Assessment of Palau’s Banking Supervision Framework

Principle 1(4): Legal Framework for Banking Supervision

Assessment and Comments

• Materially Non-Compliant: The FIC’s independent regulatory powers are effectively limited by the need for approval from the OEK and the President before regulations take effect. Additionally, the primary purpose of bank examinations is to inform the Commission about fraudulent acts or irregularities, rather than assessing a bank’s overall risk situation.

Principle 1(5): Legal Framework for Banking Supervision

Assessment and Comments

• Compliant (subject to amendment): The present wording of law does not provide adequate legal immunity for supervisors. However, an amendment to the FIA is expected to be adopted by the OEK, which would address this issue.

Principle 1(6): Sharing Information between Supervisors

Assessment and Comments

• Compliant: The Commission is required to cooperate with public authorities and protect confidential information. Supervisory personnel enjoy immunity from liability for acts or omissions in the course of their duties, except in cases of intentional wrongful conduct.