Financial Crime World

Oman’s Financial Regulations: Strengthening Stability and Compliance

Introduction

The Central Bank of Oman (CBO) has implemented various regulations and guidelines to strengthen financial stability and compliance in the country. This move aims to protect the financial system from risks and ensure a stable economic environment for the Sultanate.

Capital Requirements for Licensed Banks

  • Licensed banks must not exceed 60% of their net worth or all-time and savings deposits (whichever is greater).
  • Borrowings from foreign banks are restricted to 300% of net worth, with sub-limits for time buckets.
  • Investment powers in shares and bonds are limited to 20% and 10%, respectively, while underwriting obligations cannot exceed 20% of the bank’s net worth.

Credit Limits for Licensed Banks

  • Housing loans are capped at 15% of a bank’s total credit.
  • Other personal loans cannot exceed 35%.
  • Maximum tenors for non-housing personal loans and non-housing loans are 10 years and 25 years, respectively.
  • Debt Service Ratio cannot exceed 50% and 60%.

International Standards and Regulations

  • The CBO has implemented international standards on customer due diligence, internal audit, risk management, compliance, corporate governance, and other areas.
  • Islamic banking entities will be governed by the distant Islamic Banking Regulatory Framework (IBRF), which emphasizes sound Sharia’ Supervisory Framework and Practices.

Finance and Leasing Companies (FLCs)

  • FLCs must have a minimum capital of RO 25 million.
  • Limit outside liabilities to five times their net worth.
  • As of December 2016, there were six FLCs operating with 43 branches.

Money Exchange Establishments

  • Regulated by the CBO, which requires them to maintain records of all transactions and report suspicious activities.
  • The Sultanate has also committed to international initiatives in combating money laundering and financing of terrorism (AML/CFT), including being a founding member of the Middle East and North Africa Financial Action Task Force (MENA FATF).

Compliance with AML/CFT Requirements

  • The CBO has updated its laws, regulations, and instructions to ensure compliance with AML/CFT requirements.
  • The Sultanate is also updating its legal, institutional, and procedural requirements to combat money laundering and financing of terrorism.

Conclusion

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In conclusion, the Central Bank of Oman’s regulations aim to strengthen financial stability and compliance in the country. By implementing international standards and guidelines, the CBO seeks to protect the financial system from risks and ensure a stable economic environment for the Sultanate.