Banks Must Establish Strong Governance Structure to Ensure Stability

In an effort to ensure the stability and integrity of the banking system in East Timor, the Central Payments Office has introduced new regulations requiring banks to establish a robust governance structure.

Key Requirements

The new regulations impose several key requirements on banks, including:

• Governing Board: Each bank must have a Governing Board responsible for establishing policies for operations and supervising their implementation.
• Audit Committee: Banks must have an Audit Committee that oversees accounting procedures and controls.
• Risk Management Committee: A Risk Management Committee must be established to manage credit appraisal, loan administration, and asset and liability management.

Additional Requirements

In addition to the above requirements, banks must also:

• Maintain a list of authorized officials with their specimen signatures and a description of their authority limits.
• Keep on file with the Central Payments Office a certified copy of its charter, by-laws, and list of officials.

Confidentiality and Integrity

To ensure the integrity of the governance structure, the regulations prohibit present and past administrators, employees, and agents from using non-public information for personal gain or disclosing it to unauthorized parties. The only exceptions are:

• Disclosure to the Central Payments Office
• External auditors
• Judicial authorities
• Foreign bank supervisory authorities
• When necessary to protect the bank’s own interest

Anti-Money Laundering Measures

Banks must also take measures to prevent money laundering by not concealing, converting, or transferring cash or other property knowing that it is derived from criminal activity. Banks must:

• Inform the authorities in East Timor responsible for combating money laundering of any evidence of property being derived from criminal activity.
• Provide information at their request.

Commitment to Stability and Integrity

“We are committed to ensuring the stability and integrity of the banking system in East Timor,” said a spokesperson for the Central Payments Office. “These regulations will help to prevent financial crimes and ensure that banks operate in a transparent and accountable manner.”

Effective Date

The new regulations come into effect immediately, and all banks in East Timor must comply with them by [date].