sultation with the Central Bank, in writing authorise.

Authorisation of location and approval of new business premises.
(2) No financial institution shall open a new place of busi- ness or change the location of an existing place of business in Antigua and Barbuda without the prior approval of the Minis- ter after consultation with the Central Bank.

(3) No financial institution shall close an existing place of business in Antigua and Barbuda without having given ninety days prior notification to the Minister and the Central Bank.
(4) No local financial institution shall open a place of busi- ness elsewhere than in Antigua and Barbuda without the prior approval of the Minister after consultation with the Central Bank.

(5) No local financial institution shall close a place of busi- ness outside of Antigua and Barbuda without having given twenty-one days prior notification to the Minister and the Cen- tral Bank.
(6) The Minister, acting on the recommendation of the Cen- tral Bank, may direct the closing of a branch of a local financial institution operating outside of the territories of the Participat- ing Governments or impose limitations on the activities of such a financial institution if the Central Bank determines that the supervision by the host country supervisor is not adequate rela- tive to the risks that the branch presents to the viability or sound- ness of the local financial institution.
(7) (a) No financial institution may establish or change the location of an electronic banking system in a place other than a 12 The Banking Act, 2005.

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ANTIGUA AND BARBUDA place of business approved under sub-section (2) of this sec- tion, without having given thirty days prior notification to the Minister and the Central Bank.
(b) Where a financial institution operating under a valid li- cence has, at the commencement of this Act, established an elec- tronic banking system in a place other than a place of business such financial institution shall notify the Central Bank of the location of all such electronic banking systems within sixty days of the date of commencement of this Act.
(8) Any person who contravenes the provisions of this sec- tion commits an offence and is liable on summary conviction to a fine not exceeding two hundred and fifty thousand dollars or to imprisonment for a term not exceeding five years or to both such fine and imprisonment; and in the case of a continu- ing offence to a further penalty of two thousand dollars for each day on which the offence is continued after conviction thereof.

Restriction on vot- ing rights.

9.
(1) Subject to subsection (7), except with the approval of the Central Bank, no person shall hold or acquire either directly or indirectly: (a) (b) such of the paid-up capital of a local financial in- stitution which would confer upon such person more than 20 per cent of the total voting rights of all the members at a general meeting of the local financial institution, or in the case of a local financial institution not hav- ing a share capital, more than 20 per cent of the total voting rights of all the members entitled to vote at a general meeting of the local financial institu- tion.
(2) Where the Central Bank determines that the interests of a group of two or more members of a local financial institution are connected or related, the total holdings of those members shall be combined and deemed to be the holdings of a single member.

(3) A local financial institution must submit a report quar- terly to the Central Bank on the names and addresses of any person who owns five per cent or more of the total voting rights of the local financial institution and where such a person is a No.
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The Banking Act, 2005. inn 13 ANTIGUA AND BARBUDA nominee, the name and address of any beneficial owner for whom such a person holds the shares or other ownership interests.

(4) In the event that the Central Bank, determines that the provisions of subsection (1) have been violated, the Central Bank may issue an order under section 22 requiring the divestment of so much of the offending interest as is necessary to secure compliance with the provisions of subsection (1).
(5) A director of a local financial institution who knows or ought reasonably to know of a transfer made in violation of subsection (1) and who fails to disclose it to the Central Bank commits an offence and is liable on summary conviction to a fine not exceeding two thousand dollars or to imprisonment for a term not exceeding three months.
(6) Any person who knowingly acquires an interest in viola- tion of subsection (1) commits an offence and is liable on sum- mary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months.
(7) Subsection (1) shall not apply to the Government or to any person who at the commencement of this Act has acquired more than 20 per cent of the total voting rights of all the mem- bers of the local financial institution, but no such person shall without the consent of the Central Bank, acquire any additional shares which shall have the effect of increasing that person’s percentage of the voting rights.

10.
10.

(1) Unless the approval of the Minister acting upon the recommendation of the Central Bank is first obtained no finan- cial institution shall: Actions of fundamental change requiring approval.
(a) (b) (c) (d) transfer the whole or any substantial part of its as- sets or liabilities in Antigua and Barbuda other than in the ordinary course of its business; effect a reduction of its paid up or, as the case may be, assigned capital established under section 13; alter its name as set out in its licence; enter into a merger or consolidation within Antigua and Barbuda; or 14 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (e) in the case of a local financial institution, amend the instrument or charter under which it is formed in Antigua and Barbuda.

(2) Every foreign financial institution shall notify the Min- ister and the Central Bank of any amendment to the instrument or charter under which it is formed, within 60 days of such amendment.
(3) In recommending any proposed action under subsec- tion (1), the Central Bank shall be guided by the criteria speci- fied in section 5 (2) Revocation of licence and declaration of discontinuance of service.

11.
(1) The Minister, acting upon the recommendation of the Central Bank, may revoke any licence to carry on banking business in Antigua and Barbuda if the licenced financial insti- tution: (a) (b) (c) (d) (e) (f) fails to commence operations within a period of 12 months following the granting of the licence; fails to comply with the conditions of its licence or the measures required by the Central Bank in ac- cordance with section 22; is in breach of any of the provisions of this Act which is applicable thereto; ceases to carry on banking business in Antigua and Barbuda; is conducting its affairs in a manner detrimental to the national interest or to the interest of its deposi- tors; fails to maintain sufficient capital or liquidity to meet its liabilities; (g) has not fulfilled or is unlikely to fulfill the minimum criteria for licensing under this Act; or (h) merges or amalgamates with another company or institution and the licence is no longer required.
(2) Before revoking any licence under subsection (1), the Minister shall give the financial institution concerned notice in writing of his intention to do so, specifying therein the grounds No.

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The Banking Act, 2005. inn 15 ANTIGUA AND BARBUDA upon which he proposes to make the revocation and shall re- quire the financial institution to submit to him within a speci- fied period being not less than 30 days, a written statement of objections to the making of the revocation and thereafter, the Minister shall advise the financial institution of his decision.
(3) Where the decision referred to in subsection (2) is to revoke the licence, the notice shall include a statement of the reasons for the decision.

(4) Notice under subsection (2) shall be served at the last known address of the financial institution or shall be published in the Gazette or in any local newspaper.

(5) If any financial institution is aggrieved by any decision made under subsection (1), that financial institution may ap- peal to the High Court within fourteen days of such decision.
(6) Where a licence to carry on banking business in Antigua and Barbuda has been revoked, the Minister shall, as soon as possible thereafter cause a notice of the revocation to be pub- lished in the Gazette and a newspaper circulating in Antigua and Barbuda and cause such other steps to be taken as he deems necessary to inform the public of such revocation.

12.

(1) Every financial institution shall pay such annual li- cence fee as the Minister, may by Order published in the Ga- zette, prescribe.
Licence fees and penalty for default.

(2) The Minister, after consultation with the Central Bank, may prescribe different licence fees in respect of different classes or categories of financial institutions and such fees shall apply uniformly to such classes or categories.

(3) All licence fees paid under this Act shall be payable to the Government and form part of the Consolidated Fund.
(4) A person who fails to comply with any requirement of this section and where such person is a company, the company and every director, manager, secretary or other officer of the company who knowingly authorises or permits the default com- mits an offence and is liable on summary conviction to a fine not exceeding ten thousand dollars and in the case of a continu- ing offence to a further penalty of one hundred dollars for each day on which the offence is continued after conviction thereof.
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ANTIGUA AND BARBUDA FINANCIAL REQUIREMENTS AND LIMITATIONS PART II Minimum paid-up or assigned capi- tal.

13.
13.

(1) Every licensed financial institution shall maintain in Antigua and Barbuda unimpaired, paid-up or, as the case may be, assigned capital at least equal to the minimum amounts speci- fied in accordance with the following requirements: (a) (b) if operating as a bank, the minimum required capi- tal shall be not less than five million dollars; if operating as a credit or other financial institu- tion, the minimum required capital shall be not less than one million dollars.
(2) The Minister may, after consultation with the Central Bank from time to time: (a) (b) by written notice to the main office of each licensed credit or financial institution in Antigua and Barbuda; or by notice in a newspaper of general circulation in Antigua and Barbuda or in the Gazette; increase or vary the minimum amounts of required capi- tal specified in sub-section (1) in respect of all or any appropriate class of financial or credit institution.
(3) Any financial institution which contravenes sub-section (1) commits an offence and is liable on summary conviction to a fine not exceeding fifty thousand dollars.

14.
14.

(1) Subject to this section every licensed financial insti- tution shall maintain a reserve fund and shall, out of its net profits of each year transfer to that fund a sum equal to not less than twenty per cent of such profits whenever the amount of the reserve fund is less than a hundred per cent of the paid-up or, or as the case may be, assigned capital of the financial insti- tution.
(2) No financial institution shall declare, credit or pay any dividend or make any other transfer from profits whenever such declaration, credit, payment or transfer would result in an im- pairment of the capital required under section 13.

Maintenance of reserve fund.

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The Banking Act, 2005. inn 17 ANTIGUA AND BARBUDA (3) Notwithstanding the provisions of subsection (1), the Minister, acting upon recommendation by the Central Bank may, on application made by a foreign financial institution, exempt such an institution from the requirements of this section.
1 5 1 5 1 5 1 5 1 5 1 A licensed financial institution shall not at anf ti[e have a capital adequacf ratio of less than such percentage and calculated in such [anner as the Central Bank [af deter- [ine in respect of all or anf appropriate class of financial institution Adequacy of capital.
(2) Any ratio required under subsection (1) shall be calcu- lated on a consolidated and a solo basis for every licenced fi- nancial institution within a financial group.

(3) Where there is a deficiency in the prescribed capital ad- equacy ratio, the Central Bank shall require the licenced finan- cial institution to present a plan that is satisfactory to the Cen- tral Bank to reconstitute its capital adequacy ratio within thirty days or such longer period as may be determined by the Central Bank.
(4) Where the financial institution (a) (b) fails to present a satisfactory plan pursuant to sub- section (3); or fails to implement a plan presented pursuant to sub- section (3) the Central Bank shall take such remedial action as it deems necessary in accordance with section 22.

16.
(1) A financial institution shall not directly or indirectly, except with the approval of and subject to such terms and con- ditions as the Central Bank, may determine: (a) incur exposures to any person, any member of a borrower group or to any borrower group so that the total value of the exposures in respect of such person, member or borrower group, is at any time more than twenty-five per cent of the aggregate amount of the financial institution’s unimpaired capital and reserves: Restriction on certain activities of licensed financial institutions and affiliates.
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ANTIGUA AND BARBUDA Provided that the limitation upon the foregoing transactions shall not apply in respect thereof if such transactions represent loans to a Participating Government, or to the statutory boards, agen- cies, or local government bodies of a Participating Government which are guaranteed by the Participating Government; (b) (c) (d) (e) grant any advance against the security of its own shares, the shares of its affiliates, or the shares of a company to whom the advance is being granted; grant or permit to be outstanding to its officers and employees unsecured advances which aggregate amount for any one officer or employee exceeds the annual remuneration of such officer or em- ployee; engage in trade, except insofar as may be tempo- rarily necessary in the conduct of its business or in the course of the satisfaction of debts due to it; acquire or continue in the acquisition of any own- ership interest in any financial, commercial, agri- cultural, industrial or other undertaking except such interest as a financial institution may acquire for the satisfaction of debts due to it, which shall be disposed of as soon as possible thereafter, but this paragraph shall not prevent the purchase and sale of shares or stocks for trust accounts or upon the order and for the account of a customer without re- course; but a financial institution may: (i) (ii) hold shares in any company set up for the purpose of promoting the development of a money market or securities market or of im- proving the financial mechanism for the fi- nancing of economic development in Antigu and Barbuda; hold shares in another company the aggre- gate value of which does not at any time ex- ceed ten per cent of the sum of the unimpaired capital and reserves of that financial institu- tion, and where there is no established mar- ket value for such shares the value of such shares shall be established on the basis of a valuation approved by the Central Bank; but No.
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The Banking Act, 2005. inn 19 ANTIGUA AND BARBUDA the total amount of a financial institution’s holdings under this paragraph may not exceed sixty per cent of the sum of the unimpaired capital and reserves of the financial institu- tion; (f) purchase, acquire or lease immovable property ex- cept as may be necessary for the purpose of con- ducting its business as a financial institution includ- ing provision for future expansion and housing its officers and employees: Provided that: (i) (ii) it shall be allowed a period of three years in which to comply with this paragraph; and in respect of any real or immovable property held or leased by it prior to the commence- ment of this Act for purposes other than those referred to herein, it may secure a debt on any property immov- able or movable and in default of repayment may acquire such property for resale as soon as possible thereafter, but not later than five years thereafter.
(2) (a) Where the total value of exposures granted under paragraph (a) of subsection (1) is at any time more than fifteen per cent of the aggregate amount of the financial institution’s unimpaired capital and reserves the transaction shall be secured by collateral, fully covered by insurance, having an ascertainable market value or otherwise having such a value as collateral found in good faith by an officer of such financial institution, of at least twenty per cent more than the amount of the obligations secured thereby.
(b)The aggregate of exposures in excess of ten percent incurred by a financial institution shall not exceed four hun- dred per cent of its unimpaired capital and reserves, or such other percentage as the Minister on the recommendation of the Central Bank may by Order prescribe.

(c)The amount of exposures permitted under paragraph (a) of subsection (1) may be varied or suspended from time to time by the Central Bank.

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ANTIGUA AND BARBUDA (3) Any financial institution which contravenes the provi- sions of subsection (1)(a), (1)(e), (1)(f), or subsection (2) com- mits an offence and is liable on summary conviction to a fine not exceeding ten thousand dollars for each contravention.
(4) A financial institution shall not directly or indirectly grant or permit to be outstanding unsecured advances unless such advances have been approved by its board and the Central Bank has been provided with prior notification thereof to: (a) (b) (c) (d) (e) the members of its board whether such advances are obtained by them jointly or severally; any person in which it or any one or more of its directors have any interest as a director, partner, manager, agent, member or otherwise; any person who owns, controls or has the power to vote more than ten per cent of any class of voting securities of the financial institution; any person serving as an auditor under section 19 or conducting an examination under section 20; any person, whose relationship to another finan- cial institution in which a correspondent account is maintained, is within any of the categories described in paragraphs (a) to (d); (5) The total of all unsecured advances made to any person within any of the categories described in paragraphs (a) to (d) of subsection (4) shall not exceed five per cent of the sum of the paid-up or, as the case may be, assigned capital and re- serves of the financial institution.
(6) Any financial institution which contravenes the provi- sions of subsection (4) or (5) commits an offence and is liable on summary conviction to a fine not exceeding ten thousand dollars for each contravention.
(7) Any advances, extensions or guarantees of credit made to any person under paragraph (a) of subsection (1) or within any of the categories described in subsection (4) shall be made on substantially the same terms, including interest rates and col- lateral, as applicable, as those prevailing for comparable trans- actions with other persons.

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The Banking Act, 2005. inn 21 ANTIGUA AND BARBUDA (8) In determining whether any approval referred to in para- graph (e) of subsection (1) should be granted, the Central Bank shall take into account whether: (a) acquisition of the shares is likely to prejudice the: (i) the financial condition of the financial insti- tution; (ii) the capitalisation of the financial institution; (iii) the interest of depositors of the financial in- stitution; or (b) the corporate affiliations and structure of the finan- cial institution exposes the financial institution to undue risks or hinder its effective supervision.
(9) A financial institution shall maintain information sys- ` tems to identify loans to connected or related parties and shall record the amount of such loans and monitor and report on such loans to the Central Bank at such times as the Central Bank shall specify.
(10) In applying paragraph (a) of subsection (1) and subsec- tion (4), if the Central Bank determines that the interests of two or more persons are connected or related, the total indebted- ness of such persons shall be aggregated and deemed to be the indebtedness of a single person; and a financial institution shall not be deemed to have violated paragraph (a) of subsection (1) or subsection (4) solely by reason of the fact that the aggre- gated indebtedness exceeds the limitation at the time of the de- termination, but the financial institution shall dispose of the indebtedness of such persons in the amount in excess of the limitation within such reasonable time as shall be determined by the Central Bank.
(11) Any financial institution to which subsection (1) and (4) are applicable that, prior to the commencement of this Act, entered into any transactions incompatible with paragraphs (a), (b), (c), (d), or (e) of subsection (1) or subsection (4) shall, within twelve months after the commencement of this Act, or within such further period as the Central Bank may determine, submit a statement thereof to the Central Bank and shall, in 22 The Banking Act, 2005.

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14 of 2005.

ANTIGUA AND BARBUDA respect of such transactions, take such action within such rea- sonable time as shall be determined by the Central Bank.

(12) Unless the approval of the Minister acting on the rec- ommendation of the Central Bank is first obtained, no licenced financial institution shall be an affiliate of a company that does not conduct banking business or business of a financial nature.
(13) Where, on the commencement of this Act, a financial in- stitution operating under a valid licence is an affiliate of a com- pany that does not conduct banking business or business of a financial nature, no further affiliation may take place without the approval of the Minister acting on the recommendation of the Central Bank .” Maintenance of specified assets.

17.
17.

(1) Every licensed financial institution may be required to maintain specified assets of an amount not less than that from time to time prescribed by the Minister acting on the advice of the Council by Order published in the Gazette.
(2) The amount of the specified assets prescribed under sub- section (1) shall be expressed as a percentage of the aggregate demand, savings, and time deposits and other liabilities of the licensed financial institution to which the Order relates, and such percentage shall not be more than forty per cent unless the Council so approves.

(3) The Minister, after consultation with the Central Bank may approve a period during which surpluses and deficiencies in specified assets may be averaged.
(4) The Minister may, after consultation with the Central Bank by Order provide that advances granted to a licensed fi- nancial institution by any other financial institution or by an foreign branch or office thereof may be excluded from the com- putation of the demand, savings and time deposits and other liabilities of the licensed financial institution.
(5) The Central Bank may determine the distribution of amounts required to be held between different classes of speci- fied assets, and may also differentiate between classes of banks, credit institutions and other financial institutions.

(6) Every financial institution which is required to hold speci- fied assets shall be afforded a reasonable time to comply with the Order.

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The Banking Act, 2005. inn 23 ANTIGUA AND BARBUDA (7) In this section, “specified assets” consists of freely trans- ferable assets free from any charge, lien or encumbrance what- soever and includes: (a) (b) (c) (d) (e) (f) notes and coins which are legal tender in Antigua and Barbuda and such foreign notes and coins as the Central Bank may specify; balances at the Central Bank; net balances at financial institutions in Antigua and Barbuda but where such balances are negative they will be subtracted from the specified assets; treasury bills and other securities issued or guaran- teed by a Participating Government and securities issued by a statutory corporation wholly owned by a Participating Government and approved by the Central Bank; bills of exchange and promissory notes eligible for rediscount by the Central Bank and warehouse war- rants or their equivalent securing possession of goods against which the Central Bank may grant advances, within the limits and in accordance with the evaluation fixed by the Central Bank; net balances at financial institutions in such mon- etary areas as the Central Bank may approve and the Central Bank may provide for the treatment to be accorded the balance or any portion thereof in respect of the head office of a financial institution organised abroad, and where such balances are nega- tive they will be subtracted from specified assets; (g) money at call in monetary areas approved by the Central Bank under paragraph (f), bills of exchange bearing at least two good signatures drawn on and payable at any place in the approved monetary ar- eas, and treasury bills issued by the government of a country in any such approved monetary areas and maturing within 180 days.
(8) A financial institution contravenes this section if: (a) it fails to furnish promptly any information required by the Central Bank to satisfy itself that the finan- cial institution is observing the requirements of this section; or 24 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (b) (c) it allows its holdings of specified assets to be less than the amount which is fixed from time to time; or during the period of any such deficiency of speci- fied assets the financial institution grants or per- mits increases in its outstanding advances, whether by loans or overdrafts or investment portfolio other than investment in specified assets.
(9) Any financial institution that contravenes this section may be ordered by the Central Bank to pay a charge at an annual rate not exceeding twice the highest rate fixed at the time of such failure by the Central Bank pursuant to Article 32 of the Agreement for any of its operations on the amount of the defi- ciency for so long as the failure continues, and such charge shall be payable to the Central Bank on such date as may be fixed by the Central Bank and may be recovered by deduction from any balance of the financial institution with the Central Bank.
Credit institution, class of credit in- stitution and fi- nancial group.

18.
18.

The Minister may, after consultation with the Central Bank, by Order, direct that any provision of this Act, which at the date of the commencement of this Act does not apply to a credit institution, class of credit institution or financial group, shall apply with such modifications, adaptations, qualifications and exceptions as may be specified in the Order to any credit institution, class of credit institution or financial group.
Annual audit, report and publication of financial statements and results.

PART III AUDIT, INFORMATION AND EXAMINATION 19.
(1) A financial institution shall appoint annually an au- ditor approved by the Central Bank whose duties shall: (a) be to examine the books and records and to make a report on the annual financial statements and finan- cial position, and in every such report the auditor shall state whether in the auditor’s opinion the bal- ance sheet and profit and loss account give a true and fair view of the state of affairs of the financial institution and of its results for the period then ended; and (b) include all or any of the following duties as may from time to time be imposed on the auditor by the No.
14 of 2005.
The Banking Act, 2005. inn 25 ANTIGUA AND BARBUDA licensed financial institution at the request of the Central Bank: (i) (ii) (iii) (iv) (v) (vi) (vii) to submit such additional information in re- lation to the audit of the financial institution as the Central Bank considers necessary; to carry out any other examination or estab- lish any procedure in any particular case; to submit a report on any of the matters re- ferred to in sub-paragraphs (i) and (ii); to submit a report on the financial and ac- counting systems and risk management con- trols of the financial institution; to submit a report on whether prudent credit– granting and investment criteria, policies, practices and procedures are approved and reviewed by the management and board and communicated to all credit officers and whether major credits and investments are decided at a high managerial level; to certify whether the systems of loan classi- fication, provisioning and write-offs deter- mined by the Central Bank are being adhered to; and to certify whether suitable measurers to counter money laundering and to combat the financing of terrorism have been adopted by the licenced financial institution and are be- ing implemented in accordance with the ap- plicable laws.
(2) A financial institution shall remunerate the auditor in re- spect of the discharge by the auditor of all or any of the duties set out in subsection (1).

(3) If in the course of the performance of an auditor’s duties the auditor is satisfied that: (a) there has been a serious breach of or non-compli- ance with the provisions of this Act or any, regula- tions, notice, order, guidelines or directions issued under the Act; 26 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (b) (c) (d) (e) there is evidence that a criminal offence involving fraud or other dishonesty may have been commit- ted; losses have been incurred which reduce the paid up or assigned capital, as the case may be, of the financial institution by twenty-five per cent or more; serious irregularities have occurred, including those that affect the interest of depositors; or the claims of depositors covered by the assets can- not be confirmed, the auditor shall immediately report the matter to the li- censed financial institution and the Central Bank.
(4) The Central Bank may request copies of reports submit- ted to the board of a licenced financial institution by both its internal and external auditors.

(5) An auditor shall report to the Central Bank any matter it is required to report on any licenced financial institution to any investigative, regulatory or other institution, simultaneously with its report to that institution.
(6) The report of the auditor made in accordance with sub- section (1) shall be presented with the report of the board and the financial statements of the financial institution at the annual meeting of shareholders of each local financial institution and shall be transmitted to the head office of each foreign financial institution.

A copy of the financial statements and reports shall be sent to the Minister and the Central Bank within four months of the end of the financial year.
(7) A local financial institution shall within four months of the end of its financial year — (a) publish in the Gazette and in a local newspaper; and (b) exhibit in a conspicuous place in each of its offices, a true and full yearly statement of its accounts and a consoli- dated balance sheet of all its operations in Antigua and Barbuda and abroad as the case may be as certified by its auditor.

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The Banking Act, 2005. inn 27 ANTIGUA AND BARBUDA the statement shall be signed by the manager or by such other officer of the financial institution as may from time to time be authorised by the financial institution to sign the statement on behalf of the financial institution.
(8) A foreign financial institution shall within four months of the end of its financial year: (a) (b) publish in the Gazette and in a local newspaper; and exhibit in a conspicuous place in each of its offices, a true and full yearly statement of its accounts of all its operations in Antigua and Barbuda as certified by its au- ditor; and the statement shall be signed by the manager or by such other officer of the financial institution as may from time to time be authorised by the financial institu- tion to sign the statement on behalf of the financial insti- tution.
(9) A licensed financial institution which fails to comply with a request under subsection (1)(b) commits an offence and is liable on summary conviction to fine not exceeding ten thou- sand dollars for each such failure.
(10) If any financial institution fails to comply with the re- quirements of subsection (6), (7) or (8) within four months of the end of its financial year, it shall be liable to a penalty of five hundred dollars for every day of such default except when an extension of the period has been granted by the Central Bank pursuant to section 24.
(11) If a financial institution fails to appoint an auditor sat- isfactory to the Central Bank, the Central Bank may appoint an auditor for such financial institution; and he remuneration of the auditor so appointed shall be determined by the Central Bank and paid by the financial institution.
(12) The Central Bank may appoint an auditor to conduct an independent audit of a financial institution, in accordance with the instructions of the Central Bank, and to report the findings or results thereof to the Central Bank.

(13) No auditor shall be liable for breach of any duty solely by reason of compliance with the provisions of subsections (1), 28 The Banking Act, 2005.

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ANTIGUA AND BARBUDA Central Bank examination.


(3), (5) of this section or any other request for information by the Central Bank.

(14) No person having an interest in any financial institution otherwise than as a depositor and no director, manager, secre- tary, employee or agent of a financial institution shall be eli- gible for appointment as auditor for such financial institution.
(15) Any person appointed as auditor in respect of a finantial institution under this Act who, after the appointment, acquires any interest in a financial institution otherwise than as a de- positor, or becomes a director, manager, secretary, employee or agent of the financial institution shall immediately cease to be such auditor.

20.
20.

(1) The Central Bank shall examine or cause an exami- nation to be made of each licensed financial institution from time to time or whenever in its judgement such examination is necessary or expedient in order to determine that such financial institution is in a sound financial condition and that the require- ments of this Act have been complied with in the conduct of its business.
(2) For the purpose of determining the condition of a finan- cial institution and its compliance with this Act the Central Bank may— (a) (b) save in case of a financial institution regulated in Antigua and Barbuda, examine or cause an exami- nation of any affiliate of a financial institution in Antigua and Barbuda or abroad or any of its foreign officers to the same extent that an examination may be made for the financial institution.
require an affiliate of a financial instituion regu- lated by the regulatory authority of Antigua and Barbuda, to furnish any relevant information regard- ing the affiliate financial institution, if in its opin- ion, it is material to the financial situation of the financial institution or the assessment of the risks of the financial institution.

(3) The Central Bank may assess a financial institution for the reasonable expenses of conducting an examination under subsections (1) and (2).

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The Banking Act, 2005. inn 29 ANTIGUA AND BARBUDA (4) The Central Bank shall forward copies of balance sheets, statements and reports on the results of any examination to the Minister and the financial institution.

21.
21.

(1) A licensed financial institution shall produce for the inspection of any examiner appointed by the Central Bank at such time as the examiner specifies all books, minutes, accounts, cash, securities, documents and vouchers relating to its busi- ness and the business of its affiliates as requested by the exam- iner for the purpose of this Act.

Disclosure and access to books and records by Central Bank examiner for ex- amination.
(2) If any books, minutes, accounts, cash, securities, docu- ments and vouchers are not provided or information is not sup- plied in accordance with subsection (1), the defaulting finan- cial institution or affiliate, or both shall be guilty of an offence and shall be liable on summary conviction to a fine not exceed- ing fifty thousand dollars and in the case of a continuing of- fence to a further penalty of one thousand dollars for each day on which the offence is continued after conviction thereof.
(3) If any information supplied or item produced is false in any material particular, the financial institution or affiliate or both shall be guilty of an offence and shall be liable on sum- mary conviction to a fine not exceeding fifty thousand dollars.

22.
22.

(1) If in the opinion of the Central Bank an examination authorised under section 20 shows that the financial institution concerned or any affiliate, director, officer, employee, or sig- nificant shareholder of the financial institution is: Central Bank’s powers and measures for preventing adverse consequences.
(a) (b) (c) engaging in unsafe or unsound practices in con- ducting the business of the institution; violating any law, regulation or guideline issued by the Central Bank to which the institution or per- son is subject;or the Central Bank has reasonable cause to believe that the practices or violations referred to in para- graphs (a) or (b) are likely to occur, the Central Bank may take one or more of the following mea- sures — 30 The Banking Act, 2005.

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14 of 2005.
ANTIGUA AND BARBUDA (i) (ii) (iii) issue a written warning as is deemed neces- sary; conclude a written agreement with the finan- cial institution providing for a programme of remedial action; issue a cease and desist order that requires the financial institution, the affiliate the per- son responsible for the management of the financial institution to cease and desist from the practice or violations specified in the or- der; or (iv) issue such directions as it considers necessary in relation to the persons comprising the man- agement of the financial institution.
(2) Where in the opinion of the Central Bank any of the cir- cumstances specified in paragraphs (a) or (b) of subsection (1) exists, the Central Bank may, after exhausting all the measures under subsection (1), recommend that the Minister: (a) vary the conditions of a licence; or (b) revoke the licence of the financial institution to do banking business pursuant to section 11.
(3) An agreement made under subparagraph (ii) of subsec- tion (1) may include stipulations that require the financial in- stitution to: (a) increase the paid-up share capital of an affiliate; (b) sell or otherwise dispose of an affiliate or part of its business; (c) make advances or grant credit facilities to an affili- ate; or (d) make special provisions for any potential losses which in the opinion of the Central Bank, the affili- ate is likely to incur where such affiliate has credit facilities with the financial institution.
(4) A cease or desist order issued under subparagraph (iii) of subsection (1) may require that the financial institution take No.

14 of 2005.

The Banking Act, 2005. inn 31 ANTIGUA AND BARBUDA action to correct the condition resulting from any unsound prac- tices or violation of any law.

(5) Any person served with a cease and desist order under subparagraph (iii) of subsection (1) may apply to the High Court for an order setting aside, varying, or suspending the operation of the cease and desist order.
(6) A licenced financial institution, its affiliate, or any direc- tor, officer, employee or significant shareholder of a licenced financial institution who fails to comply with any requirement or contravenes any prohibition imposed on the financial insti- tution under this section commits an offence and is liable on summary conviction — (a) (b) in the case of the licenced financial institution or its affiliate, to a fine of one hundred thousand dol- lars, and in the case of a continuing offence, to a further penalty of ten thousand dollars for each day on which the offence is continued after conviction thereof; in the case of any individual specified in this sub- section, to a fine of fifty thousand dollars and in the case of a continuing offence, to a further penalty of five thousand dollars for each day on which the offence is continued after conviction thereof.
(7) Any order, warning, agreement, or direction issued by the Central Bank under subsection (1) shall be deemed to take effect from the date specified therein.

(8) (a) This sub-section shall apply to the offences specified in Schedule III.
(b) Where circumstances giving rise to a reasonable be- lief that a person has committed an offence to which this subsection applies exist, the Central Bank may give a notice in writing in the form prescribed in Schedule IV offering that person the opportunity to discharge any liability to conviction of that offence by payment of a fixed penalty under this section.

(c) No person shall be liable to be convicted of the offence if the fixed penalty is paid in accordance 32 The Banking Act, 2005.

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ANTIGUA AND BARBUDA with this section and the requirement in respect of which the offence was committed is complied with before the expiration of fifteen days following the date of the notice referred to in paragraph (b) of this subsection or such longer period (if any) as may be specified in that notice or before the date on which proceedings are begun, whichever event last occurs.
(d) Where a person is given notice under this section in respect of an offence, proceedings shall not be taken against the person for that offence until the end of the fifteen days following the date of the notice or such longer period (if any) as may have been specified therein.
(e) Payment of a fixed penalty under this subsection shall be made to the Accountant-General and in any proceedings a certificate that payment of a fixed penalty was or was not made to the Accountant Gen- eral by a date specified in the certificate shall, if the certificate purports to be signed by the Accountant General, be admissible as evidence of the facts stated therein.
(f) A notice under paragraph (b) of this subsection shall (i) specify the offence alleged; (ii) (iii) give such particulars of the offence as are nec- essary for giving reasonable information of the allegation; and state the period (whether fifteen days or a longer period) during which, by virtue of paragraph (d) of this subsection proceedings will not be taken for the offence.
(g) The fixed penalty for the offences specified in Schedule III shall be the penalty specified therein in relation to such offences.

(h) In any proceedings for an offence to which this sub- section applies, no reference shall be made after the conviction of the accused to the giving of any no- tice under this section or to the payment or non- No.

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14 of 2005.

The Banking Act, 2005. inn 33 ANTIGUA AND BARBUDA payment of a fixed penalty thereunder unless in the course of the proceedings or in some docu- ment which is before the court in connection with the proceedings, reference has been made by or on behalf of the accused to the giving of such a notice, or, as the case may be, to such payment.
(i) (j) In this subsection “proceedings” means any crimi- nal proceedings in respect of the act or omission constituting the offence specified in the notice under paragraph (b) of this subsection and “con- victed” shall be construed in like manner.
The Minister may, by order, make provision as to any matter incidental to the operation of this sec- tion, and in particular, any such order may— (i) (ii) prescribe the nature of the information to be furnished to the Accountant General along with any payment; prescribe the arrangements for the Accoun- tant General to furnish to the Central Bank, information with regard to any payment pur- suant to a notice under this section; (iii) amend Schedule III; (iv) amend Schedule IV.
(k) (l) The power conferred by this subsection shall only be exercised where the person admits that he has commited the offence and agrees in writing to the offence being dealt with under this subsection.

If proceedins are brought against any person for an offence under this Act, it shall be a defence if the person proves that the offence with which that person is charged has been compounded under this section.

23.
23.

(1) Every financial institution shall furnish to the Central Bank at such time and in such manner as the Central Bank may prescribe, such information and data as the Central Bank may re- quire for the proper discharge of its functions and responsibilities.

Submission of returns and production of information as required by the Central Bank.

34 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (2) Without limiting the generality of subsection (1), every financial institution shall, at the request of the Central Bank, in relation to that financial institution’s operations in the territory of a Participating Government, submit to the Central Bank, in such form as the Central Bank may from time to time approve— (a) (b) (c) not later than fourteen days after the last day of the month to which it relates, a monthly statement of assets and liabilities at the end of each month; not later than fourteen days after the end of the quar- ter to which it relates, a quarterly return providing an analysis of customers’ liabilities to the financial insti- tution in respect of loans, advances and other assets of the financial institution at the end of each quarter; not later than fourteen days after the end of the quar- ter to which it relates, a quarterly return providing information on all exposures that equal to or are in excess of ten per cent of the unimpaired capital and reserves of the financial institution.
(d) within such period as the Central Bank may deter- mine, such other returns as the Central Bank may be required.
(3) All statements and returns submitted by a financial insti- tution under subsection (2) and any data or information sub- mitted by a financial institution under subsection (1) or (2) hereof, shall be regarded by the Bank as secret: Provided that— (a) the Central Bank may provide international finan- cial institutions, foreign banking supervisors and any other local or foreign authority responsible for the supervision or regulation of a financial institu- tion, or for maintaining the integrity of the finan- cial system with such statements, returns, data and information on a reciprocal basis and subject to an agreement for confidentiality and a Memorandum of Understanding; and (b) the Central Bank may prepare and publish consoli- dated statements relating to the territories of the No.
14 of 2005.

The Banking Act, 2005. inn 35 ANTIGUA AND BARBUDA Participating Governments individually or collec- tively, aggregating the figures furnished in the re- turns.
(4) At the request of a Participating Government, the Central Bank shall arrange for that Government to be supplied with a copy of any statement or return furnished by a financial institu- tion under paragraph (2) in relation to its operation in the terri- tory of that Government and all statements and returns so sup- plied shall be regarded by the Government as secret.
(5) The Central Bank may require a financial institution to disclose the basis for any of its charges and fees and such dis- closure shall be made within such period and in such manner as the Central Bank may require.
(6) The Central Bank may require a financial institution to submit such further information and data relating to the matters described in subsection (2) or (5), and may from time to time call for any other information which it may require for the pur- poses of this Act from any financial institution about its opera- tions and those of its affiliates in Antigua and Barbuda or from a local financial institution about its operations and those of its affiliates abroad and such further information and data shall be submitted within such period and in such manner as the Central Bank may require.
(7) Any financial institution which contravenes subsection (2) or (6) commits an offence and shall be liable on summary conviction to a fine not exceeding five thousand dollars for each contravention.

24.

At the request of a financial institution, the Central Bank may extend, from time to time, any period within which such financial institution is, in accordance with the provisions of this Act, obliged to furnish any document or information.

Extension of period for providing information.

25.
25.

(1) No licensed financial institution shall engage in ad- vertising practices which are likely to mislead the public con- cerning: Restriction on advertising likely to mislead the public (a) the relation of the financial institution to the Cen- tral Bank or any department or official of the Cen- tral Bank; 36 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (b) (c) the interest rate paid on deposits or charged on credit; the insured or guaranteed status of deposits or other liabilities of the financial institution; (d) the financial condition of the financial institution.

(2) The Minister, after consultation with the Central Bank, may issue an Order to a financial institution as is necessary, to secure compliance with the provisions of subsection (1).
(3) Any financial institution which contravenes subsection (1) or an order issued under subsection (2), commits an offence and is liable on summary conviction to a fine not exceeding fifty thousand dollars for each contravention.

PART IV MISCELLANEOUS Minimum criteria for determining whether a person is fit and proper 26.
(1) Any person who, on the commencement of this Act, is a director, significant shareholder, or manager of a financial instituution, shall not be qualified to hold or continue to hold that position with a finiancial instion unless he is a fit and prop- ers on to hold that position.
(2) In determining whether a person is a fit and proper per- son to hold any particular position, regard shall be had to: (a) (b) that person’s probity, competence and soundness of judgment for fulfilling the responsibilities of that position; the diligence with which that person is fulfilling or likely to fulfill the responsibilities of that position; and (c) whether the interests of depositors or potential de- positors of the licenced financial institution are, or are likely to be, in any way threatened by that per- son holding that position.
(3) Without prejudice to the generality of subsections (1) and (2), in determining whether a person is fit and proper person to hold any position refered to in subsection (1), regard may be No.

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14 of 2005.

The Banking Act, 2005. inn 37 ANTIGUA AND BARBUDA had to the previous conduct and activities in business or financial matters of the person in question and, in particular, to any evidence that the person has — (a) (b) (c) (d) (e) committed an offence involving fraud or other dis- honesty or disreputable conduct.
contravened any provision made by or under an enactment designed for protecting members of the public against financial loss due to dishonesty, in- competence or malpractice by persons concerned in the provision of banking, insurance, investment or other financial services or the management of companies or against financial loss due to the con- duct of a discharged or undischarged bankrupt; engaged in any business practices appearing to the board to be deceitful or oppressive or otherwise improper (whether unlawful or not) or which oth- erwise reflect discredit on that person’s method of conducting business; an employment record which leads the board to believe that the person carried out an act of impro- priety in the handling of his employer’s business; engaged in or been associated with any other busi- ness practices or otherwise conducted himself in such a way as to cast doubt on his competence and soundness of judgment.
(f) engaged in any act constituting disreputable con- duct.

27.

(1) Any person who is a director, manager or other of- ficer concerned with the management of a financial institution shall cease to hold office — Removal and disqualification of director, manager.
(a) upon notification by the board of a finding by two- thirds of its members: (i) (ii) of that person’s permanent incapacity or se- rious neglect of, or misconduct in, office; or that the person is not a fit and proper person in accordance with the criteria specified in para- graphs (a) or (b) of subsection (3) of section 26.

38 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (b) if that person has been (i) convicted of an offence under this Act; (ii) (iii) declared bankrupt or is compounding with, or suspending payment to, that person’s credi- tors; or convicted in a court of law of any offence involving fraud, dishonesty, or disreputable conduct.
(2) Any person who: (a) (b) (c) has been sentenced for an offence involving a term of imprisonment of six months or more or in de- fault of payment of a fine; has been a director or manager of a company which has been wound-up by a court or has been placed in receivership; has been a director or manager of, or directly or indi- rectly concerned in the management of a former li- cenced financial institution, the licence of which has been revoked, unless such revocation was due to— (i) its amalgamation with another licenced finan- cial institution or company; or (ii) its voluntary winding up, shall not, without the express approval of the Minister after consultation with the Central Bank, act or continue to act as a director or manager of, or be directly or indi- rectly concerned in any way in the management of any licenced financial institution.
(3) A person who contravenes subsection (1) or (2) commits an offence and is liable on summary conviction to a fine not exceeding ten thousand dollars or to imprisonment for a term not exceeding one year or to both such fine and imprisonment and in the case of a continuing offence to a further penalty of five hundred dollars for each day on which the offence is con- tinued after conviction thereof .

ANTIGUA AND BARBUDA Declaration and registration of related interest and conflict of interest by directors.
No.

14 of 2005.

The Banking Act, 2005. inn 39 28.

(1) Every director of a financial institution who is in any manner whatsoever, directly or indirectly interested in loans, advances, contracts or transactions from that financial institu- tion shall, as soon as possible, declare the nature of his interest to the board or other body responsible for the management of that institution and shall cause such declaration to be circulated immediately to all of the members of the board.
(2) For the purpose of subsection (1), a declaration by a di- rector of a financial institution to the effect that the director is to be regarded as interested in any loan, advance, contract or other transaction, which may, after the date of the notice, be made by the financial institution shall be deemed to be a suffi- cient declaration of interest in relation to any loan, advance, contract or other transaction so made if — (a) (b) it specifies the nature and extent of the interest of the director; and the interest of the director is not different in nature from, or greater in extent than, the nature and ex- tent so specified in such notice at the time any ad- vance is made.
(3) Every director of a financial institution who holds any office or possesses any property whereby, whether directly or indirectly, duties or interests might be created in conflict with his duties or interests as such director in Antigua and Barbuda shall declare the fact, nature, character and extent of the con- flict at the first meeting of the board held — (a) (b) after assuming office as a director of the financial institution; or if already a director, within thirty days after he com- mences to hold office or to possess the property.
(4) Every director of a financial institution who is affected by qualifies as an interested director under the provisions of this section shall cause to be brought up and read any declara- tion made under subsection (1) or (3) at the next meeting of the board after it is given, and shall cause to be recorded any decla- ration made under this section in the minutes of the meeting at which it was made or at which it was brought up or read.

40 The Banking Act, 2005.

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ANTIGUA AND BARBUDA Responsibility for deceiving statements and obstruction of audit or authorised examination.

(5) A director who contravenes subsection (1) or subsection (3) commits an offence and is liable on summary conviction to a fine not exceeding ten thousand dollars or to imprisonment for a term not exceeding one year or to both such fine and impris- onment.

29.
Any director, manager, secretary, employee or agent of a financial institution who — (a) with intent to deceive — (i) makes any false or misleading statement or entry; (ii) omits any statement or entry that should be made in any book, account, report or state- ment of the financial institution; or (b) obstructs or attempts to obstruct — (i) (ii) the proper performance by an auditor of his duties in accordance with the provisions of this Act; or a lawful examination of the financial institu- tion by a duly authorised examiner appointed by the Central Bank; commits an offence and is liable on summary conviction to a fine not exceeding fifteen thousand dollars or to im- prisonment for a term not exceeding two years or to both such fine and imprisonment.
Management’s duty of compliance with the requirements of the laws.

30.
Any director, manager, secretary or other officer con- cerned in the management of a financial institution who — (a) (b) fails in relation to his functions, to take all reason- able steps to secure compliance by the financial in- stitution with the requirements of this Act; or participates in the commission of an offence under this Act, commits an offence and is liable on summary conviction to a fine not exceeding fifteen thousand dollars or to im- prisonment for a term not exceeding two years or to both such fine and imprisonment.
ANTIGUA AND BARBUDA Liability of directors, manag- ers, officers and partners.

Secrecy of information.

No.

14 of 2005.

The Banking Act, 2005. inn 41 31.
(1) Where an offence under this Act has been committed by a body of persons which is — (a) a body corporate, society or other body of persons, every person who at the time of the commission of the offence was a director, manager, secretary or other officer of the body corporate, society or other body of persons as well as that body corporate, so- ciety or other body of persons; (b) a partnership or firm, every partner of the partner- ship or firm as well as that partnership or firm, commits an offence and is liable to be proceeded against and punished accordingly.
(2) No person referred to in subsection (1) shall be found guilty of an offence under that subsection if he proves, that (a) (b) the act constituting the offence took place without his knowledge or consent, or he exercised all due diligence to prevent the com- mission of the offence.

32.
(1) No person who has acquired knowledge in his capac- ity as director, manager, secretary, officer, employee or agent of any financial institution or as its auditor or receiver or official liquidator or as director, officer, employee or agent of the Cen- tral Bank, shall disclose to any person or governmental author- ity the identity, assets, liabilities, transactions or other informa- tion in respect of a depositor or customer of a financial institu- tion except: (a) with the written authorization of the depositor or customer or of his heirs or legal personal represen- tatives; or (b) for the purpose of the performance of his duties within the scope of his employment in conformity with the provisions of this Act; or (c) when lawfully required to make disclosure by any court of competent jurisdiction within Antigua and Barbuda; or 42 The Banking Act, 2005.
No.

14 of 2005.
ANTIGUA AND BARBUDA (d) under the provisions of any law of Antigua and Barbuda or agreement among the participating Gov- ernments; (2) Subsection (1) shall not be construed as preventing — (a) a financial institution from providing to a person, upon a legitimate business request, a general credit rating, a summary of which will be provided to the depositor or customer upon request; (b) the Central Bank from — (i) (ii) sharing any information received or any re- port prepared by the Central Bank in the per- formance of its duties under this Act, with any local or foreign authority responsible for the supervision or regulation of a financial insti- tution, or for maintaining the integrity of the financial system; or providing access, to any officer of a foreign authority responsible for the supervision or regulation of financial institutions in order to assess the safety and soundness of a foreign financial institution; on a reciprocal basis, and subject to an agreement of confidentiality and a Memorandum of Under- standing between the Central Bank and such authori- ties.
Working days of financial institu- tions.

33.

(1) All financial institutions in Antigua and Barbuda shall remain open for business on all days, except sundays and public holidays, and such other days as may be agreed to by the Minis- ter after consultation with the Central Bank.
(2) Any obligation which can only be fulfilled at a financial institution which would fall due on any day or at any particular hour on which such financial institution is not open for business under subsection (1) shall be deemed to fall due on the first working day thereafter.

(3) The Minister may, after consultation with the Central Bank, by notice in the Gazette, declare any day on which no No.

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14 of 2005.

The Banking Act, 2005. inn 43 financial institution may be open for business, without regard to whether or not such day is or is not also a public holiday.

34.
(1) The Minister upon the recommendation of the Cen- tral Bank may make such Regulations as may be required from time to time for giving effect to the provisions of this Act, and, without limiting the generality of the foregoing, may make Regulations respecting — (a) (b) (c) (d) (e) the reports or other information to be supplied by persons to whom licences have been granted and any other matter associated with the use of such li- cence the records to be kept, returns and reports to be made to the Central Bank or the Minister by persons who are appointed as auditors under the Act; the character of the records to be kept by any finan- cial institution and the form of the report and re- turns to be made by the financial institution and fix- ing the times when such reports and returns shall be made; forms necessary for the administration of this Act; the penalties that may be imposed for violations of Orders and Regulations made under this Act and may also prescribe the penalties to be imposed on summary conviction, but no such penalty shall ex- ceed a fine of ten thousand dollars or imprisonment of a term exceeding twelve months; (f) the capital adequacy requirements and capital ra- tios to be maintained by a licensed financial institu- tion.
(7) The Minister, after consultation with the Central Bank, may by order published in the Gazette amend the Schedules.

35.

(1) Subject to this section, the Minister on consultation with the Central Bank may, if the Minister is satisfied that any person has committed an offence under the Act or under any Order or Regulation made under this Act, other than an offence specified in schedule III, compound such offence, by accepting from the person a sum of money not exceeding five thousand dollars.
ANTIGUA AND BARBUDA Regulations.

Compounding of offences.

44 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (2) The power conferred by subsection (1) shall only be ex- ercised where the person admits that he has committed the of- fence and agrees in writing to the offence being dealt with un- der this section.
(3) If any proceedings are brought against any person for an offence under this Act or under any Order or Regulation made under this Act, it shall be a defence if the person proves that the offence with which that person is charged has been compounded under this section.

(4) Any sum of money received under this section shall be dealt with as if the sum of money were a fine imposed by a court.

Prudential guide- lines.

36.
The Central Bank may issue prudential guidelines and related orders in administering the provisions of this Act to a financial institutions and their affiliate, and without limiting the generality of the foregoing, may issue guidelines respect- ing: (a) policies, practices and procedures for evaluating (i) the quality of assets, (ii) the adequacy of loan loss provisions, and (iii) loan loss reserves; (b) (c) (d) (e) (f) a system of loan classification, provisioning and write-offs; the method of valuation of collateral; rules for non-accrual of income on non-performing or impaired assets; the suspension and reversal of accrued interest; policies, procedures and systems for identifying, monitoring and controlling country risk, transfer risk, market risk, liquidity risk, interest rate risk, operational risk; and such other risks as the Central Bank shall specify; No.
14 of 2005.

The Banking Act, 2005. inn 45 ANTIGUA AND BARBUDA (g) liquidity requirements and ratios; (h) treatment of assets and investments; (i) (j) treatment of loans and other credit facilities; related party transactions; (k) corporate governance; (l) audits and auditors (m) disclosure; and (n) anti money laundering and combating the financing of terrorism matters.

PART V RECEIVERSHIP, LIQUIDATION AND REORGANISATION 37.
A voluntary liquidation of a financial institution shall be subject to the approval of the Minister upon the recommen- dation of the Central Bank and the Central Bank shall so recom- mend when — Voluntary liquidation.

(a) (b) the financial institution is solvent and has sufficient liquid assets to repay its depositors and other credi- tors without delay; and the liquidation has been properly approved by the members or shareholders of the financial institution.

38.
38.

When it has received the approval of the Minister the financial institution shall: Cessation of business operations.

(a) immediately cease to carry on business, retaining only the powers necessary to effect an orderly liq- uidation; (b) repay its depositors and other creditors; and (c) wind up all operations undertaken prior to the re- ceipt of the authorisation.

39.
39.

(1) Within thirty days from the receipt of approval re- ferred to in section 37 a notice of voluntary liquidation, setting out such information as the Minister, upon the recommendation Notice to depositors of voluntary liquidation.

46 The Banking Act, 2005.

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ANTIGUA AND BARBUDA of the Central Bank may determine, shall be sent by mail to all depositors, other creditors and persons otherwise entitled to the funds or property held by the financial institution as a trustee, lessor of a safe deposit box or bailee.
(2) The notice shall be posted conspicuously on the pre- mises of each office and branch of the financial institution and shall be given such publicity as the Minister, upon the recom- mendation of the Central Bank, shall direct.

(3) Notwithstanding subsection (1), the Minister, upon the recommendation of the Central Bank, may exemp the service of a copy of the notice of voluntary liquidation on specified per- sons upon the financial institution showing cause for such ex- emption.
Rights of depositors and creditors in voluntary liquidation.

40.

(1) An approval for a voluntary liquidation under section 37 shall not prejudice the rights of a depositor or other creditor to payment in full of his claim nor the right of an owner of funds or other property held by the financial institution to the return thereof.
(2) All lawful claims shall be paid promptly and all funds and other property held by the financial institution shall be re- turned to their owners within such maximum period as the Min- ister, upon the recommendation of the Central Bank, shall by Order prescribe.

Distribution of assets.

41.
(1) When the Minister, after consultation with the Cen- tral Bank, is satisfied that the financial institution has discharged all the obligations referred to in section 40, it shall be struck of the list of licensed financial institutions and the remainder of its assets shall be distributed among its shareholders in propor- tion to their respective rights, but no such distribution shall be made before — (a) all claims of depositors and other creditors have been paid or, in the case of a disputed claim, before the financial institution has transferred to the Cen- tral Bank as agent for the Minister, sufficient funds to meet any liability that may be determined by a court of competent jurisdiction; No.
14 of 2005.

The Banking Act, 2005. inn 47 ANTIGUA AND BARBUDA (b) (c) any funds payable to a depositor or other creditor who has not claimed them have been transferred to the Central Bank, as agent for the Minister; any other funds and property held by the financial institution that could not be returned to the owners thereof in accordance with the provisions of sec- tion 40 have been transferred to the Central Bank as agent for the Minister, together with the inven- tories pertaining thereto.
(2) Any funds or property not claimed within a period of fifteen years following a transfer to the Central Bank, as agent for the Minister, shall be presumed to be abandoned property for purposes of section 60.

42.
42.

If the assets of a financial institution, whose voluntary liquidation has been approved is not sufficient for the full dis- charge of all its obligations or completion of the liquidation is unduly delayed, the Minister after consultation with the Cen- tral Bank, may cause the commencement of proceedings lead- ing to its compulsory liquidation or reorganisation in confor- mity with the provissions of this Part.

Insufficiency of assets in discharge of obligations in voluntary liquida- tion.

43.
43.

The Minister, acting upon the recommendation of the Central Bank may appoint a receiver for a financial institu- tion — Appointment of receiver.
(a) whose capital is impaired or whose condition is otherwise unsound; (b) whose business is being conducted in an unlawful or imprudent manner; (c) when the continuation of its activities is detrimen- tal to the interests of its depositors; (d) that refuses to submit its accounting records and its operations for examination as provided for in sec- tion 20 or has otherwise obstructed such examination; (e) whose licence has been in accordance with section 11 or subsection (2) (b) of section 22; or revoked ANTIGUA AND BARBUDA Notice of appointment of receiver.
48 The Banking Act, 2005.

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(f) that is carrying on banking business without a li- cence.

44.

When the Minister appoints a receiver for a financial in- stitution the Minister shall post or cause to be posted up on the premises of the financial institution a notice announcing the ap- pointment and the time when such appointment shall take ef- fect, but the time of the appointment shall not be earlier than the date of the posting of the notice.
A copy of the notice shall be transmitted to the Registrar of the High Court.

Financial institu- tion may intitute proceedings to have receiver’s ap- pointment revoked.

45.

Within a period of ten days after the date on which the Minister has appointed a receiver, the financial institution may institute proceedings in the High Court to have the appoint- ment revoked.

Period of obliga- tion to commence compulsory liquidation or reorganisation proceedings.

46.
46.

(1) Within a period of sixty days from the date of the appointment of the receiver, the Minister after consultation with the Central Bank, shall commence proceedings leading to: (a) compulsory liquidation in accordance with sec- tion 47; or (b) reorganisation, in accordance with section 52, of a financial institution for which the Minister has ap- pointed a receiver.
(2) In the event that proceedings under subsection (1) are not commenced within that period, and the Minister has not sooner elected to terminate his appointment, the appointment of the receiver shall immediately terminate .

Compulsory liquidation, reorganisation proceedings pro- ceedings.

47.
47.

(1) The Minister, after consultation with the Central Bank, may, by petition, apply to the High Court to order the compul- sory liquidation or reorganisation of the financial institution for which a receiver has been appointed under section 43.
(2) Upon an application under subsection (1), the High Court may make an order requiring the financial institution and any person having an interest in the financial institution or claim against it to show cause, at a time and place specified in the order which must not be less than thirty days after the date of the order, why the financial institution should not be liquidated and dissolved or reorganised, as the ease way be.

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The Banking Act, 2005. inn 49 ANTIGUA AND BARBUDA (3) A copy of an order made under subsection (2) shall be — (a) published in the Gazette and in a newspaper pub- lished or distributed in Antigua and Barbuda as di- rected in the order at least twice before the time appointed for the hearing; and (b) served upon each person named in the order.
(4) Publication and service of an order under this section shall be effected by the financial institution or by such other person and in such manner as the High Court may order.

48.

(1) The High Court may make any order it thinks fit, including an order: Powers of the High Court.

(a) (b) for the compulsory liquidation of the financial in- stitution; refusing the compulsory liquidation and terminat- ing the appointment of the receiver; and (c) for the reorganisation of the financial institution.
(2) Where the High Court orders either the compulsory liq- uidation or the re-organisation of the financial institution, it shall upon delivering its decision simultaneously order the appoint- ment of the receiver to be terminated and appoint an official liquidator who will be responsible to the High Court to direct the compulsory liquidation, or as the case may be, the re- organisation of the financial institution.
(3) As soon as possible after his appointment, the official liquidator shall make an inventory of the assets of the financial institution and transmit a copy of the inventory to the Registrar of the High Court.

49.
49.

(1) After his appointment by the Minister, the receiver and, subsequent to his appointment by the High Court, the offi- cial liquidator shall be vested with the full and exclusive power of management and control of that financial institution in Antigua and Barbuda, including the power to: Powers of receiver, official liquidator.

(a) continue or discontinue its operations; (b) stop or limit the payment of its obligations; 50 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (c) (d) (e) employ any necessary staff and to terminate their employment; execute any instrument in the name of the financial institution; initiate, defend and conduct in its name any action or proceeding to which the financial institution may be party; (f) restore the financial institution to its board; and (g) reorganise or liquidate the financial institution in accordance with the provisions of this Act.
(2) The actions of the receiver or, as the case may be, the official liquidator shall be promptly notified to the Central Bank.

Term extensions and attachment transfer of assets to be void.

50.
When the Minister has appointed a receiver for a finan- cial institution in accordance with section 43 and thereafter when the official liquidator has been appointed by the High Court: (a) (b) any term, statutory, contractual or otherwise, on the expiration of which a claim or right to the financial institution would expire or be extinguished shall be deemed to be extended by six months from the date of the appointment of the receiver; any attachment or lien except a lien registered prior to the appointment of the receiver for the financial institution shall be vacated and no attachment or lien except a lien created by the receiver or the official liquidator in the application of the provisions of this Part shall attach to any of the property or assets of the financial institution so long as such possession continues; (c) any transfer of an asset of the financial institution made after or in contemplation of its insolvency or the appointment of the receiver with intent to effect a preference shall be void.
ANTIGUA AND BARBUDA Execution against assets of financial institution.

Reorganisation provisions.

No.

14 of 2005.

The Banking Act, 2005. inn 51 51.

No execution shall be enforced against the assets of a financial institution for which a receiver or an official liquida- tor has been appointed except an execution effected pursuant to a judgement rendered prior to the date of the appointment of the receiver or official liquidator for an amount not exceeding one thousand dollars.

52.
52.

(1) If the High Court makes an order for reorganization of a financial institution, whether pursuant to a request by the Minister after consultation with the Central Bank, or by virtue of its authority under section 48(1), the official liquidator shall, after granting a hearing to all interested parties, send a copy of the reorganisation plan to all depositors and other creditors who will not receive full payment of their claims under the reorganisation plan.
(2) The copy of the re-organisation plan shall be accompa- nied by a notice stating that (a) (b) (c) if the re-organisation plan is not refused in writing within a period of thirty days by persons holding at least one third of the aggregate amount of deposit and other liabilities in Antigua and Barbuda; if the subject of the plan is a local financial institu- tion, by members of the financial institution own- ing at least one third of its issued capital; or if within the same period of thirty days the High Court does not order a stay of proceedings, the official liquidator will proceed to carry out the reorganisation plan.
(3) The official liquidator may, subject to confirmation by the High Court to be obtained before the commencement of the thirty-day period, effect service of the reorganisation plan and he shall publish the notice in the Gazette.

53.

The application of any reorganisation plan under the pro- visions of this Act is subject to the following conditions: precondition for reorganisation provision.
(a) (b) the reorganisation plan shall be equitable to all classes of depositors, other creditors and shareholders; the reorganisation plan shall provide for bringing in new funds so as to establish adequate ratios be- tween 52 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (i) capital and deposits; and (ii) liquid assets and deposits; and (c) the reorganisation plan shall provide for the removal of any director, manager, secretary, officer or em- ployee responsible for the circumstances which led to the appointment of a receiver for the financial institution and subsequently of an official liquida- tor in accordance with sections 43 and 48 (2), re- spectively.

Petition for modification or revision of reorganisation plan.

54.
54.

When in the course of reorganisation it appears that cir- cumstances render the plan inequitable or its execution unde- sirable, the official liquidator may apply to the High Court by petition to: (a) modify the plan; or (b) order the compulsory liquidation of the financial institution in accordance with the provisions of sec- tion 48.

Preferential and other claims.

55.
(1) Notwithstanding any law to the contrary in a com- pulsory liquidation of a financial institution, the following claims shall have priority against the general assets of the financial institution as follows: (a) necessary and reasonable expenses incurred by the receiver and subsequently by the official liquidator; (b) wages and salaries of officers and employees of the financial institution in liquidation for the six-month period preceding the appointment of the receiver for the financial institution; (c) (d) national insurance contributions for officers and employees due but not paid; balances of three hundred dollars and less in sav- ing and time deposits; (e) other deposits; (f) taxes, rates and deposits owed to the Government of Antigua and Barbuda and local authorities con- cerned; No.
14 of 2005.

The Banking Act, 2005. inn 53 ANTIGUA AND BARBUDA (g) fees and assessments due to the Central Bank.

(2) After payment of all other claims filed, with interest at a rate to be fixed by the official liquidator with the approval of the High Court, any remaining claims which were not filed within the prescribed time shall be paid.

(3) If the amount available for any class is insufficient to provide payment in full, the said amount shall be distributed pro rata among the members of the class.

56.
56.

Unclaimed funds remaining after the final distribution made by the official liquidator which are not subject to other provisions of this Act shall be deposited by the official liquida- tor in the Central Bank for fifteen years, unless claimed by the owner before the expiration of that period, and on the expira- tion of that period the funds remaining unclaimed shall be pre- sumed to be abandoned property for the purposes of section 60.

Unclaimed funds.

57.


Any assets remaining after all claims have been paid shall be distributed among all the shareholders in proportion to their participation.

Shareholders rights on remaining assets.

58.
58.

Any safe deposit boxes the contents of which have not been withdrawn before a date specified by the official liquida- tor shall be opened by the official liquidator and their contents and any unclaimed property held by the financial institution as bailee, together with inventories pertaining thereto, shall be de- posited by the official liquidator in the Central Bank, there to be kept for fifteen years, unless claimed by the owner before the expiration of that period.
On the expiration of that time all funds and property not claimed shall be presumed to be aban- doned for the purposes of section 60.

59.

(1) When all assets have been distributed in accordance with the provisions of this Act, the official liquidator shall ren- der an audited account to the High Court and the Cefntral Bank (2) Upon approval of this account by the High Court, the licence of the financial institution shall be revoked by the Min- ister.
The Registrar of the High Court shall be notified and the official liquidator shall be relieved of any liability in connec- tion with the liquidation.

The liquidation and dissolution of the financial institution shall then be declared by the High Court and the Registrar of the High Court shall proceed to terminate the judicial existence of the financial institution.

Safe deposits and unclaimed property.


Receiver’s audited accounts, striking the name of the institution off the list and conclusion of liquidation.

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ANTIGUA AND BARBUDA PART VI ABANDONED PROPERTY Abandoned property.

60.
(1) Subject to subsection (2) the items in paragraphs (a), (b), (c) and (d) which are held or owing by a financial institu- tion shall be presumed to be abandoned: (a) (b) (c) (d) any general deposit (demand, savings or matured time deposit) made in Antigua and Barbuda with a financial institution, together with any interest or dividend, but excluding any lawful charges thereon; any funds paid in Antigua and Barbuda toward the purchase of shares or other interests in a financial institution, together with any interest or dividend, but excluding any lawful charges thereon; any sum payable on cheques certified in Antigua and Barbuda or on written instruments issued in Antigua and Barbuda on which a financial institu- tion is directly liable; any contents of a safe deposit box on which the lease or rental has expired and concerning which notice of the intention of the financial institution to deliver the contents thereof into the custody of the Central Bank has been sent by registered letter to the last known address of the lessee and to which the lessee has failed to respond within one year.
(2) The items enumerated in paragraphs (a), (b) and (c) of subsection (1) shall not be presumed to be abandoned if the owner has, within fifteen years of the date of deposit, payment of funds or issuance of instruments, as the case may be: (a) (b) (c) increased or decreased the amount of the deposit or funds or presented the passbook or other record for the crediting of interest or dividends in respect of the items enumerated in paragraphs (a) or (b) of subsection (1); corresponded in writing with the financial institu- tion concerning the items; or otherwise indicated an interest in the items as evi- denced by a memorandum concerning them writ- ten by a financial institution.
ANTIGUA AND BARBUDA Report, publication and disposal of abandoned property.

Sale and handling of proceeds of sale of abandoned property.

No.

14 of 2005.

The Banking Act, 2005. inn 55 61.


(1) Every financial institution holding any of the items enumerated in section 60 shall within ninety days after the end of its financial year report such holdings to the Central Bank, and thereafter pay or deliver to the Central Bank all property presumed to be abandoned listed in the report in accordance with the Regulations which the Minister, acting on the recom- mendation of the Central Bank shall make.
Upon paying or delivering such property into the custody of the Central Bank a financial institution shall be relieved of all liability to the ex- tent of the value of the property for any claim in respect thereof.
(2) Except with the approval of the Minister, acting on the recommendation of the Central Bank, on such terms and condi- tions as he may prescribe, no reduction in the amount of inter- est or dividends payable and no charges in excess of those made in respect of comparable active accounts shall be made by a financial institution either during the period of inactivity of the items set out in section 60 (1) or at the time payment and deliv- ery of them under subsection (1) is required.
(3) Within 30 days after the end of its financial year but before the filing of the report to the Central Bank required by subsection (1), a financial institution shall publish in the Ga- zette, the name of the owner and particulars concerning the prop- erty and shall mail a notice to the owner at his last known ad- dress containing particulars concerning the property.

62.
62.

(1) A financial institution may sell at public sale all prop- erty other than money presumed to be abandoned after the ex- piration of 60 days from the later date of publication or mailing required by section 61 (3) following such advertisement of the sale as the Minister acting on the recommendation of the Cen- tral Bank, may determine.

(2) Any purchaser shall receive title to the property free from all claims of the owner or prior holder and from all persons claiming through or under him.
(3) A financial institution shall deposit with the Central Bank the proceeds of the sale of property in accordance with subsec- tion (1) less all reasonable costs incurred by it in connection with the sale, mailing of notices, and service as it may deem appropriate to assure the prompt payment of claims which may subsequently be made and approved by the Minister, acting on the recommendation of the Central Bank.

ANTIGUA AND BARBUDA Claims on abandoned property.

Penalties.

Banking Business Vesting Order.


56 The Banking Act, 2005.

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(4) Any property remaining unsold shall be delivered to the Central Bank and shall be disposed of by the Central Bank in such manner as the Minister may prescribe.

63.
63.

(1) Any person claiming an interest in any property which has been paid or delivered into the custody of the Central Bank or in the proceeds from the sale thereof may file a claim thereto with the Central Bank, and after an appropriate hearing, the decision of which shall be communicated to the claimant and made a public record, the Central Bank may deliver up the prop- erty or make payment.
(2) Any person aggrieved by a decision of the Central Bank may commence an action in the High Court to establish his claim within 30 days following the decision of the Central Bank.

64.
64.

Any financial institution which willfully fails to file the report or to pay or deliver property presumed to be abandoned into the custody of the Central Bank in accordance with section 61 (1), 62 (3) or 62(4) commits an offence, and it and each of its directors is liable on summary conviction to a fine not ex- ceeding one thousand dollars or to imprisonment for a term not exceeding three months or to both such fine and imprisonment.

PART VII TRANSFER OF BANKING BUSINESS 65.
(1) Where an agreement has been entered into for the acquisition by a financial institution (herein referred to as the “transferee financial institution”) of the undertaking of another financial institution, whether or not a financial institution, to which the provisions of this Act apply (herein referred to as the “transferor financial institution) the transferor financial institu- tion may, for the purpose of effecting the transfer to, and the vesting in, the transferee financial institution of the undertak- ing, make a written application to the Minister for the approval of the transfer, notice of which shall be published in the Ga- zette in any case where the Minister so directs.
(2) Upon the making of an application under subsection (1), the Minister shall request the Central Bank to investigate and report on the application including in particular the circum- stances leading to the proposed transfer, the ability of the trans- feree to discharge its obligations under the transfer and the ef- fect, which the transfer is likely to have on the banking services available to the public.

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The Banking Act, 2005. inn 57 ANTIGUA AND BARBUDA (3) On receipt of the report from the Central Bank, the Min- ister may, if he thinks fit, make a banking business vesting or- der transferring to and vesting in the transferee financial insti- tution the undertaking, as from the date specified therein, and on the making of such an order, all such existing property, rights, liabilities and obligations as are intended by the agreement to be transferred and vested shall, by virtue of this Act, and with- out further assurance be transferred to, and shall vest in, the transferee financial institution to the intent that such financial institution shall succeed to the whole or such part of the under- taking of the transferor financial institution as is contemplated by the agreement.
(4) No transfer or vesting effected by a banking business vesting order shall: (a) (b) (c) operate as a breach of covenant or condition against alienation; give rise to a forfeiture; or invalidate or discharge a contract or security.
(5) Notwithstanding anything contained in any enactment to the contrary, a banking business vesting order may, in the dis- cretion of the Minister for the purposes of corporation tax, con- tain provisions respecting: (a) (b) the carry forward; and the set off, by the transferee financial institution of such of the losses of the transferor financial institution as may be specified in the Order as if the undertaking of the transferor financial institu- tion had not been permanently discontinued on the date speci- fied in the Order and a new banking business had been then set up and commenced by the transferee financial institution.
66.

(1) Without prejudice to the generality of section 65, the effect of a banking business vesting order, as regards the bank- ing business thereby transferred, is that on and from the date of transfer — Supplementary provision as to transfers.

(a) every existing contract to which the transferor fi- nancial institution was a party, whether in writing or not, has effect as if 58 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (i) (ii) (iii) the transferee financial institution had been a party thereto instead of the transferor finan- cial institution; for any reference (however worded and whether expressed or implied) to the transf- eror financial institution there were substi- tuted as respects anything falling to be done on or after the date of the transfer, a refer- ence to the transferee financial institution; and any reference (however worded and whether express or implied) to the directors or to any director, officer, clerk or servant of the trans- feror financial institution were, as respects anything falling to be done on or after the date of transfer, a reference (as the case may re- quire) to the directors of the transferee finan- cial institution it may appoint, or in default of appointment, to the director, officer, clerk or servant of the transferee financial institu- tion who corresponds as nearly as may be to the first mentioned director, officer, clerk or servant; (b) (c) (d) any account between the transferor financial insti- tution and a customer shall become an account be- tween the transferee financial institution and that customer; any existing instruction, direction, mandate, power of attorney or consent given to the transferor finan- cial institution shall have effect as if given to the transferee financial institution; any negotiable instrument or order for payment of money which is expressed to be drawn on, or given to, or accepted or endorsed by the transferor finan- cial institution, or payable at any of its places of business, shall have effect as if it had been drawn on, or given to or accepted or endorsed by the trans- feree financial institution, or payable at the same place of business of the transferee financial institu- tion; (e) any security transferred to the transferee financial institution by a banking business vesting order that No.
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The Banking Act, 2005. inn 59 ANTIGUA AND BARBUDA immediately before the date of the transfer was held by the transferor financial institution as security for the payment or discharge of any debt or liability or obligation (whether present or future, actual or con- tingent) shall be held by, and be available to, the transferee financial institution as security for the payment or discharge of such debt or liability or obligation; and any such security which extends to future advances or liabilities shall, from the date of the transfer, be held by, and be available to, the transferee financial institution as security for future advances by, and future liabilities to, the transferee financial institution, in the same manner and in all respects as if future advances by, or liabilities to, the transferor financial institution were secured thereby immediately before the date of the trans- fer; any judgement or award obtained by or against the transferor financial institution and not fully satis- fied before the date of the transfer shall be enforce- able by or against the transferee financial institu- tion; unless the agreement by the parties to the transfer provides to the contrary, any officer, clerk, or ser- vant employed by the transferor financial institu- tion immediately before the date of the transfer shall become an officer, clerk or servant, as the case may be, of the transferee financial institution on terms and conditions no less favourable than those on which he was so employed immediately before the date of the transfer, and such employment with the transferor, and transferee financial institution re- spectively shall be deemed, for all purposes, to be a single continuing employment, save that no direc- tor, secretary or auditor of the transferor financial institution shall by virtue only of a banking busi- ness vesting order become a director, secretary or auditor, as the case may be, of the transferee finan- cial institution.
(f) (g) (2) The provisions of subsection (1)(a)(ii) and (1)(a)(iii) shall apply to — 60 The Banking Act, 2005.

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ANTIGUA AND BARBUDA (a) (b) (c) any statutory provision; any provision of any existing contract to which the transferor financial institution was not a party; and any provision of any other existing document (not being a contract but including in particular a will); as they apply in relation to a contract to which paragraph (1)(a) applies.
(3) Any property or rights transferred to, and vested in, the transferee financial institution which immediately be- fore the date of the transfer were held by the transferor fi- nancial institution, whether alone or jointly with any other person - (a) as trustee or custodian trustee of any trust, deed, settlement, covenant, agreement or will, and whether originally so appointed or not, and whether appointed under hand or seal or by or- der of any court; (b) as executor of the will of a deceased person; (c) (d) (e) as administrator of the estate of a deceased person; as judicial trustee appointed by order of any court; or in any other fiduciary capacity whatsoever, shall, from the date of the transfer, be held by the trans- feree financial institution whether alone or jointly with such other person, in the same capacity upon the trusts, and with, and subject to, the powers, pro- visions, liabilities and obligations, applicable thereto respectively.
Transfers to be subject to stamp duty.

Cap.

410.

67.
The transfer of, and vesting in, the transferee financial institution of an undertaking by a Banking Business Vesting Order shall, unless exempted (either generally or in some par- ticular case) by the banking business vesting order, be subject to the provisions of the Stamp Act as if the banking business vesting order were, in each of the cases in which the duty is imposed on the several instruments specified in the Schedule to that Act, an instrument between party and party within the contemplation of the Act.
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The Banking Act, 2005. inn 61 PART VIII GENERAL 68.

The provisions of the Non-Citizens Landholding Regu- lation Act, do not apply to financial institutions licensed under this Act in relation to charges held by the bank as security.

69.

The Banking Act, is hereby repealed.

SCHEDULE I ANTIGUA AND BARBUDA Non-application of Non-Citizen Landholding Regulation Act, Cap 293.

Repeal Cap.

40.
DOCUMENTS AND OTHER INFORMATION REQUIRED IN ORDER TO OBTAIN A LICENCE UNDER SECTION 5 In order to obtain a licence as a financial institution, an applicant shall submit the following: (a) (b) (c) authenticated copies of the instrument under which the applicant is formed or organised; a statement of the address of its head office, the name and address of every member of its board of directors; a statement of the name, address, qualification and experience of its chief executive officer; (d) such financial data as the Minister may require; (e) (f) full particulars of the areas/sectors in which the applicant proposes to do business; the location of the principal and other places of business where the applicant proposes to do business; (g) an operating plan and documented internal controls system; (h) such other information as the Minister may require.
62 The Banking Act, 2005.

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ANTIGUA AND BARBUDA SCHEDULE II Sections 2 and 16(12) “Business of a financial nature” includes the following types of business: CLASS ACTIVITIES 1.

Finance house or Finance Hire purchase and installment company credit Credit union 3.Merchant bank Provision of basic savings (share accounts) for members and making loans to members.
Floating and underwriting, stocks, shares, and bonds Loans syndication Providing consultancy Dealing in gold and providing consultancy and investment management services and corporate advi- sory services Acceptance of credit Project Development Foreign exchange Lease financing Foreign exchange dealing Inter-bank financing.

4.

Mortgage institutions Mortgage lending 5.

Trust company 6.
Trust company 6.

Unit trusts 7. Credit card business Managing trust funds Performing duties of trustees Executor or administrator and attorney Administration of Pension Funds Mort gage lending.
Providing facilities for the participation by persons as beneficiaries under a trust or other scheme, in profits or income arising from the acquisition, holding, management or disposal of securities or any other prop- erty whatever Issuing payment, credit or charge cards in co-operation with others, including other financial institutions, operating a payment, credit or charge card plan.

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The Banking Act, 2005. inn 63 ANTIGUA AND BARBUDA 8.

Financial services 9.

Securities business 10.


Insurance business Providing financial services relating to fu- ture and contingent liabilities in relation to foreign exchange and commodities.
carrying on within the meaning of the Se- curities Act, 2001, the business of a secu- rities exchange, clearing agency, securi- ties depository, securities registry, under- writing, broker-dealer, limited service broker, custodian, an investment ad- viser, or a management company or trustee or custodian of a collective invest- ment scheme.
Carrying on the business of receiving pro- posals for or the issuing of policies of any class of insurance, or the collection or re- ceipt of premiums on policies and the mak- ing of payments due under such policies, re-insurance, insurance underwriting, in- surance brokerage, the issuing and carry- ing out of contracts to pay annuities, the effecting and carrying out of tontines.
SCHEDULE III Section 22(7) Offences in respect of which liability to conviction may be discharged by payment of a fixed penalty Offence Section Fixed Penalty 1.

Failure to maintain minimum capital requirement 13(3) 10 000.00 2.

Breach of large exposure 16(3) limits 3.

Granting unsecured credit 16(6) facilities without prior notification to the Central Bank and approval of the board $2000.00 for each exposure be- yond limit $2000.00 for each contravention 64 The Banking Act, 2005.

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ANTIGUA AND BARBUDA 4.

Failure of financial institution to instruct external auditor to carry out additional duties at the request of the Central Bank 19(9) $2000.00 for each failure 5.

Failure to present auditor’s report to annual shareholders meeting, Minister, and the Central Bank 19(10) $500.00 6.
Failure to make returns under section 23 or making returns after the prescribed date 23(7) $1000.00 for each contraven- tion SCHEDULE IV Section 22(7) (b), 35 and Sechedule III NOTICE OF OPPORTUNITY TO DISCHARGE LIABILITY The Eastern Caribbean Central Bank has reason to believe that [ name of bank........................................................................................................................ ..........................................] has committed an offence under section.................of the Banking Act having [....................................................................................... .............................particulars of offence.............................]; and hereby gives the .....................................................[ name of bank ] the opportunity to dis- charge liability for this offence by payment of the sum of [ insert fixed pen- alty listed in Schedule III in words and figures ] to the Accountant General on or before the.................day of ..............................................., 20..........and be- fore that date no proceedings in respect of this offence will be taken.
___________________________ Governor Eastern Caribbean Central Bank No.

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The Banking Act, 2005. inn 65 ANTIGUA AND BARBUDA Passed the House of Representatives this 18th day of July, 2005.

Passed the Senate this 12th day of August, 2005.

D. Giselle Isaac-Arrindell, Speaker.

Hazlyn M. Francis, President.

Yvonne Henry, Acting Clerk to the House of Representatives.

Yvonne Henry, Acting Clerk to the Senate.


____________ Printed at the Government Printing Office, Antigua and Barbuda, by Eric T. Bennett, Acting Government Printer —By Authority, 2005.

800—9.05 [ Price $24.65 ] 66 The Banking Act, 2005.

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The Banking Act, 2005. inn 67 ANTIGUA AND BARBUDA 68 The Banking Act, 2005.

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ANTIGUA AND BARBUDA 1.5 1.6 1.7 1.8 1.9 A typical financial crisis has no single cause, but is usually the outcome of many factors working in parallel.

These include allowing banks to be set up by persons with little expertise and even less capital, weak supervision, inadequate rules governing accounting and bankruptcy, dire economic management, weak underwriting standards and macroeconomic volatility.
Banking legislation does not deal with macroeconomic policies that are tied to a great extent with fiscal policies of government.

It is important that the Central Bank is given adequate powers to ensure that banks and other non-bank financial institutions licensed under the Banking Act are fundamentally very sound and can withstand adverse trends even in a fragile economy.
The proposed amendments to the Banking Act seek to address major deficiencies in legislation and to tighten the supervisory and regulatory framework.

The proposals establish certain prudential requirements that must be adhered to by all financial institutions and gives the Minister of Finance the power to make regulations to effect the provisions of the Banking Act, upon the recommendation of the ECCB.
Due to these several proposed amendments, it is recommended that the current Uniform Banking Act be repealed and a new Act, incorporating the amendments, be enacted.

The new Act will have more comprehensive provisions to regulate banks.

The amendments presented benefited from a first draft by an IMF legal consultant, various discussions by committees within the Central Bank, and the Financial Secretaries.
The draft amendments were circulated to commercial banks for their comments and the concerns raised were discussed at the Banking Committee Meeting.

The Banking Committee endorsed the recommendations to address the major shortcomings identified in the Act.

B.

PROPOSALS 2.

Arrangement of Sections 2.1 2.2 Section 11, Rights of Central Bank to examine books of banking business without a valid licence has been incorporated under Section 3, Requirement for licence.
Section 16, Restriction on certain activities of licensed financial institutions, was renamed Restriction on certain activities of licensed financial institutions and affiliates to capture the activities of affiliates of financial institutions which are now being restricted to enable effective supervision of the licensed entity.

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The Banking Act, 2005. inn 69 ANTIGUA AND BARBUDA 2.3 2.4 Section 18, Credit Institution, has been revised to Credit Institution, Class of Credit Institution and Financial Group to incorporate entities within the same structure as the licensed banking institution.
Section 21, Disclosure and access to books and records by Central Bank examiner for Inspection, was reworded to replace the word Inspection with Examination to avoid misinterpretation arising form the use of both terms in the Act.

The Bank Supervision Department refers to the exercise as an examination and not an inspection.

2.5 Section 33A, Compounding of Offences, was renumbered as Section 35 and a new section, Section 36 – Prudential Guidelines was added.
Accordingly, the former Section 34, Voluntary Liquidation, becomes Section 37 and every Section thereafter falls back in numbering accordingly.

2.6 An additional Schedule has been added to the Act as Schedule II, to define business of a financial nature.

Schedule I remains with amendments.

3.


Interpretation Section 2 3.1 3.2 3.3 3.4 3.5 3.6 The term affiliate was added to define entities within and outside of a conglomerate structure whose activities would be subject to review by the Supervisory Authority under consolidated supervision.

For clarity, the word auditor was amended to read external auditor to differentiate between an internal auditor of the financial institution.
The term borrower group was introduced to capture the linkage between individual borrowers and their related interests when transacting credit facilities with financial institutions.

The term business of a financial nature was introduced to give clarity to the type of businesses in which institutions that may comprise a financial group are engaged and hence covered under the provisions of this Act.

The institutions to be included hereunder are set out in Schedule II of the Act.
The terms connected or related were included to enable the ECCB to determine the relationship between two individual borrowers, either an individual or a company, for the purposes of establishing concentration in the lending activities of financial institutions.

The term control was included to enable the Central Bank, the Council or the Minister in determining 3.3 and 3.5 above.

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ANTIGUA AND BARBUDA 3.7 3.8 3.9 3.10 3.11 The definition of the term Credit Institution was expanded to capture all aspects of credit granting.

The term Financial Group was included to assist in the identification of entities that conduct business of a financial nature and are related to the licensed financial institution.
The term Holding Company was introduced to capture new and complex structures that may be brought under the Act and has a common meaning as laid out in the various Companies Acts in the member territories.

The term significant shareholder was introduced to differentiate ownership of shares by an individual or entity that warrant approval of the Central Bank from ownership of sums that would only require periodic and routine reporting to the Central Bank.
The term subsidiary was introduced to capture entities owned in whole or in part by the licensed banking institution, holding company or financial institution.

It has a common meaning as laid out in the various Companies Acts in the member territories.

3.12 The definition of the term unsecured was broken down into two parts for clarity.

However the content of the definition remains unchanged.

PART I - LICENCES 4.


Requirements for Licence Section 3 Rationale for Amendment 4.1 Provisional licences have been granted, in the past, to institutions suspected of carrying on banking business, but whose operations grandfathered the Banking Act.

The word provisional means tem- porary and such licences were, in the past, granted to institutions pending an on-site examination by the ECCB.
Such examinations would either conclude that a licence be granted or that the finan- cial condition of the entity was such that it not be allowed to con- tinue to operate.

4.2 It has been determined that this function would be better facilitated by making provision for the Central Bank to conduct an examination of any entity suspected of conducting banking business, and to take the necessary action to licence or remove the entity from the system.
As illustrated below in paragraph 5 of this Explanatory Memoran- dum, the subsequent Section 4 provides for this, including and ex- No.

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The Banking Act, 2005. inn 71 ANTIGUA AND BARBUDA panding the provisions of the former Section 11.

Accordingly, an amendment is necessary under Section 3 to reflect the removal of Provisional Licences.
Proposal for Amendment 4.3 To amend subsection (2) to remove bank and replace it with financial institution to capture non-banks that have been issued a licence.

4.4 4.5 4.6 To remove subsections 4, 5 and 6 of the old Act to remove the re- quirement for a provisional licence.
To renumber Section 3(7) which requires all financial institutions to be licensed within the jurisdiction as Section 4(4) To renumber subsection (8) as section (5) with modifications to sepa- rate the fines and terms of imprisonment for breach of subsections 1 and 4 that are applied to the institution from those applicable to the directors and managers.

5.

Examination of books of person carrying on banking business without a licence.
Section 4 Rationale for Amendment 5.1 The repositioning of this section was appropriate as it now directly follows the section prohibiting the carrying on of banking business without a licence.

The purpose of the section is to ascertain whether the person is in fact carrying on banking business.

The process will now be done through the Magistrate’s Court, and, where necessary, entry to premises will be with the assistance of a police officer.
This provision was framed in a similar manner as in the Financial Institutions Act of Jamaica to effect swift resolution to such unlawful practices.

5.2 Previously the Central Bank would have to apply to the High Court, after consultation with the Minister, for an order to examine the books.

This was a lengthy process during which time the safety and soundness of the institution, the system as well depositors’ funds were being further threatened.
To effectively circumscribe the actions of such persons the Central Bank needs the authority to close down the unlicensed business if necessary.

Accordingly, a provision is inserted to allow the Central Bank to recommend to the Minister that a receiver be appointed for the business.

72 The Banking Act, 2005.

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ANTIGUA AND BARBUDA Proposal for Amendment 5.3 To amend subsection (1) to remove the proceedings to the Magistrate’s Court, allowing the Magistrate to issue a special warrant authorizing the Central Bank to enter an entity suspected of conducting banking business unlawfully and to collect such evidence as deemed necessary to substantiate its suspicions.
5.4 5.5 5.6 5.7 To insert a new subsection (3) to allow a police officer to use force to gain entry to the premises in respect of which the special warrant is granted.

To reposition the former Section 11(2) as Section 4(4) To insert a new subsection (5) to empower the Central Bank to recommend to the Minister that the business be placed in receivership, in the event that, having exercised its rights under subsection (6), the Central Bank determines that a licence should not be granted.
To transpose subsections (3) and (4) of the former section 11 as a new subsections (6) and (7) of Section 4 and for clarity the words, “where the Minister has reasonable cause to suspect that the conditions in subsection (1) (a) and (b) exist,” were added to subsection 7.

6.

Licences – Application for Licence Section 5 Rationale for Amendment 6.1 Where an applicant has duly submitted an application for a banking licence, the licensing authority should have established criteria for assessing the proposal.
To lend some degree of transparency to the process and to ensure that only high integrity applicants are licensed, the criteria for approval should be outlined in the legislation.

6.2 Banks, unlike other companies are opaque.

The nature of their operations is such that they garner public funds, which are then invested into assets of varying risk.

The need to meet shareholder expectations of maximum rewards invites moral hazard on the part of managers.
The lack of public disclosure requirements to invoke market discipline thickens the veil over banking operations.

Accordingly, the criteria for entry and the scope under which ongoing monitoring would be effected requires tightening.

6.3 The proposed amendments address the administrative procedures for the processing of applications for licenses by the licensing authority, incorporating the requirements of Basle Core Principle 3.

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The Banking Act, 2005. inn 73 ANTIGUA AND BARBUDA Proposal for Amendment 6.5.1 To retain subsection (2), paragraphs (a), (b) and (c), without amendment.

6.5.2 To amend paragraph (d) to incorporate a more thorough assessment of the directors and management of the proposed banking institution including a fit and proper test as outlined in Schedule I of the Act.

This is similar to the requirements the Trinidad and Tobago and Jamaica Banking Act.
6.5.3 To insert the word the before capital structure in paragraph (e).

6.5.4 To retain paragraphs (f) and (g) without amendment.

6.5.5 6.5.6 6.5.7 6.5.8 6.6 6.7 6.9 6.10 To insert a new paragraph (h) to provide for the assessment of any significant shareholders as defined under the Act.

To insert a new paragraph (i) which provides for the assessment of the ownership structure in line with Basle Core Principle 4.
To insert a new paragraph (j), which provides for the assessment of the source of capital funds in line with the Basle Core Principle 6.

To insert a new paragraph (k), which provides for the assessment of the legal and managerial structure in line with the Basle Core Principle 4.

To insert a new subsection (3) to address issues relating to a foreign bank applying for a license to establish branch operations in the ECCB Member States.
The subsection requires certification from the home country supervisor that its approval has been granted and documented evidence to be presented to the Central Bank to assess the quality of supervision.

To renumber the existing Section 4(3) as subsection (4) of this section.

To retain subsection (5) of the former Section 4 and renumber it as subsection (6) of this section.
To retain subsection (6) of the former Section 4 and renumber it as subsection (7) of this section, and pluralize the word Schedule to reflect the addition of a new Schedule to the Act.

7.

Restricted words, names and practices Section 6 74 The Banking Act, 2005.

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ANTIGUA AND BARBUDA Rationale for Amendment 7.1 Basle Core Principle 2 requires that the permissible activities of institutions that are licensed and subject to supervision as banks must be clearly defined, and the use of the word “bank” in names should be controlled as far as possible.
This is provided for in the existing Act, however, the provisions is strengthened by increasing the fine for contravention of this section, to discourage this practice and ensure that the banking public is not misled.
Proposal for Amendment 7.2 To amend subsection (2) of the former section 5 now section 6 (4) to increase the fine from one hundred thousand dollars to two hundred and fifty thousand dollars and the penalty from one thousand dollars to five thousand dollars for unlawful use of the words “bank”, “financial institutions”, or their derivatives in their name.

7.3 The former section 5 and 6 have been substantively merged to form the proposed section 6 and the former section 6 (2) is the proposed section 7.

8.
8.

Authorisation of location and approval of new business premises Section 8 Rationale for Amendment 8.1 A component of the licensing process is the proposed location of the licensee.

Accordingly, the approval of the location of the business is part of the overall application review and approval process and the establishment of new offices forms part of ongoing supervision of existing institutions.
Overseas offices of local financial institutions can pose significant risks to the operations of the banks, if these offices are not managed or regulated prudently.

Accordingly, the regulator should have the authority to require a local financial institution to close a branch where the quality of supervision of that branch is inadequate when compared to the risks the branch poses to the entire bank.

Proposal for Amendment 8.2 To divide subsection (2) of the former Section 7 into subsections (2) and (3).
8.3 8.4 To reposition the former subsection (3) of Section 7 as subsection (4) To reposition the former sub-section (4) of Section 7, as subsection (5).

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The Banking Act, 2005. inn 75 ANTIGUA AND BARBUDA 8.5 To insert a new Subsection (6) to enable the Minister on the recommendation of the Central Bank, to require a locally incorporated financial institution to close its place of business outside the ECCU Area or impose limitations on its activities if it is dissatisfied with the quality of host country supervision.

9.
9.

Voting Section 9 Rationale for Amendment 9.1 Core Principle 4 requires that banking supervisors have the authority to review and reject proposals to transfer significant ownership or controlling interests in existing banks to other parties.

Significant ownership and controlling interest in banks may be transferred by transferring voting shares or by transferring assets.
The Core Principles Methodology requires supervisory approval of a change in ownership or exercise of voting rights over a particular threshold.

Sections 9(1) and 10(1)(a) of the Banking Act (formerly sections 8(1) and 9(1)(a) address ownership and the transfer of the whole or any substantial part of an institutions’ assets or liabilities without the approval of the Minister.
9.2 Supervisory approval is required at the licensing stage for the indi- viduals and or companies that are deemed to be significant share- holders in a financial institution to ensure that banking institutions are only owned by credible individuals or as in the case of compa- nies, that the structure is not so complex as to inhibit effective super- vision.

The beneficial owner of the banking institution, as well as of each entity within the financial group, must be known to the supervi- sor.
It becomes necessary therefore for supervisory approval to be sought on an ongoing basis, particularly with the advent of the ECSE, for the acquisition of significant holdings in a banking institution and for the transfer of a significant portion of the business to another en- tity or individual.

The supervisory authority must at all times be able to make a determination as to the risk exposure and potential threat to the financial stability of the bank.
To enable the Supervisor to make an informed assessment of the ownership of a financial institution, a three-tiered approach is being proposed in the amendments.

9.3 The first tier is supervisory authority to review and reject proposals to transfer ownership.

This position is similar to that in Trinidad and Tobago and Jamaica.
However, in these jurisdictions the Minister may require a local bank to transmit to the Minister information as to whether that shareholder holds any voting shares in the bank as ben- eficial owner or as trustee.

The second is reporting of significant 76 The Banking Act, 2005.

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ANTIGUA AND BARBUDA shareholdings to the supervisory authority, and the third is the ability of the supervisor to order divestment.
Proposal for Amendment 9.4 9.5 9.6 9.7 9.8 9.9 To reposition the existing Section 8(2) as subsection (2) of this Sec- tion and replace the words “so interrelated that they should be con- sidered as a single unit” with the words connected or related as de- fined in Section 3, which is outline above.
To insert a new subsection (3) to require quarterly reporting by fi- nancial institutions of share ownership in excess of 5 per cent of the total voting rights of the institution to the Central Bank as part of the ongoing supervision.

To retain subsections (3) through (5) renumbering as subsections (4) through (6).
To amend sub-section 3 to give the Central Bank the authority to use its powers to prevent adverse consequences under Section 22 (dis- cussed below) to require divestment of interests acquired in violation of this section.

To amend sub-section 4 to refer to the Central Bank only.

To renumber subsection (6) as subsection (7).

10.

Revocation of licence and declaration of discontinuance of service.
Section 11 Rationale for Amendment 10.1 Core Principle 22 requires that banking supervisors have at their disposal adequate supervisory measures to bring about timely corrective action when banks fail to meet prudential requirements (such as minimum capital adequacy ratios), when there are regulatory violations, or where depositors are threatened in any other way.

In extreme circumstances, this should include the ability to revoke the banking license or recommend its revocation.
The proposed amendment expands the ground for revocation to include circumstances directly related to the prudent operation of the financial institution Proposal for Amendment 10.2 To include in subsection (1) additional paragraphs to address specific No.

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The Banking Act, 2005. inn 77 ANTIGUA AND BARBUDA conditions under which the Minister, acting on the recommendation of the Central Bank can revoke a licence.
Paragraph (f) was included to address inadequacies in capital and liquidity; paragraph (g) to address ongoing fulfilment of the criteria applied at the licensing stage; and paragraph (h) to address instances where the licensed entity is taken over by another licensed entity rendering one of the licences unnecessary.

Paragraph (h) would be applicable in cases such as FirstCaribbean International Bank Limited.
To amend sub-section (2) to explicitly provide that a licensee’s statement of objections to a decision must be in writing.

To insert a new sub-section (3) to provide a statement of reasons for a decision to revoke.

To renumber the existing sub-sections (3), (4), and (5) as sub-sections (4), (5), and (6).

10.3 10.4 10.5 PART II — FINANCIAL REQUIREMENT AND LIMITATIONS 11.
Minimum paid-up or assigned capital Section 13 Rationale for Amendment 11.1 Core Principle 6 requires that banking supervisors set minimum capital adequacy requirements for banks that reflect the risks that the bank undertakes, and define the components of capital, bearing in mind its ability to absorb losses.

For internationally active banks, these requirements must not be less than those established in the Basle Capital Accord.
Sections 13,14 and 15 of the Banking Act set minimum capital adequacy requirements, however the test of capital adequacy prescribed by the banking supervisors of the Basle Committee which have been accepted internationally is to relate own funds (described as Tier I capital and or Tier II Capital reserves) to total assets and off- balance sheet items, risk adjusted and to establish a minimum level that should be maintained.
11.2 To ensure that banks are sufficiently capitalized to protect against losses while utilizing criterion for assessment and benchmarks that are internationally recognized, the supervisory authority must be able to set the requisite criteria, determine how the criteria would be applied and make adjustments as trends in the financial world dictate.
The supervisory authority must also be able to apply the capital adequacy criteria to conglomerates in a similar manner as is applied to the banking entity to ensure that the risk of contagion is adequately mitigated.

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ANTIGUA AND BARBUDA 11.3 In addition to establishing criterion for assessment, the supervisory authority must be able to determine the components that qualify for inclusion in Tier I and Tier II capital and set the appropriate risk weightings, which in both instances must be equal to or exceed that required under the Basle Capital Accord.
Proposal for Amendment 11.4 To amend Section 13 to establish absolute minimum amounts for banks, credit institutions and other financial institutions and to allow for the Minister, on the recommendation of the Central Bank, to in- crease the minimum so established either through written notice sent to the main office of each financial institution or published in the local newspapers or the Gazette.
11.5 To amend subsection (1) paragraph (a) to fix the amount of five mil- lion dollars for all banks whether existing or newly licensed, and paragraph (b) to establish a minimum of one million dollars for credit institutions and other financial institutions.

11.6 To replace the old subsection (3) with a new subsection to create an offence for breach of sub-section 1 12.
Maintenance of Reserve Fund Section 14 Proposal for Amendment 12.1 To reword subsection (3) which provides for the submission of an application for exemption by a foreign financial institution from this section of the Act, to explicitly state the procedure for exemption.

13.
13.

Adequacy of Capital Section 15 Proposal for Amendment 13.1 To reword the existing section 15, to allow the Minister, acting on the recommendation of the Central Bank to prescribe the percentage of risk adjusted assets that must be maintained by various classes of financial institutions, and the manner of computation of this ratio.
13.2 To replace subsection (2) with a new subsection allowing the Central Bank to determine capital adequacy ratios to be applied to all or any class of financial institution, and to expand the capital adequacy stan- dards to include entities within a financial group (defined).

13.3 To replace the original subsection (3) with a new subsection that re- quires any financial institution that does not meet the capital adequacy No.

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The Banking Act, 2005. inn 79 ANTIGUA AND BARBUDA requirements to submit a plan for addressing the deficiency, establish- ing a timeframe within which to have it addressed.

13.4 To replace subsection (4) with a new subsection to allow the Central Bank to take action against the institution in accordance with section 22 of the Banking Act for failure to satisfactorily comply with sub- section (3) 14.
Restriction on Certain activities of licensed Financial Institutions and Affiliates Amendment of Section 16 of the Act 14A.

Lending Activities Rationale for Amendment 15.1 Core Principle 9 requires that Banking Supervisors be satisfied that banks have management information systems that enable manage- ment to identify concentrations within the portfolio and Supervisors must set prudential limits to restrict bank exposures to single borrow- ers or groups of related borrowers.
15.2 15.3 In 1995 the Central Bank sought to augment the requirements under section 16 (1) of the BA, which refers to large credit exposures, by issuing Prudential Guidelines limiting large credit exposures to 25 per cent of Tier I Capital per individual borrower.

Experience has shown that this is generally not adhered to.

Empirical evidence dem- onstrates that bank failures generally stem from poor credit quality, which in turn creates liquidity problems.
In order to achieve effective supervision, Core Principle 10 requires that Banking Supervisors have in place requirements that banks lend to related companies and individuals on an arms-length basis that such extensions of credit are effectively monitored, and that other appropriate steps are taken to control or mitigate the risks.

The pro- posed amendment that introduces a new subsection (10) seeks to ad- dress this Principle.
In addition to the restriction on lending to indi- viduals, it restricts lending to members of a borrower group that would push the financial institution’s exposure to the borrower group as a whole over the statutory limit.

Proposal for Amendment 15.4 To repeal section 16 and substitute with a new section 16.
15.5 To make provisions to amend existing section 16(1)(a) to— 15.5.1 tighten the reference to related parties to which a financial institution’s exposure is limited under this section by combining these parties into 80 The Banking Act, 2005.

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ANTIGUA AND BARBUDA a borrower group, and change the reference to making advances, to incurring exposures so as to capture all types of exposures e.g.

letters of credit and futures agreements.


The amendment also seeks to cap the exposure to such a group or party therein to 25 per cent of Tier I Capital as agreed to by the Caribbean Banking Supervisors and to retain only one exception, the Government or debts secured by Gov- ernment.
15.5.2 remove all the exemptions outlined in the existing subparagraphs (i),(ii) and (iii) 15.6 15.7 15.8 15.9 To expand the existing subsection (1)(b) to additionally prohibit the extension of credit against shares of any entity within the financial group to which the licensed institution belongs, as well as the shares of a borrower company.

This improves upon the existing provision, which only refers to the shares of the bank.
To reposition the existing paragraph (1)(c) as subsection (4), and re- number subsections (1)(d-g) as subsections (1)(c-f).

To amend subsection (1)(c) as renumbered (existing subsection (1)(d)) to remove the exemptions contained therein.

The amendments to subsections (1)(e) and (1)(f) as renumbered (ex- isting paragraphs (f) and (g)) will be addressed under Investment Ac- tivities.
15.10 To insert a new subsection (2), paragraph (a) of which provides that obligations incurred under subsection (1) which are in excess of 15% of the financial institution’s unimpaired capital and reserves must be secured by insurance with a value of at least twenty percent more than the amount of the obligations secured thereby.
Paragraph (b) limits the combined exposure of 10 per cent of Tier I Capital to 400 percent or 4 times the financial institution’s Tier I capital, and para- graph (c) allows the Central Bank to vary or suspend any of the limits prescribed under subsection (1).

15.11 To insert a new subsection (3) creating an offence for breaches of subsections (1)(a), (1)(c), (1)(f), or (2).

15.12 To reposition the existing subsection (1)(c) but renumbering it as sub- section (4).
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The Banking Act, 2005. inn 81 ANTIGUA AND BARBUDA financial institution’s Tier I Capital.

The amendment also requires the references in this section to be altered, to reflect the change in posi- tion of Section 16(1)(c), to stand as Section 16(2).

15.14 To insert a new subsection (6) creating an offence for breaches of subsections (4) or (5).
15.15 To reposition the existing subsection (3) as subsection (7) and make the relevant amendments to reference the appropriate subsections.

15.16 To insert a new subsection (8), which will be addressed under Invest- ment Activities.

15.17 To insert a new subsection (9) that mandates financial institutions to maintain information systems that facilitate the capturing of connected lending.
15.18 To amend the references made in subsection (10), existing subsec- tion (4), and to capture connected or related borrowers.

15.19 To amend subsection (11), existing subsection (5), to insert amend- ments to the sections referenced under this section.
15.20 To insert a new subsection (12) that limits the activities of a financial group to banking business or business of a financial nature to enable effective consolidated supervision and regulation of all entities that could impact the soundness of the licensed institution.
15.B Investment Activities Rationale for Amendment 15.21 Core Principle 5 requires that banking supervisors have the authority to establish criteria for reviewing major acquisitions or investments by a bank and ensuring that corporate affiliations or structures do not expose the bank to undue risks or hinder effective supervision.
15.22 The existing section 16(1)(f) of the Banking Act now section 16(1)(e), contains certain statutory limitations on the ability of a financial in- stitution (including a bank) to acquire or continue in the acquisition of any ownership interest in any financial, commercial, agricultural, industrial or other undertaking.

The limitations are related to the capital and reserves of the financial institution.

The provision does not, how- ever, contain a global limitation on such holdings.
15.23 These limitations do not extend to the range of activities that affili- ates may conduct.

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ANTIGUA AND BARBUDA non-financial unregulated entities that the supervisors do not have ei- ther the expertise or the legal authority to supervise.
15.24 The existing Section 16(1)(g) now section 16(1)(f), contains certain statutory limitations on the purchase and acquisition of real estate other than for expansion and sets out a time frame for disposal.
15.25 The provisions under the Banking Act while limiting the holdings of a financial institution in another company to 10 per cent of its capital and reserves does not preclude ownership in several companies to such an extent that the entire capital and reserves of the financial institution is tied up in other companies.
Where the investments by a financial institution results in the formation of a group or conglomer- ate, under the existing Banking Act the ECCB cannot effectively su- pervise the activities of the group with a view to determining the potential threat to overall financial stability of the banking entity as some entities are outside its reach.

15.26 The proposed amendment should be viewed in conjunction with the amendments to Sections (6) and (15) of the existing Banking Act.
15.27 To re-letter section 16(1)(f) as section 16(1)(e) and section 16(1)(g) as section 16(1)(f).

15.28 To amend existing subsection (e) by expanding subparagraph (ii) with a proviso that limits the global holdings by a financial institution in other companies to 60 per cent of the financial institution’s Tier I Capital.

15.29 To amend existing subparagraph (ii) of paragraph (f) to permit finan- cial institutions to hold other real estate for a maximum period of five years before disposal.
15.30 To insert a new subsection (8), which was introduced in light of the requirements under Core Principle 4 and embodies criteria to deter- mine the suitability of a proposed shareholding.

15. Credit Institutions, Class of Credit Institution and Financial Group Section 18 Rationale for Amendment 15.1 The activities engaged in by any member of a financial or other group impacts the performance, credibility and viability of all members.
The Supervisor must be aware of the risk attendant in each segment of the group if the supervision of the financial institution is to be effective.

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The Banking Act, 2005. inn 83 ANTIGUA AND BARBUDA 15.2 Core Principle 23 requires that Banking Supervisors practice global consolidated supervision over their internationally active banking organizations, adequately monitoring and applying appropriate pru- dential norms to all aspects of the business conducted by these bank- ing organizations worldwide, primarily at their foreign branches, joint ventures and subsidiaries.
15.3 Whenever a financial institution is part of a group, the Central Bank will need to conduct consolidated supervision.

Consolidation will include the preparation of consolidated returns covering the group or part of the group.

Consolidation will also take into account the ac- tivities of group entities, which are not included in consolidated re- turns because of the nature of their assets, which cannot be meaning- fully included.
It is not intended to conduct full supervision of all the members in the group but only to supervise the financial institution as part of its group.

15.4 The requirements of Core Principle 23 are also applicable to Sections 18,20,21,22,23,31 and 35 of the Banking Act.

These sections will be addressed subsequently.


Proposal for Amendment 15.5 To amend section 18, enabling the Minister in consultation with the Central Bank to apply the provisions of the Act to members of a fi- nancial group as defined in the interpretations section with such modi- fications as are deemed appropriate.

In so doing the Central Bank is better placed to comply with the requirements of Core Principle 23.

PART III — AUDIT, INFORMATION AND EXAMINATION 16.


Annual Audit, report and publication of financial statements and results.

Section 19 Rationale for Amendment 16.1 Core Principle 19 requires that supervisors have a means of independent validation of supervisory information whether by onsite examination or use of external auditors.
Significant emphasis is placed on the work of the external auditors in the acquiring information on the performance of the financial institution and in advising such institutions of prudent courses of action to be taken with respect to accounting practices and procedures.

16.2 Essential criteria for compliance with this Principle include the Su- pervisor having the authority to directly appoint external auditors to 84 The Banking Act, 2005.

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ANTIGUA AND BARBUDA conduct supervisory tasks, and to oppose the appointment of an exter- nal auditor that is deemed to have inappropriate expertise and or inde- pendence.

Proposal for Amendment 16.3 16.4 16.5 16.6 16.7 16.8 16.9 To amend subsection (1) to specifically detail the duties of the exter- nal auditor.

To insert a new subsection (2) to address the remuneration of the auditor.
To insert a new subsection (3) to mandate the auditor to immediately report on matters of concern arising out of the audit of the institution to the financial institution and the Central Bank.

The matters that must be immediately reported are outlined in paragraphs (a) to (e) under this subsection.

To insert a new subsection (4) to enable the Central Bank to request the reports submitted to the board of the financial institution by its internal and external auditors.
To insert a new subsection (5) to address further areas on which the auditor is expected to inform the Central Bank.

The insertion of the above subsections resulted in a renumbering of existing subsections.

To amend subsection (6), formerly subsection (2) to require the auditor to present its findings directly to the board of the financial institution.
16.10 To amend subsection (7), formerly subsection (3) to require any locally incorporated bank to publish and exhibit copies of audited statements, on a solo and consolidated basis for local and foreign operations.

16.11 To amend subsection (8), formerly subsection (4), to require the foreign branch banks to publish statements of its local operations.

16.12 To insert a new subsection (9) creating an offence for failing to carry out additional duties at the request of the Central Bank.
16.13 To amend subsection (9), formerly subsection (5) to reflect the increased fines applicable to violations under subsections (6), (7) and (8) under this section from one hundred dollars to five hundred dollars.

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The Banking Act, 2005. inn 85 ANTIGUA AND BARBUDA 16.14 To amend subsection (11), formerly subsection 6, to replace the phrase shall have the power to with the word may in relation to the appointment of an auditor by the Central Bank.
16.15 To insert a new subsection (10) that enables the Central Bank to commission a special audit of a financial institution.

16.16 To insert a new subsection (12) relieving auditors of liability for disclosure of information to the Central Bank.

16.17 To reposition the former subsections 7 and 8 as subsections 13(a) and (b).

16.18 To amend Subsection (13), formerly Subsection (8) to exclude certain persons from remaining as auditors of the financial institution.

17.
17.

Central Bank Examination Section 20 Rationale for Amendment 17.1 Core Principle 16 requires that an effective banking supervisory system consist of some form of offsite and on-site supervision.

In addition, Core Principle 20 requires that the banking supervisor have the ability to supervise the banking group on a consolidated basis.

In line with this Section 20 allows the examination of the affiliates of a financial institution.
However, since affiliates located abroad may pose considerable risk to a financial institution (see paragraph 15 above), it is necessary to expand this section to provide for supervision of overseas as well as local affiliates.

Proposal for Amendment 17.2 To amend subsection (2) to effect an examination of the offices of locally incorporated banks that are outside the jurisdiction.

17.3 To reposition the existing section 23(2) as subsection (3) of this section.
To amend subsection (2) by removing the word Inspection and replacing it with Examination to address inconsistencies arising from the use of both terms in the Act.

18.

Disclosure and access to books and records by Central Bank examiner for examination Section 21 Proposal for Amendment 18.1 To amend subsection (1) to change the word Inspection to Examination 86 The Banking Act, 2005.

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ANTIGUA AND BARBUDA and to extend Central Bank’s examinations to the affiliates of licensed financial institutions.

This is to address inconsistencies arising from the use of both terms in the Act.

19.
19.

Central Bank’s Powers and Measures for Preventing Adverse Consequences Section 22 Rationale for Amendment 19.1 Core Principle 22 requires that banking supervisors have at their dis- posal adequate supervisory measures to bring about timely correc- tive action when a bank fails to meet prudential requirements, when there are regulatory violations, or where depositors are threatened in any other way.
In extreme circumstances this should include the ability to revoke the banking license or recommend its revocation.

Proposal for Amendment 19.2 To amend section 22 to outline the specific courses of action at the disposal of the Central Bank and the basis for such action by the Cen- tral Bank.
The courses of action outlined are on gradation that com- mences with written warnings, and includes the payment of a mon- etary sum to the Comptroller of Inland Revenue, where the Central Bank notifies the institution of a breach of certain sections of the Banking Act and the institution admits such breach.

The ultimate sanction is the revocation of licenses by the Minister.
With regard to monetary penalties due regard has been paid to constitutional limita- tions to ensure that the amendment does not allow the ECCB to im- pose fine, or a discretionary penalty.

This ensures that the ECCB does not act in the nature of a judicial or legislative body.
19.3 19.4 To expand subsection (1) to take into account the actions of affiliates, directors, officers, employees or significant shareholders in undertaking remedial action, and to detail in order of severity the remedial action measures available to the Central Bank.
To insert a new subsection (2) which authorizes the Minister on the rec- ommendation of the Central Bank, to restrict or vary any restriction of a licence or to revoke a licence pursuant to section 11 under the Act where there is evidence of unsafe or unsound practices in the managing of the financial institution, or a violation of any law, regulation, or Central Bank guideline to which the financial institution is subject.
19.5 To insert a new subsection (3) which outlines the remedial actions that can be the subject of a written agreement concluded between the Central Bank and the financial institution as a remedial measure.

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The Banking Act, 2005. inn 87 ANTIGUA AND BARBUDA 19.6 19.7 19.8 19.9 To insert a new subsection (4) that allows a cease and desist order issued under subsection (1) subparagraph (iii) of this section to include correc- tive action to be taken by the financial institution.
To insert a new subsection (5) that makes it an offence liable to sum- mary conviction to fail to comply with the provisions of this section.

The subsection also outlines the applicable fines that may be charged to directors/managers and to the financial institution.

The financial insti- tution is liable to be fined one hundred thousand dollars, with an addi- tional fine of ten thousand dollars for each day on which he offence is continued after conviction.
The individual is fined fifty thousand and five thousand dollars respectively.

To introduce a new subsection (6) specifying the manner of setting the effective date of remedial measures directed by the Central Bank.

To introduce a new subsection (7) instituting a regime for the payment of a monetary sum for admitted breaches of certain sections of the Bank- ing Act by a licensed financial institution.
The provision contains pro- tection from liability for prosecution after admission and payment of the monetary sum to the Comptroller of Inland Revenue.

20.

Submission of returns and production of information as required by the Central Bank Section 23 Rationale for Amendment 20.1 In addition to the production of information upon the request of the Central Bank the submission of prudential returns containing important data is a key part of the supervisory process.
These returns form the bulk of information used for offsite surveillance of licensed financial institutions.

The provisions for making returns appear in the Eastern Caribbean Central Bank Agreement, which predated the Banking Act.

The proposed amendments regularises the process by importing the provisions into the Banking Act where most other obligations of commercial banks towards the supervisor are to be found.
Proposal for Amendment 20.2 To modify and renumber the existing subsection (1) as subsection (6).

20.3 To insert a new subsection (2) to provide for the submission of re- turns, including a quarterly report to the Central Bank on exposures that exceed 10 per cent of the Tier I capital.

20.4 To insert a new subsection (3) to provide for the confidential treat- ment of such returns, but for the exchange of information with other 88 The Banking Act, 2005.

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ANTIGUA AND BARBUDA financial supervisory institutions with adequate arrangements for pre- serving their confidentiality.

20.5 To insert a new subsection (4) to allow for copies of returns to be provided to a Participating Government at its request.

20.6 To insert a new subsection (5) enabling the Central Bank to require a financial institution to disclose the basis for any of its fees and charges.
20.7 To reposition subsection (1) as subsection (6) expanding it to refer to data described in subsections (2) or (5).

20.8 To insert a new subsection (7) creating an offence for breaches of subsection (2) or (6).

PART IV – MISCELLANEOUS 21.


Minimum Criteria for determining whether a person is Fit and Proper Section 26 Rationale for Amendment 21.1 It is necessary that certain minimum standards of performance be set for directors so that each director will know what is required, when serving on the board of a financial institution.

The standards are embodied in the fit and proper criteria.
There is an ongoing need to ensure that Directors continue to meet these criteria given their critical role in ensuring the financial soundness of the institution.

21.2 This amendment is critical in light of the fact that banks and other financial institutions hold the wealth of the member states, as custo- dians of the funds of individual depositors.

The law must ensure that the rights of the owners of this property that is held by financial insti- tutions are protected.
The democratic right of shareholders to elect the persons they wish to manage their company, is preserved as share- holders would be aware of the criteria, allowing them to elect their directors within the bounds of the law.

21.3 The criteria set out in the Act would be one of the tools used in the offsite surveillance and onsite examinations to assess directors’ per- formance and conduct in office.
Proposal for Amendment 21.4 To insert a new section containing the minimum standards of performance for directors, controlling shareholders or managers of financial institutions.

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Removal and disqualification of Director Section 27 Rationale for Amendment 22.1 Good corporate governance requires directors, managers and con- trolling shareholders to meet the minimum standards of performance outlined in section 26.
To strengthen the existing criteria it was nec- essary to include additional provisions for disqualification upon noti- fication by a special majority of the financial institutions board, auto- matic disqualification, and provisions that allow for discretion in in- stances where the failure or revocation of the licence of a financial institution was not directly attributable to the performance of the di- rector or manager.
Proposal for Amendment 22.2 22.3 To renumber the existing Section 26 as Section 27 and amend sub- section (1) by renumbering subsections (b), (c) as subparagraphs (b)(ii), (iii) and inserting a new subparagraph (i) to include convic- tion of an offence under this Act as an additional reason for disquali- fication.
To amend subsection (2) dividing it into three paragraphs, to include the former sub-paragraph (1)(d) as sub-paragraph (2)(a), to include a new paragraph (b) to cover association with companies which have been wound-up by the court or placed in receivership, and to modify the existing sub-section placing it as paragraph (c) adding an excep- tion in the event that the licence was revoked due to amalgamation or voluntary winding-up, to this provision which results in disqualifica- tion for association with any financial institution whose licence was revoked,.
22.4 To remove the words “his” and “his being” replacing them with has been, throughout the Section.

23.

Declaration and registration of related interest and Conflict of interest by Director Section 28 23.1 To renumber the existing Section 27 as Section 28, and amend sub- section (2) to remove the word “his” and replacing it with the direc- tor.
23.2 To amend paragraphs (a) and (b) of subsection (2) to reflect the re- moval of the words “his interest”, replacing it with the phrase the interest of the director.

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ANTIGUA AND BARBUDA 23.3 To amend paragraphs (a) and (b) of subsection (3) to reflect the re- moval of the word “he”, replacing it with the phrase assuming office in subparagraph (a) and the date of commencement in office or pos- session of the property in subparagraph (b).
23.4 Subsection (4) is retained without amendment.

23.5 To amend subsection (5) to increase the fine applicable to this sec- tion.

24.

Responsibility for deceiving statements and obstruction of audit or au thorized examination Section 29 This former Section 28 is renumbered, and the content retained withoutamendment 25.

Management’s duty of compliance with requirements of the laws Section 30 This former Section 29 is renumbered, and the content is retained without amendment.

26.
26.

Liability of directors, officers and partners Section 31 This former Section 30 is renumbered, and the content is retained without amendment 27.

Secrecy of Information Section 32 Rationale for Amendment 27.1 At present the ECCB regulates branches of First Caribbean International Bank.

The head office of these branches is located in Barbados.
The Act is making provision for consolidated supervision, but this would be impossible under the current arrangements where the ECCB would be prohibited from exchanging information with the Central Bank of Barbados.

As required by Core Principle 24, in order to effectively perform consolidated supervision, the ECCB as supervisor must establish contact and exchange of information with the other supervisors of the regulated entity.
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The Banking Act, 2005. inn 91 ANTIGUA AND BARBUDA information sharing on the financial condition and performance of overseas operations of its banks in the host countries.

The information referred to is prudential and other relevant information relevant to financial stability.

Information on individuals will not be disclosed.


The information shared will be done so on the basis that it is not to be used for purposes other than financial supervision.

Such excluded purposes are for provision to criminal or taxation authorities for the purpose of preventing money-laundering or tax evasion.
Proposal for Amendment 27.3 To renumber the existing Section 31 as Section 32, and expand the proviso to subsection (1) to include provisions granting authority to the Central Bank to make arrangements with home supervisors of foreign financial institutions and host supervisors of local financial institutions that have established offices overseas for the sharing of information for the purpose of ensuring safety and soundness, subject to a Memorandum of Understanding, and provided that appropriate measures are instituted for the confidential use of the information.
28.

Working days of financial institutions Section 33 28.1 This former Section 32 is renumbered, and the content is retained without amendment.

29.

Regulations Section 34 Rationale for Amendment 34.1 There is a general theme throughout the Core Principles that requires the banking supervisor to have the capacity to issue standards, guidelines or regulations to effect varying operational aspects of risk management.
Such standards, guidelines and regulations are in relation to market, country, transfer and credit risk, loan classification and provisioning, capital adequacy, funds management and know- your-customer procedures.

Proposal for Amendment 34.2 To renumber the existing Section 33 as Section 34, and insert a new subsection (f) that gives the Minister the authority to make regulation regarding capital adequacy requirements.

30.

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ANTIGUA AND BARBUDA Proposal for Amendment 30.1 To renumber section 33A as section 35 and to change the word “he” to The Minister.

31.

Prudential Guidelines Section 36 Rationale for Amendment 36.1 The supervisor should have at its disposal the ability to issue Prudential Guidelines to strengthen the supervisory process within its jurisdiction.
The proposed amendment seeks to explicitly state in the Act the authority of the Central Bank to issue Prudential Guidelines and thereby give them legal effect.

Proposal for Amendment 36.2 To insert a new section 36 which authorises the Central Bank to issue Prudential Guidelines on a range of detailed matters, for the effective administration of the banking laws.

PART V – RECEIVERSHIP, LIQUIDATION AND REORGANISATION 32.
Voluntary Liquidation Section 37 Proposal for Amendment 32.1 To renumber section 34 as section 37.

38.

Cessation of business operations Section 38 Proposal for Amendment 33.1.

To renumber section 35 as section 38.

34.

Notice to depositors of voluntary liquidation Section 39 Proposal for Amendment 39.1 To renumber section 36 as section 39.

39.2 To amend subsection (1) to remove the word “prescribe” and replace it with the word determine.

35.
35.

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The Banking Act, 2005. inn 93 ANTIGUA AND BARBUDA Proposal for Amendment 35.1 To renumber section 37 as section 40.

36.

Distribution of assets Section 41 Proposal for Amendment 36.1 To renumber section 38 as section 41, and amend references to prior sections, in accordance with the renumbering of the sections.

37.
37.

Insufficiency of assets in discharge of obligations in voluntary liquidation Section 42 Proposal for Amendment 37.1 To renumber section 39 as section 42.

38.

Appointment of Receiver Section 43 Proposal for Amendment 38.1 To renumber section 40 as section 43.

38.2 38.3 38.4 To replace the word “shall” with may.
The replacement is to allow exercise of discretion where the conditions of paragraphs (a) & the (b) exist, namely impairment of capital or unsound condition, or conduct of business in an unlawful or imprudent manner.

It is possible for these circumstances to be corrected by remedial measures, before the financial institution arrives at a point where the appointment of a receiver is necessary.

To amend paragraph (d) to remove the word “inspection” and replace it with the word examination.
To amend the reference in paragraph (e) from section 10 to section 11 and to replace the reference to Section 22 with subsection (2) of Section 22 to reflect the changes in Section 22.

38.5 To insert a new paragraph (f) to authorise compulsory liquidation where persons are conducting banking business without a licence.

39.

Notice of Appointment of Receiver Section 44 Proposal for Amendment 39.1 To renumber section 41 as section 44.

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ANTIGUA AND BARBUDA 40.


Institution of proceedings to have Receiver’s appointment lifted.

Section 45 Proposal for Amendment 40.1 To renumber section 42 as section 45 41.

Period of Obligation to Commence Compulsory Liquidation or Reorganisation Section 46 Proposal for Amendment 41.1 To renumber the section 43 as section 46.

41.2 To amend paragraph (a) to replace the reference to section 44 to section 47 41.3 To amend paragraph (b) to replace the reference to section 49 to section 52 42.
Compulsory Liquidation, Reorganisation Proceedings Section 47 Proposal for Amendment 42.1 To renumber section 44 as section 47.

43.

Powers of the High Court Section 48 43.1 To renumber section 45 as section 48.

44.

Powers of receiver, official liquidator Section 49 Proposal for Amendment 44.2 To renumber section 46 as section 49.

50.

Term extensions and attachment transfer of assets to be void Section 50 Proposal for Amendment 45.1 To renumber section 47 as section 50.
45.2 To amend subsection (1) to change the reference to section 40 to refer to section 43.

No.

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The Banking Act, 2005. inn 95 ANTIGUA AND BARBUDA 46.

Execution against assets of an official institution Section 51 46.1 To renumber section 48 as section 51.

47.

Reorganisation Proceedings Section 52 Proposal for Amendment 47.1 To renumber section 49 as section 52.

47.2 To amend subsection (1) to change the reference to Section 45 (1) to Section 48 (1).

48.
48.

Reorganisation Provisions Section 53 Proposal for Amendment 48.1 To renumber section 50 as section 53.

48.2 To amend the reference to Sections 40 and 45(2) under Subsection (c) of Section 5 to Sections 43 and 48(2) respectively.

49.

Petition for Modification or revision of reorganisation Section 54 49.1 To renumber section 51 as section 54.

50.

Preferential and Other Claims Section 55 50.1 To renumber section 52 as section 55.

51.
51.

Unclaimed Funds Section 56 51.1 To renumber section 53 as section 56 51.2 To amend the reference to Section 57 to Section 60.

52.

Shareholders Rights on Remaining Assets Section 57 52.1 To renumber section 54 as section 57.

96 The Banking Act, 2005.

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ANTIGUA AND BARBUDA 53.

Safe Deposits and Unclaimed Property Section 58 53.1 To renumber section 55 as section 58.

54.
54.

Receiver’s audited accounts, striking the name of the institution and conclusion of liquidation Section 59 54.1 To renumber section 56 as section 59.

PART VI – ABANDONED PROPERTY 55.

Abandoned Property Section 60 55.1 To renumber section 57 as section 60.

56.

Report, Publication and Disposal of Abandoned Property Section 61 61.2 To renumber section 58 as section 61.

56.2 56.3 To amend subsection (1) to change the reference to section 57, to refer to section 60.
To amend subsection (2) to change the reference to section 57(1) to section 60(1).

61.

Sale and Handling of Proceeds of Sale of Abandoned Property Section 62 Proposal for Amendment 57.1 To renumber section 59 as section 62.

57.2 To make further amendment to Subsection (1) to change the reference to Section 58(3) to Section 61(3).

58.

Claims on abandoned property Section 63 Rationale for Amendment 63.1 The proposed amendment is being made to clarify the role of the No.

14 of 2005.
14 of 2005.

The Banking Act, 2005. inn 97 ANTIGUA AND BARBUDA Central Bank under this provision.

The term paid to connotes that the property so transferred becomes the property of the Central Bank rather than merely being placed in the custody of the Central Bank for safekeeping.

Proposal for Amendment 58.2 To renumber section 60 as section 63.

58.3 To amend subsection (1) to add the word delivered to reflect the custodial arrangement referred to above.

59.
59.

Penalties Section 64 Proposal for Amendment 59.1 To renumber section 61 as section 64.

59.2 To amend the reference to sections 58(1) and 59(3) and replace them with Sections 61(1) and 62(3) respectively.

PART VII — TRANSFER OF BANKING BUSINESS Banking Business Vesting Order 60.

Section 65 60.1 To renumber section 62 as section 65.

61.

Supplementary Provision as to Transfers Section 66 61.1 To renumber section 63 as section 66.

62.
62.

Transfer to be Subject to Stamp Duty Section 67 62.1 To renumber section 64 as section 67.

PART IX — GENERAL 63.

Non-application of Aliens (Landholding Regulation) Act Section 68 63.1 To renumber Section 65 as Section 68.

98 The Banking Act, 2005.

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ANTIGUA AND BARBUDA 64.

Repeal and Saving Section 69 Proposal for Amendment 64.1 To make provisions for repealing the existing Banking Act in subsection (1).
64.2 A new subsection (2) is included to preserve any regulation, notice or other subsidiary legislation that was made pursuant to the Banking Act that is in force at the commencement of this Act.

Errol Cort, Minister responsible for Finance No.

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The Banking Act, 2005. inn 99 ANTIGUA AND BARBUDA ANTIGUA AND BARBUDA THE BANKING ACT 2005 ARRANGEMENT OF SECTIONS Sections 1.

2.

Short title and commencement.

Interpretation.

PART I LICENCES 3.

Requirement for licence.

4.


Examination of books of person carrying on banking business without a licence.

5 Application for licence 6.

Restricted words, names and practices 7.

Display of licence certificate 8.

Authorisation of location and approval of new business premises.

9.

Restriction on voting rights.

10.

Actions of fundamental change requiring approval.

11.

Revocation of licence and declaration of discontinuance of service.

12.

Licence fees and penalty for default.


FINANCIAL REQUIREMENT AND LIMITATIONS PART II 13.

Minimum paid-up or assigned capital.

14.

Maintenance of Reserve Fund.

15.

Adequacy of Capital.

16.

Restriction on certain activities of licensed financial in stitutions and affiliates.

17.

Maintenance of specified assets.

18. Credit Institution, Class of Credit Institution and Financial Group.

PART III AUDIT, INFORMATION AND EXAMINATION 19.


Annual audit, report and publication of financial statements and results.

20.

Central Bank examination.

21.

Disclosure and access to books and records by Central Bank examiner for examination.

22.

Central Bank’s powers and measures for preventing adverse consequences.

23.

Submission of returns and production of information as required by the Central Bank.

24.

Extension of period for providing information.

25.
25.

Restriction on advertising likely to mislead the public.

PART IV MISCELLANEOUS 26.

Minimum criteria for determining whether a person is fit and proper.

27.

Removal and disqualification of director, manager, etc.

28.

Declaration and registration of related interest and conflict of interests by Director.

29.

Responsibility for deceiving statements and obstruction of audit or authorised examination.

30.

Management’s duty of compliance with the requirements of the laws.

31.
31.

Liability of directors, managers, officers and partners.

32.

Secrecy of information.

33.

Working days of financial institutions.

34.

Regulations.

35.

Compounding of offences.

36.

Prudential guidelines.

RECEIVERSHIP, LIQUIDATION AND REORGANISATION PART V 37.

Voluntary liquidation.

38.

Cessation of business operations.

39.

Notice to depositors of voluntary liquidation.

40.

Rights of depositors and creditors in voluntary liquidation.

41.

Distribution of assets.

42.


Insufficiency of assets in discharge of obligations in voluntary liquidation.

43.

Appointment of receiver.

44.

Notice of appointment of receiver.

45.

Financial institution may institute proceedings to have receiver’s appoint- ment lifted.

46.

Period of obligation to commence compulsory liquidation or reorganisation proceedings.

47.

Compulsory liquidation, reorganisation proceedings.

48.

49.

Powers of the High Court.

Powers of receiver, official liquidator.


50.

Term extensions and attachment and transfer of assets to be void.

51.

Execution against assets of a financial institution.

52.

Reorganisation proceedings.

53.

54.

55.

Precondition for reorganisation provisions.

Petition for modification or revision of reorganisation.

Preferential and other claims.

56.

Unclaimed funds.

57.

58.

Shareholders rights on remaining assets.

Safe deposits and unclaimed property.

59.


Receiver’s audited accounts, striking the name of the institution off the list and conclusion of liquidation.

PART VI ABANDONED PROPERTY 60.

Abandoned property.

61.

Report, publication and disposal of abandoned property.

Sale and handling of proceeds of sale of abandoned property.

62.

63.

Claims on abandoned property.

64.

Penalties.

PART VII TRANSFER OF BANKING BUSINESS 65.

Banking Business Vesting Order.

66.

Supplementary provision as to transfers.


67.

Transfers to be subject to stamp duty.

PART VIII GENERAL 68.

Non-application of Non-citizens Landholding Regulation Act, Cap.

293.

69.

Repeal and Saving.

SCHEDULE I – Documents and other Information required in order to obtain a licence under section 4(1).

SCHEDULE II – Business of Financial Nature SCHEDULE III – Offences in respect of which liability to conviction may be discharged by payment of a fixed penalty.
SCHEDULE IV – Notice of opportunity to discharge liability