Financial Crime World

Assessment of Macao’s Financial Sector: A Draft Report

Introduction

This document is a draft report from an International Monetary Fund (IMF) mission that visited Macao SAR in 2002. The report provides an assessment of Macao’s financial sector, including its regulatory framework, insurance industry, investments and securities, and companies.

Key Findings and Recommendations

Insurance Industry

  • Regular Meetings with Industry Associations: The supervisor has expressed a desire for more regular meetings with industry associations to improve market conduct.
  • Checklists for Annual Reviews: The mission recommends introducing checklists for annual reviews of financial and statistical reports.
  • On-Site Inspections: A new program of on-site inspections should be implemented to ensure compliance with standard reporting requirements.

Investments and Securities

  • Legislative Amendments: The legislation should be amended to provide core objectives, including protecting investors and preserving markets’ integrity.
  • Operational Independence for AMCM: The AMCM (Macao Monetary Authority) should have operational independence specified in the legislation.
  • Staff Additions for Supervision: Staff additions are recommended to perform supervisory functions over companies acting as financial intermediaries or providing other securities services.
  • Role of SROs: SROs (Self-Regulatory Organizations) can complement regulatory oversight in achieving securities regulation objectives.

Companies

  • Bearer Shares: Current practice is either to forbid bearer shares or introduce provisions for their immobilization. Macao SAR should consider one of these options.
  • IPIM Operational Independence: The IPIM (Macao Trade and Investment Promotion Institute) should be allowed to operate under general guidelines, achieving operational independence.

Background

  • Special Administrative Region: Macao SAR has become a Special Administrative Region of the PRC since December 20, 1999.
  • Economic Dependence: The economy is heavily dependent on tourism and light manufacturing.
  • Financial Sector Size: The financial sector is small, accounting for about 12% of GDP in 2000.

Conclusion

The report provides recommendations to improve Macao’s regulatory framework, enhance supervisory powers, and promote a more effective financial system.