Montserrat’s Financial Sector
Blondelle O’Garro
Financial Officer
Financial Services Commission
Content
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Background
Overview of Current Sector
Statistics
Challenges
Current Focus
A Little Background
• Before 1995 (pre volcano), Montserrat’s
financial sector serviced a population of
approx 11,000 people
• The sector then comprised of 3 domestic
banks, 1 cooperative credit union, 1 building
society, approx 16 offshore (international)
banks and several long term insurers
• This changed in June 1995 when continuous
increasing volcanic activity began
Background cont’d
• There was colossal destruction and devastation
for up to two years after the start of volcanic
activity resulting in two thirds of the island
becoming uninhabitable
• In this destruction we lost our capital (town) and
with it our Government Headquarters, hospital,
airport and seaport, schools, banks, etc –
basically our economy was brought to a standstill
• Montserrat however is one of the five dependent
territories in the Caribbean (the others being,
Anguilla, Tortola (BVI), Turks & Caicos and
Cayman Islands)
Background cont’d
• During the activity, approx half of the
population migrated to England and some to
other Caribbean islands
• As a result we now have a population of
approx 5000 people (as at last census in May
2011)
Overview of Current Sector
• As at December 2011 our financial sector comprised of
4 international banks, 2 domestic banks, 1 cooperative
credit union, 3 long term insurers, 2 money remitters
and 1 building society
• This sector is regulated by the Financial Services
Commission (FSC) with the exception of the domestic
banks which are supervised and regulated by the
Eastern Caribbean Central Bank (the ECCB)
• The FSC regulates the domestic banks for anti-money
laundering only
• The FSC is a single regulatory unit and is a statutory
body
• The FSC’s authority comes from the Financial
Services Act 2010 and the entities mentioned
above are regulated and supervised under the
International Banking and Trust Act 2006, the
Proceeds of Crime Act 2010, the Anti Money
Laundering and Counter Financing of
Terrorism Act and Regulations 2010, the
Money Services Business Act 2009, the
Cooperative Societies Act 2010 and the
Insurance Act 2001.
Statistics
Institutions
Capital US$
Assets US$
Loans US$
International Banks
100,591,761
943,928,889
118,521,048
Domestic Banks
5,194,815
162,894,074
26,086,667
Non-Bank Financial
Institutions
7,450,866
30,623,885
19,503,541
1,137,446,848
164,111,256
Total
113,237,442
Challenges
• The main challenge in Montserrat is obtaining
and retaining skilled labour
• Not many persons, even school leavers, wish
to enter the financial sector
• Another challenge faced in tiny economies
such as Montserrat is objectivity – it is difficult
especially within the financial institutions for
employees to remain objective when one is
dealing with a mother, brother, cousin, friend
of a cousin, or friend of a parent
Challenges cont’d
• Of the two domestic banks 1 is a branch of a
foreign owned bank and the other is an
indigenous bank to Montserrat
• The foreign owned bank has no assets in
Montserrat and the Government owns more
than 50% of the indigenous bank
• Political interference is common and can often
complicate
• Although Montserrat is now in the process of
trying to rebuild;
Cont’d
• And with investment opportunities now becoming
available with the new town and sea port proposals
many Montserratians are still hesitant and will only
invest at late stages if at all, other investment
opportunities are virtually nonexistent on the island
with the exception of term deposits at the commercial
banks
• The financial institutions are mainly deposit taking,
savings, loans and mortgages and other standard
facilities
• New innovations would be difficult in our current
economic climate
• Complying with international requirements and/or
standards
Current Focus
• Montserrat is a member of the Caribbean Financial
Action Task Force (CFATF) and was evaluated in
February 2010
• The CFATF evaluates the legal framework, in particular
anti-money laundering and counter financing of
terrorism, of a country against its 40+9
Recommendations and we are currently ensuring that
all requisite legislation is in place and
recommendations are satisfied for the follow up
process
• Also the OECD evaluated Montserrat in November
2011 and we are actively trying to ensure that all
requirements are met in that regard, also for the follow
up process
Current Focus cont’d
• On 3rd January 2012, the Commissioner of the FSC was
appointed Registrar of Companies, Trade Marks and
Patents
• Part of our focus is to not only learn the systems and
processes within the Registry, but to also get that office
to be efficient and compliant with current standards
and regulations
• With that in mind, the International Business
Companies Act and the Companies Act will be merged
in the near future
• As the function of this additional office is now covered
by some of the deployed FSC staff, capacity building
although not immediate will have to explored
Cont’d
• Ensuring the legislative framework iro financial
sector is completed and meets with international
standards
• Prepare to increase the scope of the financial
sector with new business such as mutual funds,
international insurance (captives, protected cell
companies)
• Completing the process for the FCAU to become a
member of the Egmont Group which is important
for the exchange of information in investigation
of suspicious activity reports within the sector.
Thank You