Banking Regulations Unveiled to Prevent Financial Crimes in Timor

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The Central Payments Office has issued a new regulation aimed at ensuring the stability and integrity of the banking system in East Timor. The regulation outlines the governance structure and risk management requirements for banks operating in the country, designed to prevent financial crimes and promote transparency.

Governance Structure

Under the new regulation, each bank must have a governing board responsible for setting policies and supervising their implementation. The board will consist of an uneven number of members, ranging from three to seven, who are appointed by the general meeting of shareholders for a period not exceeding four years. The board is responsible for establishing policies and monitoring their implementation.

Committees

Each bank must establish two committees:

• Audit Committee: responsible for establishing accounting procedures, supervising compliance with laws and regulations, and commissioning audits at the expense of the bank.
• Risk Management Committee: establishes procedures for credit appraisal, loan administration, and asset and liability management, as well as monitors compliance with laws and regulations regarding credit and other risks.

Confidentiality

The regulation emphasizes the importance of secrecy and confidentiality among bank administrators and employees. All persons elected or appointed to these positions must maintain secrecy and confidentiality regarding non-public information obtained in the course of their services to the bank, including:

• Customer accounts
• Business relationships
• Other confidential data

Anti-Money Laundering Measures

No bank is permitted to conceal, convert, or transfer cash or other property knowing that such property is derived from criminal activity. Banks are required to inform the authorities responsible for combating money laundering if they have evidence that property is derived from criminal activity.

Confidentiality Obligations

The regulation also emphasizes the importance of secrecy and confidentiality among present and past administrators, employees, and agents of a bank, who must keep secret and not use for personal gain or gain by others than the bank any non-public information obtained in the course of their services to the bank.

Conclusion

In conclusion, the new regulation aims to ensure the stability and integrity of the banking system in East Timor by setting out clear governance and risk management requirements for banks operating in the country. The regulation is designed to prevent financial crimes and promote transparency, and will help to maintain public trust in the banking sector.