The Banking (Amendment) Bill 2019, which forms part of the Eastern Caribbean Currency Union (ECCU) efforts to improve uniformed banking laws in the region, was passed on Wednesday after a brief debate in Antigua and Barbuda’s Senate.
The mover of the Bill and Leader of Government Business in the Upper House, Senator Mary-Claire Hurst, said the planned changes to the original Act are comprehensive; will create clarity of intent and consistency in language by eliminating existing ambiguities and will correct at least one practice which currently breaches a regional Treaty.
Among the specific changes in the Banking Bill, which was passed without changes, are the introduction of the term “branch”; the replacement of the term “capital base” with the term “tier 1 capital”; and the narrowing of the definition of the term “relative”.
Adding the term branch is said to be significant as financial institutions will be expected to pay annual licence fees for each branch that operates in the ECCU. Regarding the change from saying capital base to using the term tier 1 capital, Hurst explained that this is because the banking sector is more familiar with the latter terminology.
While, narrowing the meaning of the term ‘relative’ is important since the sector has found that “the current expansive nature of the definition is problematic for the industry as securing compliance with the requirements of the Act upon which this definition has some bearing, is proving impractical and near impossible,” Hurst said, as she reviewed the explanatory memorandum of the Bill.
There is also a proposal to change the current provisions on auditing which require financial institutions to change their external auditors every six years, and the lead and concurring partner every three years.
The authorities found that the current timeframes for the rotation of external auditors are too short considering the limited number of auditing firms in the region. Thus, the plan is to revert to the previous position which would allow financial institutions to change their external auditors every nine years and the lead and concurring partner every six years.
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