Group Licensing Regime for Financial Conglomerates

The Swaziland Central Bank has introduced a new licensing regime aimed at regulating financial conglomerates, which are groups of companies that include financial institutions, insurers, and securities dealers.

Definition of a Financial Conglomerate

A financial conglomerate will be defined as a group whose members include:

A financial institution
An insurer
A securities dealer
Other undertakings not involved in financial services, where one member exercises control over another

Powers of the Bank

The Bank has been granted powers to regulate these groups, including:

Limiting shareholdings and exposure to capital and reserves of financial institutions within the group
Imposing conditions on transactions between members of the group, such as requiring collateral security for loans or investments
Making by-laws that require each member of the conglomerate to report and audit its activities

License Revocation

The Bank has also been granted powers to revoke the license of a financial institution if:

It fails to commence operations within a year
Exceeds the terms of its license
Breaches any conditions imposed by the Bank

Before revoking a license, the Bank must:

Consult with the Minister
Give the institution notice of its intention to revoke the license
Afford it an opportunity to show cause why the license should not be revoked

Licensing of Agents

The Bank has also introduced a licensing regime for agents who represent financial institutions that are not licensed in Swaziland. To obtain a license, an agent must:

Apply to the Bank
Pay an annual fee
The license may be granted for a period not exceeding one year and may be renewed upon application

Penalties

Failure to comply with the terms and conditions of a license or acting as an agent without a valid license is an offense punishable by:

A fine of up to 50,000 Linalatigeni (E1,350)
An additional fine of not less than 25,000 Linalatigeni (E2,500) for each day the contravention continues