Financial Crime World

Samoan Financial Sector Faces Challenges in Meeting International Standards

The Samoan financial sector faces significant challenges in meeting international standards, according to a recent assessment by the International Monetary Fund (IMF).

Central Bank’s Plan for Targeted On-Site Inspections

The assessment found that the country’s central bank, the Central Bank of Samoa (CBS), has not fully developed and delivered its plan for targeted on-site inspections of domestic banks. Despite conducting on-site inspections at two locally-owned banks in 2010 and four domestic banks in mid-2013, the CBS still plans to conduct on-site inspections at all four domestic banks by June 2015.

Risk-Based Supervision Gaps

The assessment also highlighted gaps in the implementation of risk-based supervision (RBS) by the CBS. While the bank aims to conduct RBS, there are instances where issues raised during inspections have not been effectively addressed.

Another challenge facing the CBS is its limited legal framework. The Financial Institutions Act (FIA) presents significant deficiencies, including:

  • A large exposure limit that has been waived without legal authority
  • Lack of definition of “significant shareholder”

International Banks’ Supervision and Regulation

In terms of international banks, supervision and regulation are minimal. The Samoa International Finance Authority (SIFA) receives quarterly reports from these banks and reviews their audited accounts prior to granting an annual license renewal.

IMF Assessment

The 2007 assessment by the IMF found that compliance had improved since the previous assessment, but it is clear that more work needs to be done to meet international standards.

Commitment to Improvement

“We recognize that the Samoan financial sector faces significant challenges, but we are committed to working with the CBS and SIFA to address these issues,” said an IMF spokesperson. “We believe that a strong and stable financial system is essential for economic growth and development in Samoa.”

Overall, it is clear that the Samoan financial sector needs to continue improving its compliance with international standards to ensure a stable and prosperous economy.