Financial Crime World

Financial Institutions Act: New Capital Requirements

The Financial Institutions Act has introduced new capital requirements for licensed financial institutions that accept deposits of any type.

Minimum Capital Base Requirement

According to Section 17 of the Act, a licensed financial institution must maintain a minimum capital base of at least $250 million. This can be satisfied through various means, including:

  • Keeping it on deposit with the Bank
  • Investing in foreign government securities
  • Purchasing marketable obligations issued by the Government of Guyana

Additional Requirements

In addition to the minimum capital base requirement, the Act also requires licensed financial institutions to maintain a capital base of at least a certain percentage of their:

  • Total assets
  • Contingencies
  • Off-balance sheet commitments

The Bank has the discretion to vary these limits, either generally or in relation to any specific financial institution, provided that it does not decrease the minimum dollar levels specified in the Act.

Prohibition on Use of Certain Names

Section 7 of the Act prohibits any person other than a licensed financial institution from using certain names, such as:

  • “Bank”
  • “Financial Institution”
  • “Savings”
  • “Loan”
  • Any derivatives thereof

This includes using these names in their title, description, or advertising.

Acquisition of Control of Licensed Financial Institutions

Section 8 of the Act sets out the requirements for acquiring control of a licensed financial institution. The applicant must submit an application to the Bank containing specified information about themselves and the proposed acquisition.

The Bank will determine whether the acquiring person is fit and proper to acquire control of a licensed financial institution, taking into account factors such as:

  • Their background
  • Experience and integrity
  • Financial resources and history
  • The financial condition and capitalization of the institution

Penalties for Non-Compliance

Any person who contravenes any provision of the Act may be liable to a fine of $100,000 for every day that the offence continues.