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A14 LOCAL
Friday 12 July 2019

The soundness and resilience of the financial sector in Aruba

remained unabatedly strong in 2018

ORANJESTAD — The Cen- nancial sector regulation
trale Bank van Aruba (CBA) and supervision, has been
publishes its FINANCIAL conducive to maintaining
SECTOR SUPERVISION RE- a very solid and reputable
PORT 2018. The CBA is the financial sector in Aruba.
sole supervisory author-
ity of the financial sector in The financial sector super-
Aruba. In the Financial Sec- vision report also shows
tor Supervision Report 2018, clearly that in 2018, Aruba’s
a legally mandated report, financial sector remained
that has to be submitted to robust, profitable, and
the Minister of Finance be- highly resilient to external
fore July 1st of each year, shocks. The aggregated
the CBA provides an over- prudential ratios of the su-
view of the main activities it pervised sectors stayed
carried out and the princi- within sound ranges. The
pal policy decisions taken nonperforming loan ratio
to implement the supervi- of the commercial bank-
sory ordinances, including ing sector continued its
the laws to prevent and to an outline of the recent the CBA’s core supervisory site surveillance includes decreasing path, from 4.0
combat money laundering developments in the inter- activities consisted of pe- reviewing the mandatory percent at the end of 2017
and terrorist financing. national supervisory land- riodic onsite examinations periodic financial and reg- and standing at 3.9 percent
scape, also an analysis is conducted at the super- ulatory reports filed by the at end-2018. Furthermore,
This report also describes given of the most salient vised institutions to assess supervised institutions at the stress tests conducted
the main actions the CBA developments in the do- key risks and compliance the CBA and holding bilat- on the domestic banking
took to further strengthen mestic financial sector. with the prevailing laws eral meetings with them. sector demonstrate that
the legislative and regula- and regulations, and ongo- this sector’s risk-weighted
tory framework. In addition As in previous years, in 2018 ing offsite surveillance. Off- Where deemed necessary, capital ratio and pruden-
the CBA applies the instru- tial liquidity ratio, amount-
ments available to it to ef- ing to 32.2 percent and
fectively enforce compli- 29.8 percent, respectively,
ance with the prevailing at end-2018 are highly ad-
laws and regulations. In equate compared to the
case it identifies a situation applicable minimum stan-
of noncompliance with dards, to absorb significant
the supervisory laws and external shocks.
regulations, it may consider
taking formal measures. As in previous years, during
That decision depends on, 2018 the CBA continued
among other things, the its efforts to strengthen the
seriousness of the case. regulatory framework by is-
In 2018, a total of 21 for- suing new or revised policy
mal measures were taken rules and guidelines. Below
(9 more than in 2017). An an overview of the most
administrative fine was im- significant developments in
posed in 14 cases, formal this area.
directives were issued to
remedy the identified defi- 1. Revision of the
ciencies in 5 cases, and a AML/CFT State Ordinance
penalty charge order was Following the gap-analysis
imposed in 2 cases. conducted vis-à-vis the
2012 FATF recommenda-
The CBA applies a risk- tions, in the second quarter
based approach in the of 2018, the CBA drafted
execution of its supervi- a legislative proposal to
sory tasks, whereby it al- address the mostly techni-
locates the largest part of cal deficiencies identified.
its supervisory resources This proposal was submit-
to the institutions and ar- ted to the Government
eas (e.g., the loan and in- of Aruba in August 2018,
vestment portfolio, gover- which regretfully has not
nance, risk management, yet entered the legislative
and compliance) with the process. Also in light of the
highest risk profile. This ap- upcoming CFATF evalua-
proach, together with its tion in 2020, it is of high im-
strict enforcement policy portance that this proposal
and its ongoing commit- enters the legislative pro-
ment to comply with the cess as quickly as possible.
highest standards and best
practices in the area of fi- Continued on Page 15