Financial Crime World

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Assessment of Palau’s Banking Supervision Legal Framework

A suitable legal framework for banking supervision is necessary, including powers to address compliance with laws, as well as safety and soundness concerns.

  • The FIC has access to a bank’s offices and a right to examine their accounts, books, documents, and other records.
  • However, the FIC cannot be deemed to have powers to address the safety and soundness concerns of a bank.
  • The primary purpose of an audit or examination is to inform the Commission about fraudulent acts within a bank or any irregularity or deficiency in the bank’s administration or operations that may result in a material loss for the bank or a subsidiary.

Assessment: MATERIALLY NON-COMPLIANT

A suitable legal framework for banking supervision is also necessary, including legal protection for supervisors.

  • An amendment to the FIA is to be adopted by the OEK in the spring session of 2002.
  • The contents of the original bill for the FIA are going to be incorporated in law during the Spring session of the OEK.
  • In a court proceeding, commission members, officers, employees, and agents of the Commission can only be convicted for their supervisory activities if the person has acted in an arbitrary or capricious manner.

Assessment: COMPLIANT (subject to the adoption of the amendment)

Principle 1(6): Sharing Information between Supervisors and Protecting Confidentiality

Arrangements for sharing information between supervisors and protecting the confidentiality of such information should be in place.

  • The Commission is required to cooperate with public authorities in pursuing its objectives.
  • By law, it must also take action to promote such cooperation.
  • The FIC is authorized to cooperate and exchange information with foreign government and international agencies.

Assessment: COMPLIANT