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The Supervision of Cross-Border Banking

Annex C: Offshore Group of Banking Supervisors: On-site Examination Checklist

1. What number, types of banks etc. are licensed in the jurisdiction? Is there any differentiation in the type of banking licence issued, or the conditions imposed and, if so, why? What legislation is in place, when was it last updated, and does it provide for the Basle Committee's minimum standards to be met?

2. What resources are available to the Supervisory Authority, with regard to the background and experience of the supervisory team, and what training programme is in place?

3. What are the requirements which banks/banking groups have to fulfil in order to become authorised in the jurisdiction? What measures are in place to ensure that banks/banking groups are managed and controlled by fit and proper persons?

4. What is the process of authorisation - what objective criteria and what type of background checks are used? What arrangements are in place to ensure the approval of the home supervisor? What regular links are there with other supervisory authorities?

5. What steps are taken to ensure that banks/banking groups are subject to effective consolidated supervision?

6. What financial and prudential information is collected from banks/banking groups in the jurisdiction, and how frequently is the information collected? By what means is the reliability of this information confirmed?

7. Are on-site inspections of banks/banking groups undertaken? If not, what are the alternative arrangements? If so, who carries them out, what is their scope and what is their frequency? Is the home supervisory authority informed of examination findings?

8. What measures are taken to supervise the overseas operations of any banks/banking groups for which the Supervisory Authority is the home supervisor? Are financial conglomerates allowed? If so, what are the arrangements for supervising the operations of non-bank subsidiaries?

9. What limits are applied with regard to the extent to which a bank or banking group can lend to:

(a) any one customer (including any arrangements for treating groups of borrowers as one risk);

(b) companies or persons connected with the bank/banking group itself; and

(c) particular sectors (e.g. real estate)?

10. What rules are in place to monitor:

(a) solvency;

(b) asset quality;

(c) country risk exposure;

(d) liquidity control systems;

(e) foreign exchange positions;

(f) off-balance-sheet activity;

(g) ownership and organisation structure;

(h) derivatives activities?

What is the frequency of report on each of the above?

11. What arrangements are in place to ensure that banks/banking groups maintain adequate accounting and other records, and adequate systems of control?

12. What measures and actions can be taken if the banks/banking groups in the jurisdiction fail to comply with prudential requirements or any other factors that are a cause for concern?

13. Are internal auditors from the parent bank or Head Office entitled to inspect the banks in the jurisdiction? Are internal auditors required to meet with/report to the host/home supervisor?

14. Are the home supervisory authorities of banks/banking groups entitled to conduct on-site inspections?

15. What powers does the supervisory authority have to provide or share information with other supervisory authorities? What kind of information may be provided or shared? What restrictions or constraints are there (if any) on the provision or sharing of information with other supervisory authorities? What statutory or other protection is available for information passed to the supervisory authorities by other authorities?

16. Have the Basle Committee's capital convergence proposals been adopted?

17. What legislation, rules, etc are in place to control money-laundering activities and to provide for the implementation of the FATF's forty recommendations?

18. Are locally incorporated subsidiaries required to publish annual audited accounts? Are all banks subject to external audit and, if so, in what form? What is the criteria for appointing/approving external auditors and do they have to be the same as the auditors of the parent/group?

15th May 1995

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