Financial Crime World

Banking Regulation Updates in Jamaica Not Expected Before 2025

The Deputy Governor of the Bank of Jamaica (BOJ), Wayne Robinson, recently revealed that legislation for the new ’twin peaks’ model of financial system regulation is unlikely to be tabled in Parliament before 2025.

Background

The announcement comes as a result of fraud at Stocks and Securities Limited earlier this year. The BOJ and Ministry of Finance and Planning (MOFP) are working together to finalize submissions for the minister and Cabinet.

Twin Peaks Model

The ’twin peaks’ model involves legislative components, actual regulations, and more. It is expected to have two peaks:

  • Prudential Supervision: The Bank of Jamaica will be responsible for supervising the financial system, focusing on prudential regulation and oversight.
  • Market Conduct and Consumer Protection: The New Financial Services Commission (FSC) will oversee market conduct, ensuring that financial institutions operate fairly and transparently. It will also focus on consumer protection, safeguarding the interests of consumers.

Key Components

According to Robinson, both peaks must be independent and have the capacity to execute their responsibilities. Governance, accountability, and funding will also be crucial aspects of the new regulatory framework.

  • Legislative Changes: The ’twin peaks’ model is expected to involve a raft of legislative changes, which are currently being worked on.
  • Internal Structures: The BOJ is examining its internal structures, regulatory requirements, and staffing needs. An international consultant has been onboarded to provide expertise in this area.

Implementation Timeline

By next year, the bank hopes to have information on how the entities will be structured. The ’twin peaks’ model was introduced earlier this year, with the MOFP announcing that the Bank of Jamaica would take over micro-prudential supervision of deposit-taking institutions and non-bank financial institutions.

Importance of the New Regulatory Framework

BOJ Governor Richard Byles emphasized the importance of the new regulatory framework, stating that it is crucial for consumer protection. He also noted that the central bank is working on a new digital eKYC system with the World Bank, which will improve consumer protection alongside the ’twin peaks’ model.

Future Plans

The BOJ hopes to have a strong, new FSC with robust consumer-protection powers and a new eKYC system that allows consumers to change their bank in one day. The central bank is also exploring digitization among financial institutions, welcoming new digital banks to start up operations.

Conclusion

While the implementation of the ’twin peaks’ model may take some time, it is expected to bring significant changes and improvements to Jamaica’s financial system.