Overview of the Legal and Regulatory Framework
The framework which provides the parameters for the exercise of the powers and execution of the functions of the Bank of Guyana has been expanded beyond the two main pieces of legislation (the Bank of Guyana Act and the Financial Institutions Act). The widening of the legislative framework arose from the enactment of the Anti- Money Laundering and Countering the Financing of Terrorism Act No. 13 of 2009, the Insurance Supplementary (Provisions) Act No. 16 of 2009 and the Money Transfer Agencies (Licensing) Act No. 20 of 2009.
The Bank of Guyana Act 1998
The Bank of Guyana Act No.19 of 1998 establishes the Central Bank as an autonomous institution. The principal objective of the Bank is stated as follows:
“Within the context of the economic policy of the Government, the Bank shall be guided in all its actions by the objective of fostering domestic price stability through the promotion of stable credit and exchange conditions, as well as sound financial intermediation conducive to the growth of the economy of Guyana.”
This Act includes provisions governing the administration of the Bank, relations between the Bank and licensed financial institutions and the Bank and the Government. The Act also places the exclusive responsibility for supervision and regulation of licensed financial institutions on the Bank and tasks it with the responsibility of oversight of the payment system.
The Act makes provision for a Board of Directors as the policy making organ of the Bank with the Governor and Deputy Governor serving as Chairman and Deputy Chairman respectively.
In November 2004 the Act (Part IV Administration) was amended with a view to enhancing and safeguarding the autonomy of the Bank. Section 9 in particular was amended by -
a) increasing the number of Directors;
b) including the requirement that the offices of Governor and Deputy Governor be filled within a specified period of becoming vacant; and
c) requiring the specification of the contractual terms and conditions of appointment of the Governor, Deputy Governor and Banking Manager upon appointment.
The Financial Institutions Act 1995
The Financial Institutions Act No.1 of 1995 which came into operation on the May 29, 1995 created the framework for the regulation of the business of banking and other financial business in Guyana.
This Act consists of nine parts which includes requirements related to licensing of financial institutions, paid up capital, restrictions on banking and financial activities, supervision of licensed financial institutions and provisions for insolvency and winding up.
The Financial Institutions Act remained substantially unchanged since its enactment in 1995 until November 2004 when amendments were made by way of modification of some sections of the Act and the inclusion of new emergency provisions dealing with temporary control.
Prior to the amendments in 2004, section 9 of the Act was amended in May 1996, to prohibit a deposit taking financial institution from acquiring another deposit taking financial institution.
The 2004 amendments sought to provide for the prevention of the abuse of financial institutions by insiders, enhance corporate governance and strengthen the powers of the Bank to deal with problematic licensed financial institutions.
The provisions of the Act are supported by subsidiary legislation, notices and supervision guidelines.
Dealers in Foreign Currency (Licensing) Act 1989
The Central Bank is also responsible for the licensing and supervision of dealers in foreign currency (cambios). Cambios are licensed to buy and sell foreign currencies. Regulation is conducted in accordance with the Dealers in Foreign Currency (Licensing) Act 1989. The Act originally gave the Minister of Finance the power to grant licences, renewable annually. In 1995 the Act was amended, transferring to the Bank of Guyana in consultation with the Minister full responsibility for administering the Act.
Implementing regulations have also been passed under this Act.
Money Transfer Agencies (Licensing) Act 2009
This Act provides for the licensing of persons to carry on the business of money transfer agencies and makes provision for the registration of money transfer agents and other connected matters. The Bank of Guyana is named as the institution responsible for the regulation and supervision under this Act. There are also implementing regulations promulgated under this Act.
Anti- Money Laundering and Countering The Financing of Terrorism Act 2009
The Anti-Money Laundering and Countering the Financing of Terrorism Act 2009 which repeals and replaces the Money Laundering Prevention Act of 2000 according to the explanatory memorandum seeks to provide for the prevention of money laundering, combating the financing of terrorism and the civil forfeiture of criminal assets.
The principal purposes of the Act as stated in its long Title are as follows:
“An Act to provide for the establishment and management of a Financial Intelligence Unit; to provide for unlawful proceeds of all serious offences to be identified, traced, frozen, seized and eventually forfeited; to provide for comprehensive powers for the prosecution of money laundering, terrorist financing and other financial crimes; and the forfeiture of the proceeds of crime and terrorist property; to require reporting entities to take preventive measures to help combat money laundering and terrorist financing; to provide for civil forfeiture of assets and for matters connected therewith”.
Sections 8 and 9 of the Act establishes the Financial Intelligence Unit and the office of the Director of the Financial Intelligence Unit respectively. The Financial Intelligence Unit is responsible for requesting receiving, analyzing and disseminating suspicious transaction reports and other information relating to money laundering, terrorist financing or proceeds of crime.
By virtue of section 22(1) of the Act the Bank is regarded as a supervisory authority with the responsibility of compliance oversight over entities specified in the Fourth Schedule referred to as reporting entities. The supervisory authority is expected to supervise compliance by reporting entities with the requirements of sections 15,16,18,19 and 20 of the Act.
Based on the Fourth Schedule the Bank has responsibility of compliance oversight over reporting entities that carry on any of the following activities or businesses:
1) Acceptance of deposits and other repayable funds from the public;
2) Lending, including consumer credit, mortgage credit, factoring (with or without recourse) and financing of commercial transactions;
3) Dealers in foreign currency, money exchangers e.g. cambios
4) Issuing and administering means of payment ( such as credit cards, travelers cheques and bankers drafts)
5) Guarantees and commitments
6) Money Transmission services (by virtue of the enactment of the Money Transfer Agencies (Licensing) Act 2009
7) Insurance business, domestic and international (by virtue of the enactment of the Insurance (Supplementary Provisions) Act 2009
Insurance (Supplementary Provisions) Act 2009
This Act paved the way for the Bank of Guyana instead of the Commissioner of Insurance to administer the Insurance Act 1998. The Act transfers all of the functions assigned to the Commissioner of Insurance by any law or Court order to the Bank and provides that the Financial Institutions Act and the Bank of Guyana Act shall be read and construed with all modifications, qualifications and adaptations that may be necessary to bring them into conformity with the Act to facilitate the administration of the Insurance Act 1998