ECCB 2020-2021 Annual Report and Statement of Accounts

FINANCIAL SECTOR STABILITY

Issuance of Prudential Standards The ECCB continued to pre-emptively update its suite of prudential standards to ensure that LFIs were inherently safe and sound and to increase financial sector resilience. In 2020, Standards related to Internal Auditing, Management of Operational Risk, Outsourcing and Permissible Activities, came into effect. The Standard for the Treatment of Impaired Assets was issued in January 2021, and becomes effective on 1 January 2022, to enable licensed financial institutions to establish the necessary frameworks towards compliance. Standards on Corporate Governance and Fitness and Probity were finalised, however issuance is contingent on all ECCU member countries passing the amendments to the Banking Act 2015. Standards on Credit Risk Management, Residential Mortgage Underwriting, Consolidated Supervision, Electronic Banking and External Auditing are being finalised for issuance during the 2021/2022 financial year. Basel-related Standards Encapsulating Capital, Credit Risk, Market Risk and Interest Rate Risk are also being finalised for issuance by December 2021. Deliver New Risk Management Infrastructure to Support the ECCU Financial Sector Strengthen the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Supervision Framework Since the establishment of the AML Supervisory Unit in 2018, the ECCB has made significant progress towards the development and implementation of its AML/CFT Supervision Framework, which has been published on the ECCB’s website. The ECCB continued its offsite supervision and monitoring of measures taken by LFIs towards satisfaction of remedial action items. Corrective action for AML/CFT deficiencies is critical, particularly in light of the Mutual Evaluation assessments that are scheduled within the ECCU during 2021/2022. A milestone was attained with the finalisation of the ECCB’s AML/CFT Prudential Return (PR14), following a pilot which took place in August 2020. The PR14 became effective 31 March 2021 with a reporting date of 31 May 2021. The objective of the Prudential Return is to gather quantitative information from LFIs, based on products and services, customers and entities. The PR14 captures pertinent data to assist the ECCB with the conduct of AML/CFT risk assessments of LFIs. Eastern Caribbean Asset Management Corporation (ECAMC) During the financial year, the ECCB continued to provide technical advisory support to the ECAMC’s asset acquisition efforts, particularly with funding solutions. The Bank also provided support with preparatory work for assuming role of receiver for two additional financial institutions and ensuring the ECAMC’s compliance with the ECAMC Act. World Bank Risk-Based Approach Toolkit The ECCB, in partnership with theWorld Bank, launched the ‘Risk-Based Approach (RBA) Toolkit- A Risk Based Approach to AML/CFT Supervision and Monitoring’ (RBA Toolkit/the tool) on 15 April 2020. The training is geared towards strengthening the risk-based supervision of Anti-

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” A milestone was attained with the finalisation of the ECCB’s AML/CFT Prudential Return (PR14), following a pilot which took place in August 2020. The objective of the return is to gather quantitative information from LFIs, based on products and services, customers and entities.

EASTERN CARIBBEAN CENTRAL BANK ANNUAL REPORT 2020/2021 8