Banking Services Act: Key Definitions
The Banking Services Act, 2014 aims to regulate and supervise the banking industry in Jamaica. To achieve this goal, it is essential to define key terms and concepts that are relevant to the operation of banks, financial institutions, and other entities licensed under the Act.
Key Employee
According to Section 2(1) of the Act, a “key employee” refers to an individual who performs functions that can substantially affect the financial condition or reputation of a licensee. This includes individuals employed below the level of management who meet certain criteria specified in guidelines prescribed by the Supervisor.
- An individual employed below the level of management
- Performs functions that can substantially affect the financial condition or reputation of a licensee
Licensee
The Act defines a “licensee” as a person or body licensed under the Act to operate as a bank, trust company, or other type of financial institution.
- A person or body licensed under the Banking Services Act
- Operates as a bank, trust company, or other type of financial institution
Shell Bank
The Act defines a “shell bank” as a bank with no physical presence in Jamaica, where the only presence is through local agents or non-managerial staff. This definition aims to prevent the establishment of banks that lack real presence and authority in the country.
- A bank with no physical presence in Jamaica
- Only present through local agents or non-managerial staff
Subordinated Debt
The Act introduces the concept of “subordinated debt,” which refers to an instrument evidencing a licensee’s indebtedness that will be subordinated in right of payment to all deposit liabilities and other liabilities in the event of insolvency or winding up.
- An instrument evidencing a licensee’s indebtedness
- Will be subordinated in right of payment to all deposit liabilities and other liabilities in the event of insolvency or winding up
Supervisor
The Supervisor is defined as the Governor of the Bank of Jamaica acting in his capacity as the Supervisor of banks, financial holding companies, and other specified financial institutions under Section 34B of the Bank of Jamaica Act. The Supervisor plays a crucial role in overseeing the banking industry and enforcing compliance with the Act’s provisions.
- The Governor of the Bank of Jamaica
- Acting as the Supervisor of banks, financial holding companies, and other specified financial institutions
These definitions are essential to understanding the scope and intent of the Banking Services Act, 2014, and its impact on the banking industry in Jamaica.