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Cook Islands Moves to Strengthen Financial Regulation

Wellington, New Zealand - The Cook Islands government has introduced amendments to existing legislation aimed at enhancing the integrity of licensed financial institutions in the country.

Enhanced Supervision and Governance

According to the Financial Services Commission (FSC), the proposed changes will provide a more robust framework for banking supervision, ensuring that financial institutions operate in a safe and sound manner. The FSC is responsible for licensing and regulating financial institutions in the Cook Islands.

The amendments come as part of efforts to strengthen the country’s financial sector, which has faced challenges in recent years. In its latest report, the International Monetary Fund (IMF) expressed concerns over the lack of expertise within the FSC, citing a shortage of experienced staff.

Addressing the Shortage of Expertise

To address this issue, the government is considering hiring expatriates on contract basis to fill senior positions at the FSC. The Commissioner, who was appointed in September 2003, is an expatriate and is expected to be joined by other international experts.

Improving Revenue Generation and Autonomy

The proposed amendments also aim to improve the FSC’s ability to generate revenue from licensing fees and registration charges. Currently, the FSC generates positive earnings, which are contributed to the government’s general fund. However, the agency has faced difficulties in using these funds effectively due to restrictions imposed by the government.

Under the new legislation, the FSC will have greater autonomy to use its financial resources to execute its duties and responsibilities under the law. This is expected to enable the agency to invest in critical areas such as training, development of supervisory tools, and information technology infrastructure.

Strengthening Governance Structure

The proposed amendments also seek to strengthen the FSC’s governance structure by clarifying the role of the Board and the Commissioner. The Commissioner will be responsible for conducting day-to-day operations, while the Board will focus on policy issues and strategic planning.

Meeting International Standards

The government hopes that these changes will help the Cook Islands meet international standards for financial regulation and supervision. The country is currently working to remove itself from a list of “blacklisted” countries by the Financial Action Task Force (FATF).

Next Steps

  • The proposed amendments are expected to be passed into law in the coming months.
  • The government will work with international partners, including the IMF and FATF, to ensure that the country meets international standards for financial regulation and supervision.
  • The FSC will continue to work closely with licensed financial institutions to ensure their compliance with regulatory requirements.

Key Features of the Proposed Amendments

  • Strengthened framework for banking supervision
  • Improved governance structure for the FSC
  • Enhanced autonomy for the FSC to generate revenue and use its funds effectively
  • Increased transparency and accountability within the FSC