REGULATIONS COMING SOON
Sun, 04/10/2016 - 12:00am
Legislation is coming to register and regulate money service providers operating in this country.
Chief Executive Officer of the Financial Services Commission (FSC), Randy Graham, in an interview with The Barbados Advocate, said work is being done to create such a legal framework, and it is his understanding that they are now waiting on the drafting of that piece of legislation.
Such a statute, he explained, would cover entities like Western Union and MoneyGram and similar businesses operating in Barbados which can bring in money and take deposits, but are not commercial banks. He made the point as he noted that while there is currently no specific law governing such companies, they are not without some oversight, given that there is provision for supervision as it relates to anti-money laundering.
“Separate legislation is needed to capture those types of arrangements, [but] we are monitoring these activities because actually under the anti-money laundering legislation, all of these entities form part of what is defined as the other financial institutions and so they are being supervised in line with the anti-money laundering guidelines. But the question is now arising, if we need to expand the oversight further,” he said.
He made the disclosure while noting that his office is also still keeping a watchful eye on the trend of local companies offering expanded credit options to their customers through the use of credit cards. It was further explained that while no complaints have reached the FSC to suggest that there is a problem with this industry development, they are not waiting for a problem to arise, but are being proactive as they seek to determine if there is a need for structured oversight.
“Nothing has come to the fore as yet to suggest that there is any particular challenge with these types of transactions, not only in Barbados but other places as well. Outside of Barbados everybody has a credit card – Sears has a credit card, J.C. Penney has a credit card, so the issuance of a credit card itself is not a particular challenge; it is whether the entity has the funding base to satisfy the transactions as they are occurring and if they don’t that is what creates the particular challenge,” he said.
Graham added, “But thus far I know the entities have been settling and we have not received any complaints, certainly not at the FSC. I don’t know about the Central Bank, but we haven’t received any complaints to suggest there is a particular challenge with the functioning of it.”
The FSC head added that even though these companies are still not required to be registered to offer such credit, a lot of research has been done on the matter and the authorities are getting closer to determining a way forward. With that in mind, he said discussions are still ongoing as to how these entities want to deal with the financing – whether they will issue a corporate bond to cover the transactions or whether they will treat it as a term deposit.
“Credit card activity as a standalone activity is not something that the Bank Supervisory Department of the Central Bank would look at separately. The institutions registered under the Financial Institutions Act are registered as a bank and then the credit card activity would be one of the consequential activities that they do. As these other entities are not licensed as a financial institution under the Banking Act that activity is not being monitored in the same way that a bank’s activity would be monitored. The legislation defines what a bank is and what an entity that needs to register with the Central Bank is, and obviously these entities don’t fit that definition under the legislation,” he explained.
As such, he made it clear they are not operating in contradiction of any laws currently in existence. (JRT)