Opening remarks
delivered by
Mrs. Leila Matroos-Lasten
Executive Director of the
Centrale Bank van Curaçao en Sint Maarten
On the occasion of the launching of
The Governance Network of the Dutch Caribbean
Centrale Bank van Curaçao en Sint Maarten
August 31, 2022
Excellencies, distinguished guests, ladies and gentlemen, good afternoon.
I would like to start by expressing my gratitude to The Themis Institute for
Governance & Leadership and NR Governance for inviting the CBCS to provide
the opening words for this special occasion. Before I start with my dissertation,
I would like to excuse Mr. R. Doornbosch, who for deeply personal reasons
was unable to provide the opening words.
It is with great pleasure that we took notice of the formal launching of the
Governance Network Dutch Caribbean. Not only is the establishment of this
governance network relevant, but also necessary considering the many
challenges that we as an international financial center are facing.
The de-risking and peer assessments by global standard setting bodies,
including the upcoming 2024 CFATF Mutual Evaluation, are noteworthy
developments that we are currently facing. I would be remiss not underscoring
the important role of good corporate governance in making our institutions
and jurisdiction resilient to the burdens of proof of proper risk management
and compliance.
The objective of good Corporate Governance is to ensure ethical, effective,
and prudent management. But also strong oversight by the governing body,
to promote responsible corporate citizenship, to safeguard stakeholders'
interest and to have a sound risk culture at all levels.
The CBCS, as part of its supervisory mandate, evaluates the functioning of
these Corporate Governance arrangements, which we have in fact identified
as a key element of our new style of supervision.
Generally speaking, Corporate Governance arrangements determine the
allocation of powers and responsibilities by which the business of a company
are carried out. Corporate Governance involves structure on the one hand
and people, behavior, and corporate culture on the other hand. The latter
group not always being easy to assess and measure. Yet, the CBCS as the
supervisory authority must position itself to properly perform this duty.
As you all may be aware, the CBCS has recently drafted a new code, the so-
called Corporate Governance Code Financial Institutions & Service Providers.
This draft Code has extensively been consulted with the private sector and all
relevant stakeholders, and addresses all aspects of governance, from the way
Boards and Senior Management work and interact, to how the decision-
making process shapes culture and risk management.
I hereby share with you a short overview of the substantive elements of this
Code:
(1) The structure of the organization should ensure that the supervisory
function and Management have clearly defined roles with adequate checks
and balances that together guarantee an effective implementation of the
strategy.
(2) The second substantive element regards the internal organization. The
organizational structure should be clear with an adequate segregation of
duties and sufficient resources. The catch phrase for Management and
Supervisory Board is "know your structure"!
Substantive elements (3) and (4) regard risk culture respectively and risk
management or internal control. Risks should be taken within a well-defined
framework in line with risk strategy and appetite. The Risk Management
function and Compliance function should be involved in the establishment of
the framework. This to ensure that all material risks are considered, and that
the financial institution complies with all requirements.
The Code uses the 'three lines of defense' model in identifying the functions
responsible for addressing and managing risks.
(5) the fifth substantive principle is to establish a sound business continuity
plan to limit losses in the event of severe business disruption. Institutions
should put in place a plan to react to emergencies and continue critical
business activities. Recovery plans are also needed to bring back the ordinary
business procedures as soon as possible.
The final two substantive provisions are (6) proportionality and (7)
transparency. The proportionality principle is very relevant in the context of
Curaçao and Sint Maarten. When implementing arrangements, financial
institutions should consider the size, nature, scale and complexity of their
activities. It should be consistent with the individual risk profile and business
model.
Finally, the Code emphasizes the importance of the governance body to lead
corporate citizenship. This is a new and important element recognizing that
the financial institution's strategy and conduct need to be consistent with
environmental, social and governance principles.
Ladies and gentlemen, the emphasis on having measures in place to protect
the integrity of our financial system will only increase in intensity and
importance. We all have a joint responsibility to guarantee the continuity of
our jurisdiction as a respected financial center. The CBCS has been working
tirelessly on its adaptive approach to keep steering our financial sector into the
right direction. The transformation of the financial sector and our responsive
supervisory capability remains our top priority. Curaçao can only be an
attractive international financial center by fostering a sound business
environment that complies with international standards.
To summarize, corporate governance is increasingly becoming the most
important part of corporate strategies, since it provides the first line of defense
against any allegation of malpractice of corporate duty. Employing sound
corporate governance practices, lowers the risk of non-compliance with
statutory and regulatory obligations, that ultimately leads to financially sound
institutions.
Tip!: Better governance most of the time equates less intrusive supervision.
Finally, I want to congratulate you with the launching of the Governance
Network of the Dutch Caribbean, with whom the CBCS will most certainly
work closely together in the future.
I thank you for your attention, and I wish you a pleasant evening.