Chapter 3 Financial Market Regulatory Bodies in Maldives

Transcription

1 Chapter 3 Financial Market Regulatory Bodies in Maldives Ibrahim Sameer (MBA - Specialized in Finance, B.Com Specialized in Accounting & Marketing)

2 Regulation of Financial Market Regulations of financial institutions differ from one country to another. The principal objective of these government authorities is to regulate the financial activities going on in the country.

3 Regulation of Financial Market Some of the examples of financial regulatory bodies are as follows: Maldives USA India Maldives Monetary Authority (MMA) Capital Market Authority Development (CMDA) Federal Reserve Bank (Fed) Securities Exchange Commission (SEC) Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI)

4 Objectives of Regulatory Bodies in the Financial Market The statutory objectives of the regulatory bodies of financial institutions include the following:

5 Market Confidence Sustaining confidence in the financial markets is one of the most important objectives of the financial regulatory bodies

6 Consumer Protection Ensuring the most suitable level of customer protection.

7 Public Awareness Encouraging public awareness about the financial market through imparting educational programs.

8 Eliminating Financial Crime The financial regulations are designed for the purpose of.reducing financial crimes and frauds

9 Financial Market Regulatory Bodies In Maldives there are two Government bodies that established in order to regulate financial market in Maldives that is: Maldives Monetary Authority (MMA) Capital Market Development Authority (CMDA)

10 Definition Central Bank A central bank is a bank that oversees the money system of a nation. The central bank in the Maldives is known as the Maldives Monetary Authority and is often referred to as MMA.

11 History of MMA The Maldives Monetary Authority was established in 1981, under the mandate provided by the MMA Act (1981).

12 History of MMA President Uz. Maumoon Abdul Gayoom, the third president of the Maldivian republic, in his dual capacity as the President and the Minister of Finance and Treasury, served as the first governor of the central bank from its inception up till end of August 2004.

13 History of MMA In April of 2007, the MMA Act was amended to provide for the autonomy and independence of the central bank, whereby the responsibilities of the Finance Minister and the Governor of the MMA were separated.

14 History of MMA In this regard, Mr. Abdullah Jihad became the first independent Governor of the MMA, serving from August 2007 to July He was succeeded by Dr. Fazeel Najeeb, who assumed governorship in October 2008, serving until his resignation in December He was succeeded by the sixth and incumbent Governor of the MMA, Dr. Azeema Adam.

15 Key Functions of MMA Issue and regulate the availability of the Maldivian Rufiyaa. License, supervise and regulate the financial sector. Maintain price stability. Advise the government on banking and monetary matters.

16 MMA Financial Stability MMA is responsible for regulating and supervising the financial sector other than the securities market, which is regulated by the Capital Market Development Authority (CMDA). Maintaining financial stability; by identifying risks to the financial system, assessing its capacity to cope with threats, and implementing policies to safeguard the financial system health, is a key objective of MMA.

17 MMA Financial Stability In addition to the commercial banks, who make up the large majority of the Maldivian financial system, the financial sector also includes insurance companies and intermediaries, a finance leasing company, a housing finance company, money remittance companies, and payment service providers.

18 Banking Sector in Maldives The banking sector consists of 8 banks, of which three are locally incorporated, four are branches of foreign banks, and one is a fully owned subsidiary of a foreign bank.

19 Banking Sector in Maldives MMA regulates and supervises the banking sector to ensure that banks operate in a prudent manner, so as to protect depositors and maintain the stability of the banking system.

20 Banks Regulatory Framework In Maldives there are two main Act that has been enacted regarding Banks regulation. Maldives Banking Act (2010) Prevention of Money Laundering and Terrorism Financing Act (2014)

21 Maldives Banking Act (2010) - Objectives According to clause (2)(a): Maintain stability and public confidence in the banking system.

22 Maldives Banking Act (2010) - Objectives Protect the rights of depositors and creditors of the Bank.

23 Maldives Banking Act (2010) - Manage systemic risks. Objectives

24 Maldives Banking Act (2010) - Objectives Prevent financial crimes.

25 Maldives Banking Act (2010) - Objectives Foster competition in the Maldives banking system, and ensure that the banking system is responsive to the public s needs for banking services and able to contribute to economic growth in the Maldives.

26 Maldives Banking Act (2010) - Objectives

27 Maldives Banking Act (2010) Criminal Sanctions According to clause (56) (engage in unlicensed banking operations): A person who knowingly and wilfully engages in the banking business in the Maldives, in contravention of Sections 3 and 4 of this Act, shall be guilty of an offense, and is liable on conviction to pay a fine between 100,000/- (one hundred thousand) Rufiyaa and 1,000,000/- (one million) Rufiyaa or imprisonment between 2 (two) years and 5 (five) years, or both, depending on the seriousness of the offence.

28 Maldives Banking Act (2010) Criminal Sanctions

29 Maldives Banking Act (2010) Criminal Sanctions According to clause (57) (providing false information to the MMA): A person who, in connection with any application for a licence filed under Chapter 2 of this Act, or in supplying information expected to be relied upon by the MMA in administering this Act, wilfully makes any statement to the MMA that is materially misleading or that he knows to be untrue in any material respect, shall be guilty of an offense, and is liable on conviction to pay a fine between 50,000/- (fifty thousand) Rufiyaa and 500,000/- (five hundred thousand) Rufiyaa or imprisonment between 6 (six) months and 3 (three) years, or both, depending on the seriousness of the offence.

30 Maldives Banking Act (2010) Criminal Sanctions

31 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Objectives According to clause (2)(a): Provide for the prohibition and prevention of money laundering and financing of terrorism.

32 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Objectives Provide for procedures and policies in respect of prevention of money laundering and financing of terrorism and offences related thereto.

33 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Objectives Provide and administer procedures in respect of detection of money laundering and financing of terrorism activities.

34 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Objectives Provide for detection persons engaged in money laundering and financing of terrorism activities, investigation of such matters, and actions against such persons.

35 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Objectives Determine the roles and responsibilities of financial institutions and reporting entities, and the regulatory and supervisory authorities of such institutions and entities, in respect of prevention of money laundering and financing of terrorism.

36 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Objectives

37 suspicion or grounds for suspicion. Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Reporting Suspicious Transection According to clause (39)(a): Obligation to report suspicious transection. Reporting Entities that suspect or have grounds to suspect that funds or property are the proceeds of crime, or are related to money laundering or the financing of terrorism, are required to submit a report setting forth their suspicions to the Financial Intelligence Unit, as soon as practicable and not later than 3 (three) working days after forming such

38 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Reporting Suspicious Transection

39 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Offences & Penalties According to clause (53)(b): Offence of money laundering: A person who commits the office specified in paragraph (a) of this section is liable to pay a fine between 100,000 (one hundred thousand) Maldivian Rufiyaa and 1,000,000 (one million) Maldivian Rufiyaa with imprisonment between 5 (five) years and 15 (fifteen) years, or to pay a fine not exceeding 5 (five) times the amount of the laundered funds with imprisonment between 5 (five) years and 15 (fifteen) years.

40 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Offences & Penalties According to clause (53)(c): Offence of money laundering: An attempt to commit the offence specified in paragraph (a) of this section or aiding, abetting, facilitating or counselling the commission of such offence shall be an offence.

41 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Offences & Penalties According to clause (53)(d): Offence of money laundering: A person who commits the offence specified in paragraph (c) of this section is liable to pay a fine between 50,000 (fifty thousand) Maldivian Rufiyaa and 500,000 (five hundred thousand) Maldivian Rufiyaa with imprisonment between 2 (two) years and 10 (ten) years or to pay a fine not exceeding 5 (five) times the amount of the laundered funds with imprisonment between 2 (two) years and 10 (ten) years.

42 Prevention of Money Laundering & Financing on Terrorism Act (10/2014) Offences & Penalties

43 MMA Prudential Regulation - Regulation on Single Borrower and Large Exposure Limits (2015/R-150) According to this regulation it states that Single person: the total exposures outstanding at any time, including both funded and unfunded exposures, to a single person, or to a group of closely-related persons treated as a single person, shall not at any time exceed 15% of the bank s capital base.

44 Questions & Answers What else you want to know?

45 Thank You Ibrahim Sameer Seek knowledge from cradle to grave