THE REGULATORY FRAMEWORK IN THE SOLOMON ISLANDS
Whilst CBSI expects the licensed financial institutions to self-regulate themselves to a large extent, a key role of banking supervision is to monitor the application of the agreed prudential standards to limit risk. These standards should be reviewed periodically by CBSI to allow for changing circumstances.
The “rules and regulations” for the financial sector in SI are found in the Financial Institutions Act 1998 (as amended) which provides a supervisory umbrella and addresses issues such as:
The “rules and regulations” for the financial sector in SI are found in the Financial Institutions Act 1998 (as amended) which provides a supervisory umbrella and addresses issues such as:
- defining financial institutions and banking business;
- rules regarding ownership;
- licensing requirements;
- minimum capital requirements;
- restrictions of business activities;
- definition of the roles and duties of external auditors;
- measures to protect the interest of depositors;
- a supervisory and examination system;
- situations where CBSI may intervene in the operations of a financial institution;
- transfer of ownership or control of a financial institution; and
- sanctions for non-compliance by financial institutions or their officers.
A supervisory and examination system is a constant continuous and perpetual cycle that has four components:
- CBSI’s goals and objectives,
- monitoring and the examination planning phase,
- on-site examination phase, and
- reporting and corrective actions phase.
Central Bank of Solomon Islands Act 2012
This Act aligns central banking in Solomon Islands with international best practices. It repeals the Central Bank of Solomon Islands Act (Cap 49) while maintaining the Central Bank's continuity, and updates its duties and powers under the new legislation.
Credit Union Act
An Act to regulate the operation of credit unions in Solomon Islands and to provide for other matters connected therewith or incidental thereto
Exchange Control Act
The Exchange Control Act empowers the making of regulations to confer powers, and impose duties and restrictions in relation to foreigh exchange, currency or public credit.
Financial Institutions Act
This Act provides for the regulation of the business of banking; and for the licensing, regulation and supervision of financial institutions carrying on banking businesses in Solomon Islands and for purposes connected therewith; and to repeal the Banking Act 1976.
Insurance Act
The Insurance Act regulates Solomon Islands' insurance industry. It establishes a Controller of Insurance, requires insurers, brokers, and agents to register, and protects policyholders' rights.
Public Finance Audit Act
This Act governs public finance management in Solomon Islands, covering the collection, issue, and payment of public moneys, regulation of public debt, and the Auditor-General's duties in auditing public accounts.