1. SUPERVISION by De Nederlandsche Bank in the BES as from July 2012 Information meeting / Roundtable St. Maarten – 6 February 2012 – Paul van den Berg – Legal Services Division – Supervision & Regulation – Marijn Ridderikhof – Expert Centre Culture, Organisation & Integrity EN

2. Introduction – Outline Which financial enterprises fall under the scope of DNB supervision ? What is expected of these enterprises ? As from when will the supervisory requirements apply ? What is the supervisory approach of DNB ?

3. Allocation of tasks to DNB and AFM – overview of «ongoing supervision» – * At present, there are no registered collective investment schemes or portfolio managers in the BES Credit Institution Insurer Money transaction office Company Service Provider (Trust office) Collective investment scheme * Portfolio manager * Broker Advisor Credit Provider Market accessDNB AFM Ongoing prudential supervision of financial enterprises DNB -- DNB-- Ongoing supervision of conduct of financial markets AFM --AFM Integrity Supervision – Wfm BES / Wwft BES (AML/CFT) / Sanctions Act DNB AFM

4. Scope of supervision by DNB ? – overview – Category of financial enterprisesWfm BES AML/CFT BES Sanctions Act Credit institutionsXXX Electronic money institutionsXXX Insurers– LifeXXX – Funeral (BiK)XX – Non-lifeXX Money transaction officesXXX Company Service Providers (Trust)XXX Credit card companiesXX CasinosXX X = DNB grants the required licence

5. Scope of supervision by DNB – market access credit institutions –  legal entity with registered office in BES  licence of DNB  via branch in BES < USD 90 million in deposits per end of previous financial year  licence of DNB  location of registered office: CUR or SXM  by provision of services in BES  licence of DNB  location of registered office: CUR or SXM

6. Scope of supervision by DNB – market access insurers –  legal entity with registered office in BES  licence of DNB  via branch in BES < USD 5 million in gross premium income in previous financial year  licence of DNB  location of registered office: CUR or SXM  by provision of services in BES  notification to DNB [ new! ]  location of registered office: CUR or SXM

7. Scope of supervision by DNB – provision of incoming services by insurers –  definition of «provision of incoming services»  ‘initiative test’  requirements notification (sect. 2:23 Wfm BES)  registered office CUR or SXM / legal personality  licensed / entitled to exercise insurance business  compliance with solvency requirements  1 July 2012: one-off full notification to DNB of all incoming insurance services in BES

8. Scope of supervision by DNB – special provisions concerning market access –  Financial markets register (Wfm BES)  Enforcement action against ‘illegal’ enterprises  Other special prohibitions  prohibition on the use of the word «bank»  prohibition on raising callable funds (or acting as a broker)

9. Scope of supervision by DNB – credit institutions & credit unions –  legal entity with registered office in BES  Wfm BES (prudential req. & integrity) Wwft BES & Sanctions Act  via branch office in BES  Wfm BES (integrity), Wwft BES & Sanctions Act  by provision of services in BES  Wwft BES & Sanctions Act

10. Scope of supervision by DNB – life insurers –  legal entity with registered office in BES  Wfm BES (prudential req. & integrity) Wwft BES & Sanctions Act  via branch office in BES  Wfm BES (integrity), Wwft BES & Sanctions Act  by provision of insurance services in BES  Wfm BES (section 2:23), Wwft BES & Sanctions Act

11.  legal entity with registered office in BES  Wfm BES (prudential req. & integrity) Sanctions Act  via branch office in BES  Wfm BES (integrity), Sanctions Act  by provision of insurance services in BES  Wfm BES (section 2:23), Sanctions Act Scope of supervision by DNB – non-life insurers & funeral insurers (BiK) –

12.  legal entity with registered office in BES  banks  reference to (New) Charts of Accounts of CBCS & transitional provisions on implementation of Basel II  insurers  reference to reporting framework / forms of CBCS (National Ordinance for insurance industry CUR / SXM)  ‘small’ branch offices in BES  banks / insurers  ‘turnover’ of branch office in BES must show from the annual accounts of the registered (head-)office  foreign banks / insurers  separate bookkeeping of activities in BES What is expected of financial enterprises? – reporting requirements –

13. What is expected of financial enterprises? – integrity requirements in the Wfm BES (1) – Personal integrity Aspects of integrity Relational integrity Organizational integrity organizational c.o.i / harm 3rd parties interests organizational c.o.i / harm 3rd parties interests misuse of information insider trading tax fraud external fraud money laundering financing of terrorism personal conflicts of interest bribery / corruption internal fraud

14. does the institution have control over its integrity risks ? Personal integrity Relational integrity Organizational integrity Focus on aspects of integrity DNB fit & proper tests  policymakers + internal supervisors Ensure trustworthiness of integrity sensitive functions Ensure trustworthiness of integrity sensitive functions Governance structure Counterparty due diligence Internal procedures Management of incidents ‘Integrity-conscious culture’ Line / Compliance / Risk Fraud control Tone at the top Costumer due diligence (CDD) integrity supervision What is expected of financial enterprises? – integrity requirements in the Wfm BES (2) –

15. Rules on financial enterprises with establishment (= registered office / branch) in BES:  proper & sound operation of business (“integere bedrijfsvoering”)  policy - procedures - measures  systematic analysis of integrity risks  arrangement of compliance function  client acceptance  protected bank accounts (credit institutions)  ‘back to back positions (credit institutions) What is expected of financial enterprises? – integrity requirements in the Wfm BES (3) –

16. Further aspects of proper & sound business operations (“integere bedrijfsvoering”)  duty to report incidents  integrity sensitive functions  conflicts of interests  measures to comply with AML/CFT-regulations in Wwft BES (credit institutions / life insurers)  measures to comply with Sanctions Act What is expected of financial enterprises? – integrity requirements in the Wfm BES (4) –

17. As from when will the regulations apply ?  In effect largely since the introduction and subsequent changes of National Ordinances of the former Netherlands Antilles + Procedures & Guidelines of BNA (CBCS)  Formally as from 10/10/2010 via Wtbk 1994 BES, Wtv BES, Wid BES, Wet MOT BES, Sanctions Act + ministerial regulations  Final regulatory framework as from 01/07/2012 via Wfm BES, Wwft BES and Sanctions Act + decrees, by-laws & regulations

18. Overview of Acts & regulations – final regulatory framework from 01/07/2012 – ACT Decrees, by-laws & regulations Decrees & Min. regulations Supervisory regulations & policy rules of DNB (guidance) Financial Markets Act BES (Wfm BES)  Decree financial markets BES  Regulation financial markets BES 2012  Supervisory Regulation on prudential requirements and integrity 2012 (DNB)  Policy Rule of DNB on the application and execution of the Wfm BES 2012 AML/CFT (Wwft BES)  Decree wft BES  Regulation wft BES  ‘Provisions & guidelines CBCS & Policy rule / Guideline DNB’ Sanctions Act  ‘Sanctieregeling BES’  Various Sanctions Reg. (financial transactions)  EU Sanctions

19. The supervisory approach of DNB  Supervisory approach: risk based  Enforcement policy / Supervisory instruments  Information  www.bes.dnb.nl  regulations on sanctions  News Service DNB (subscriptions via www.dnb.nl)  updates ‘FATF high risk jurisdictions’ (please be aware: no announcements in writing!)  No permanent presence of DNB Supervision in BES

20.  Reporting framework & -formats  credit institutions  (New) Charts of Accounts CBCS  insurers  reporting framework / forms CBCS (National Ordinance insurance industry CUR / SXM)  Ongoing supervision  trustworthiness testing of policy-makers (exchange of information)  implementation of Capital Accord Basel II (credit institutions) Cooperation DNB – CBCS (1)

21.  Council of Supervisors of the Kingdom participants: AFM, CBA, CBCS en DNB  Working Group on the Harmonisation of Integrity Supervision “harmonisation of the requirements concerning proper & sound business operations (“integere bedrijfsvoering”) – specifically AML/CFT – and the supervision thereof, aimed at reaching a ‘level playing field’ within the Caribbean part of the Kingdom”  Bilaterally, in various fields, such as:  support in research  support in the drafting of guidelines Cooperation DNB – CBCS (2)

22. Contact & Information  markttoegang-bes@dnb.nl  questions about licensing or market access  remarks or reports on financial enterprises that are active in BES without the required licence or authorisation  Via your regular contact person at the Supervisory department(s) of DNB  info@dnb.nl or tel. +31 20 524 911  DNB Information Desk