Financial Crime World

Bank of East Timor Seeks Waiver for Proposed Administrator

The Bank of East Timor (BCTL) has submitted a proposal to appoint a new administrator, but the regulator is seeking a waiver due to several criteria that the candidate does not meet.

Requirements Not Met

According to Section 19 of the Banking Law, each bank must have an Audit Committee composed of three members appointed by the General Meeting of Shareholders. However, the proposed administrator:

  • Has no experience in accounting or auditing.
  • Does not possess the necessary qualifications to serve on such a committee.

Additionally, the banking law requires that banks establish a Risk Management Committee comprising three members of the Governing Board. The proposed administrator:

  • Is not a member of the Governing Board.
  • Lacks expertise in risk management.

Remuneration and Audit

Section 16.4 of the Banking Law and Instruction CPO/B-2001/9 on Remuneration of Members of the Governing Board and Senior Management require that the remuneration of members of the Governing Board be approved by BCTL. However, the proposed administrator’s remuneration package has not been approved by the regulator.

The banking law also requires banks to appoint an independent external auditor, but the proposed administrator:

  • Has no experience in auditing or accounting.

Capital Requirements

Finally, Section 4 of the Banking Law states that BCTL defines the minimum capital requirements for newly licensed banks, which may not be less than the equivalent of US$2,000,000. However, the proposed administrator has:

  • No experience in banking or finance.
  • Lacks the necessary qualifications to manage a bank with such significant capital requirements.

Request for Waiver

Despite these shortcomings, BCTL is seeking a waiver for the proposed administrator due to their unique set of skills and expertise in other areas that could benefit the bank. The regulator will carefully consider the proposal and assess whether the candidate meets the essential criteria for the role.

Note: The regulator’s decision on this matter has not been made public yet.