Financial Crime World

Banking Compliance Issues in Antigua and Barbuda Raise Concerns

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December 7, 2004

Non-Compliance with Key Principles of Effective Banking Supervision

A recent assessment by international regulators has found that Antigua and Barbuda’s banking sector is non-compliant with several key principles of effective banking supervision. The report highlights the country’s largest bank as accounting for 61% of the sector’s aggregated assets, raising concerns about concentration risk.

Concentration Risk and Offshore Financial Centers

  • The largest bank in Antigua and Barbuda accounts for 61% of the sector’s aggregated assets
  • The country’s banking sector is dominated by offshore financial centers, which can create challenges for regulators in ensuring effective supervision
  • This dominance raises concerns about concentration risk and potential vulnerabilities to market shocks

Investment Portfolios and Loan Exposures

Investment portfolios make up the bulk of banks’ assets in Antigua and Barbuda, comprising primarily government and corporate bonds and equities. However, loan portfolios are also significant, with several large exposures exceeding 25% of capital, as well as connected party loans.

Risk Management Practices and Transparency

  • The report finds that inadequate risk management practices and a lack of transparency in lending activities contribute to the country’s banking sector facing significant compliance issues
  • These concerns highlight the need for improved risk management practices and greater transparency in lending activities

Recommendations for Reform

The report recommends that Antigua and Barbuda take immediate steps to address these concerns and implement reforms to strengthen its banking supervision framework.

Immediate Actions Required

  • Implement Basel Core Principles for Effective Banking Supervision
  • Improve risk management practices and increase transparency in lending activities
  • Strengthen the country’s banking supervision framework to ensure effective regulation of the sector