Banking Act 2005

Link to law: http://laws.gov.ag/acts/2005/a2005-14.pdf

The Banking Act, 2005
ANTIGUA
AND

BARBUDA

No. 14 of 2005. inn 1The Banking Act, 2005.

ANTIGUA AND BARBUDA

No. 14 of 2005
LL FOR

AN ACT to provide for regulating banking business.

[ Published in the Official Gazette Vol. XXV
No. 57 dated 15th September, 2005 ]

ENACTED by the Parliament of Antigua and Barbuda as
follows:

PRELIMINARY

1. This Act may be cited as the Banking Act, 2005 and shall
come into operation on such date as the Minister may, by No-
tice published in the Gazette, appoint.

2. In this Act unless the context other requires —

“Agreement” means the Agreement establishing the East-
ern Caribbean Central Bank made on the 5th day of July,
1983, the text of which is set out in the Schedule to the
Eastern Caribbean Central Bank Agreement Act;

“affiliate” in relation to a financial institution means

(a) a company which is or has at any relevant time
been —

(i) a holding company or subsidiary of a finan-
cial institution;

Short title and
commencement.

Interpretation.

Cap. 142.

[ L.S. ]
I Assent,

James B. Carlisle,
Governor-General.

13th September, 2005.

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The Banking Act, 2005. No. 14 of 2005.2

(ii) a subsidiary of a holding company of a finan-
cial institution; or

(iii) a holding company of a holding company or a
subsidiary of a subsidiary of a financial insti-
tution; or

(b) any company over which a financial institution has
control;

(c) any company over which a financial institution; and
any person associated with a financial institution has
control;

(d) any company which has common ownership
with a financial institution.

(e) any company which has the same beneficial owner
and share common management and interlinked
businesses witha financial institution;

and “affiliation” shall be construed accordingly.

“assigned capital” means the net assets derived from the
funds of a foreign financial institution that such an institu-
tion is required to keep during the term of its licence in
Antigua and Barbuda in accordance with the Regulations
that the Minister after consultation with the Central Bank
may prescribe.

“auditor” means an external auditor that is —

(a) a person who holds a practising certificate issued un-
der the Accountancy Profession Act, 1992 and is
certified to practise as an auditor;

(b) any other person approved by the Minister, acting
on the recommendation of the Central Bank;

“bank” means financial institution whose operations in-
clude the acceptance of deposits subject to the transfer of
funds by the depositor by cheque;

“banking business” means the business of receiving funds
through —

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No. 14 of 2005. inn 3The Banking Act, 2005.

(i) the acceptance of monetary deposits which are
repayable on demand or after notice or any
similar operation;

(ii) the sale or placement of bonds, certificates,
notes or other securities and the use of such
funds, either in whole or in part, for loans or
investment; and or

(iii) any other activity recognised by the Central
Bank as banking practice and which a finan-
cial institution may additionally be authorised
to do;

“board” means the board of directors or other body re-
sponsible for the management of a financial institution;

“borrower group” means—

(a) a family group comprising an individual and that
individual’s spouse, parent, child, brother or sister
where each member of the group is substantially
dependent upon the same income sources;

(b) a company in which the family group indicated in
paragraph (a) has control;

(c) a group of companies which is under a common
control;

(d) a group of persons in which the creditworthiness,
ability to generate funds or the future viability of
each, depends on one or other member of the
group;

(e) a group of persons in which one member has power
directly or indirectly to control the other members;
or

(f) any other group of persons as may be determined
by the Central Bank;

“business of a financial nature” includes the collection of
funds in the form of deposits, shares, loans, premiums,
and the investment of such funds in loans, shares and other
securities in the types of businesses set out in Schedule II
but does not include banking business;

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The Banking Act, 2005. No. 14 of 2005.4

“Central Bank” means the Eastern Caribbean Central Bank
established under Article 3 of the Agreement;

“connected” or “related” means where the interest of two
or more persons or groups of persons are so interrelated
that they should be considered as a single unit or bor-
rower group;

“control” means the ability of a person to secure, through
voting rights or power in a licenced financial institution
or other person or by an agreement or other powers con-
ferred by the by-laws, articles of association or other docu-
ment regulating the operations of the licenced financial in-
stitution or other person, that the business and affairs of the
licenced financial institution or other person are conducted
in accordance with the wishes of that frist mentioned per-
son;

“Council” means the Monetary Council established un-
der Article 7 of the Agreement;

“credit institution” means any financial institution other
than a bank whose business is that of money lending or
the granting of credit facilities;

“director” includes any person occupying the position of
director of a company by whatever name called and any
person in accordance with whose directions or instruc-
tions the directors of a company are accustomed to act;

“exposure” includes advances, credit facilities, guaran-
tees, repurchase agreements, swap agreements, and eq-
uity investments;

“financial group” means in relation to a financial institu-
tion, that financial institution and any affiliate thereof
which conducts banking business or business of a finan-
cial nature;

“financial institution” includes any person doing bank-
ing business but does not include a person carring on busi-
ness under the International Business Corporation Act and
all offices and branches of a financial institution in Antigua
and Barbuda shall be deemed to be one financial institu-
tion;

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“foreign financial institution” means a financial institu-
tion formed under the laws of a country other than Antigua
and Barbuda which carries on banking business in Antigua
and Barbuda;

“holding company” means a body corporate that controls
a body corporate;

“international financial institutions” refers to the Interna-
tional Monetary Fund, the International Bank for Recon-
struction and Development, the International Develop-
ment Bank, and the International Finance Corporation;

“licensed financial institution” means a financial institu-
tion licensed under the provisions of this Act;

“local financial institution” means a financial institution
formed under the laws of Antigua and Barbuda;

“Minister” means the Minister responsible for Finance;

“Participating Governments” has the meaning assigned
to it in the Agreement;

“person” includes a public body, company, partnership,
trust, association or body of persons whether corporate
or unincorporate;

“place of business” means any office, including a mobile
office, of a financial institution in Antigua and Barbuda;

“principal place of business” means, in relation to -

(a) a local financial institution, its principal office
in Antigua and Barbuda; and

(b) a foreign financial institution, the office desig-
nated in its licence;

“significant shareholder” means a person who either alone
or with an affiliate or related or connected person, is en-
titled to exercise or control more than 20% of the voting
rights at any general meeting of the licensed financial
institution or another company of which the licenced fi-
nancial institution is a subsidiary;”

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“subsidiary” means a body corporate that is controlled by
another body corporate;

“unsecured” in relation to advances or credit facilities,
means —

(a) advances or credit facilities granted without
security; or

(b) in the case of advances or credit facilities
against security, any part of such advances or
credit facilities which at any given time ex-
ceeds the market value of the assets compris-
ing the security given, or which exceeds the
valuation approved by the Central Bank
whenever it deems that no market value ex-
ists for those assets.

PART I
LICENCES

3. (1) A person shall not carry on banking business or hold
himself out as carrying on banking business in Antigua and
Barbuda without a licence granted by the Minister.

(2) A financial institution which, at the commencement of
this Act, holds a valid licence to carry on banking business in
Antigua and Barbuda shall be deemed to have been granted a
licence under section 5.

(3) Notwithstanding the provisions of subsection (2), the Min-
ister shall, within such period of the commencement of this Act,
as the Minister after consultation with the Central Bank may
determine, issue to an existing a financial institution which hold
a licences under the Banking Act reapeled by section 69 a new
licence under this Act.

(4) Any person intending to carry on banking business in
Antigua and Barbuda shall, before commencing such business,
apply for a licence under the provisions of section 5.

(5) Any person who contravenes the provisions of subsec-
tion (1) commits an offence and is liable on summary convic-
tion on indictment.

Requirement for
licence.

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(a) in the case of a financial institution, to a fine of five
hundred thousand dollars, and in the case of a con-
tinuing offence, to a further penalty of five thou-
sand dollars for each day on which the offence is
continued after conviction thereof;

(b) in the case of a director or a manager, to a fine of
two hundred and fifty thousand dollars or to im-
prisonment for a term not exceeding three years or
to both such fine and imprisonment; and in the case
of a continuing offence, to a further penalty of two
thousand, five hundred dollars for each day on
which the offence is continued after conviction
thereof.

4. (1) If the Central Bank has reasonable cause to suspect
that—

(a) any person is carrying on banking business without
a licence granted under this Act; and

(b) evidence of contravention of subsection (1) of sec-
tion 3 is to be found on any premises in Antigua
and Barbuda,

the Central Bank, after consultation with the Minister, may
lay information on oath to a Magistrate, and the Magis-
trate may, by warrant, authorize an officer or officers of
the Central Bank named in such warrant to enter and
search such premises with a police officer and seize any
books, accounts, records and other documents, cheques
and securities (in this subsection referred to as “the rel-
evant documents”) and any cash as may be found on the
premises relating to the conduct of banking business, to
ascertain whether the person is carrying on banking busi-
ness without a licence.

(2) A warrant issued pursuant to subsection (1) may autho-
rize:

(a) the Central Bank to detain the relevant documents
for a period not exceeding 30 days;

(b) the officer or officers to make copies of the relevant
documents; and

(c) the Central Bank to retain copies of the relevant
documents.

Examination of
books of person
carrying on
banking business
without a licence.

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The Banking Act, 2005. No. 14 of 2005.8

(3) An officer of the Centural Bank, in whose name a war-
rant has been granted pursuant to subsection (1), in the case of
resistance, may break open any door, and force and remove
any other impediment or obstruction to such entry, search or
seizure.

(4) A person refusing to make available for examination any
books, accounts and records having been requested to do so by
the Central Bank commits an offence and is liable on summary
conviction to a fine not exceeding five thousand dollars or im-
prisonment for a term not exceeding six months or to both such
fine and imprisonment.

(5) Without prejudice to section 3(5), where a person is found
under subsection (1) to be conducting banking business with-
out a licence, the Minister may on the recommendation of the
Central Bank appoint a receiver for the person under paragraph
(f) of section 43.

(6) A person holding funds which the person has obtained
by doing banking business without being in possession of a
licence granted under this Act shall repay such funds in accor-
dance with the directions of the Central Bank.

(7) The Minister may request the Central Bank to undertake
the actions under subsection (1) where the Minister has reason-
able cause to suspect that the conditions in subsection (1) (a)
and (b) exist.

5. (1) In order to obtain a licence as a financial institution, a
person shall apply in writing to the Minister and submit the
documents and other information specified in Schedule I.

(2) In considering an application for a licence the Minister
shall, request the Central Bank to conduct such investigation as
it may deem necessary to ascertain:

(a) the validity of the documents submitted in accor-
dance with Schedule I;

(b) the financial condition and history of the applicant;

(c) the character of the business of the applicant;

(d) whether the proposed directors and persons who
are to constitute the management of the financial

Application for
licence.

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No. 14 of 2005. inn 9The Banking Act, 2005.

institution are fit and proper in accordance with the
criteria under section 26;

(e) the adequacy of the capital structure;

(f) the earning prospects of the applicant;

(g) the convenience and needs of the community to be
served by the granting of the licence;

(h) the suitability of the significant shareholders;

(i) the transparency of the ownership structure;

(j) the source of initial capital; and

(k) whether the proposed legal and managerial struc-
tures will hinder effective supervision of the finan-
cial institution.

(3) A foreign financial institution that intends to open a
branch or an affiliate within Antigua and Barbuda must in ad-
dition to submitting the documents and other information re-
quired under subsection (1), submit with its application:

(a) a certificate showing that the banking supervisor of
the jurisdiction in which it was incorporated, formed
or organised has no objection to its application for a
licence to do business in Antigua and Barbuda; and

(b) evidence satisfactory to the Central Bank that it is
subject to a comprehensive supervision on a con-
solidated basis by the appropriate authorities in the
jurisdiction in which it was incorporated, formed or
organised.

(4) Within a reasonable time of its receipt of the application
for a licence the Central Bank shall make its recommendations
to the Minister.

(5) Within 30 days of the receipt of the recommendations of
the Central Bank the Minister shall either grant the licence and
may attach any conditions as the Minister deems to be prudent
in respect of the licence or, if the Minister is of the opinion that
it would be undesirable in the public interest to grant the li-
cence, he may refuse to grant the licence and inform the appli-
cant that he has refused to grant the licence.

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(6) A financial institution shall not be granted a licence un-
der this section unless it fulfills the capital requirements speci-
fied in section 13.

6. (1) No financial institution shall be granted or continue to
hold a licence under a name which so closely resembles the
name of an existing financial institution in the territories of the
Participating Governments or elsewhere as would be likely, in
the opinion of the Minister, after consultation with the Central
Bank, to mislead the public.

(2) Except with the written consent of the Minister after con-
sultation with the Central Bank, no person other than a licensed
financial institution shall use the words “bank”, financial insti-
tution”, “savings” and “loan”, or any of their derivatives or any
mutations thereof in any language, or any other word indicat-
ing the carrying on of banking business, in the name, descrip-
tion or title under which such person is carrying on business in
Antigua and Barbuda; or make any representation to such ef-
fect in any other manner whatsoever for the purpose of indicat-
ing that such person is carrying on banking business in Antigua
and Barbuda:

Provided that nothing shall prohibit an association of institu-
tions licensed under this Act formed for the pursuit of common
interests from using the words “bank”, “financial institution”,
“savings”, or “loan” or any of their mutations or derivatives in
any language as a part of its name or description of its activi-
ties.

(3) No person other than a licensed financial institution shall,
except with the written consent of the Minister after consulta-
tion with the Central Bank:

(a) make or continue to make representations in any
billhead, letter, letterhead, circular, paper, notice,
advertisement or in any other manner whatsoever
that such person is carrying on banking business;

(b) in any manner whatsoever solicit or receive depos-
its from the public, or any employee of that person;

(4) Any person who contravenes the provisions of this sec-
tion commits an offence and is liable on conviction on indict-
ment to a fine not exceeding two hundred fifty thousand dollars
or to imprisonment for a term not exceeding five years or to

Restricted words,
names, and
practices.

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No. 14 of 2005. inn 11The Banking Act, 2005.

both such fine and imprisonment; and in the case of a continu-
ing offence to a further penalty of two thousand dollars for each
day on which the offence is continued after conviction thereof.

7. A copy of the licence granted under this Act shall be
displayed and kept displayed in a conspicuous place in the pub-
lic part of any place of business of the licensed financial insti-
tution.

8. (1) Any licence granted under this Act shall authorise the
licensed financial institution to carry on banking business in
Antigua and Barbuda at the place of business designated in the
licence and at such other place as the Minister may after con-
sultation with the Central Bank, in writing authorise.

(2) No financial institution shall open a new place of busi-
ness or change the location of an existing place of business in
Antigua and Barbuda without the prior approval of the Minis-
ter after consultation with the Central Bank.

(3) No financial institution shall close an existing place of
business in Antigua and Barbuda without having given ninety
days prior notification to the Minister and the Central Bank.

(4) No local financial institution shall open a place of busi-
ness elsewhere than in Antigua and Barbuda without the prior
approval of the Minister after consultation with the Central Bank.

(5) No local financial institution shall close a place of busi-
ness outside of Antigua and Barbuda without having given
twenty-one days prior notification to the Minister and the Cen-
tral Bank.

(6) The Minister, acting on the recommendation of the Cen-
tral Bank, may direct the closing of a branch of a local financial
institution operating outside of the territories of the Participat-
ing Governments or impose limitations on the activities of such
a financial institution if the Central Bank determines that the
supervision by the host country supervisor is not adequate rela-
tive to the risks that the branch presents to the viability or sound-
ness of the local financial institution.

(7) (a) No financial institution may establish or change the
location of an electronic banking system in a place other than a

Authorisation of
location and
approval of new
business premises.

Display of licence
certificate

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The Banking Act, 2005. No. 14 of 2005.12

place of business approved under sub-section (2) of this sec-
tion, without having given thirty days prior notification to the
Minister and the Central Bank.

(b) Where a financial institution operating under a valid li-
cence has, at the commencement of this Act, established an elec-
tronic banking system in a place other than a place of business
such financial institution shall notify the Central Bank of the
location of all such electronic banking systems within sixty days
of the date of commencement of this Act.

(8) Any person who contravenes the provisions of this sec-
tion commits an offence and is liable on summary conviction
to a fine not exceeding two hundred and fifty thousand dollars
or to imprisonment for a term not exceeding five years or to
both such fine and imprisonment; and in the case of a continu-
ing offence to a further penalty of two thousand dollars for each
day on which the offence is continued after conviction thereof.

9. (1) Subject to subsection (7), except with the approval of
the Central Bank, no person shall hold or acquire either directly
or indirectly:

(a) such of the paid-up capital of a local financial in-
stitution which would confer upon such person more
than 20 per cent of the total voting rights of all the
members at a general meeting of the local financial
institution, or

(b) in the case of a local financial institution not hav-
ing a share capital, more than 20 per cent of the
total voting rights of all the members entitled to vote
at a general meeting of the local financial institu-
tion.

(2) Where the Central Bank determines that the interests of a
group of two or more members of a local financial institution
are connected or related, the total holdings of those members
shall be combined and deemed to be the holdings of a single
member.

(3) A local financial institution must submit a report quar-
terly to the Central Bank on the names and addresses of any
person who owns five per cent or more of the total voting rights
of the local financial institution and where such a person is a

Restriction on vot-
ing rights.

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No. 14 of 2005. inn 13The Banking Act, 2005.

nominee, the name and address of any beneficial owner for whom
such a person holds the shares or other ownership interests.

(4) In the event that the Central Bank, determines that the
provisions of subsection (1) have been violated, the Central Bank
may issue an order under section 22 requiring the divestment
of so much of the offending interest as is necessary to secure
compliance with the provisions of subsection (1).

(5) A director of a local financial institution who knows or
ought reasonably to know of a transfer made in violation of
subsection (1) and who fails to disclose it to the Central Bank
commits an offence and is liable on summary conviction to a
fine not exceeding two thousand dollars or to imprisonment for
a term not exceeding three months.

(6) Any person who knowingly acquires an interest in viola-
tion of subsection (1) commits an offence and is liable on sum-
mary conviction to a fine not exceeding five thousand dollars
or to imprisonment for a term not exceeding six months.

(7) Subsection (1) shall not apply to the Government or to
any person who at the commencement of this Act has acquired
more than 20 per cent of the total voting rights of all the mem-
bers of the local financial institution, but no such person shall
without the consent of the Central Bank, acquire any additional
shares which shall have the effect of increasing that person’s
percentage of the voting rights.

10. (1) Unless the approval of the Minister acting upon the
recommendation of the Central Bank is first obtained no finan-
cial institution shall:

(a) transfer the whole or any substantial part of its as-
sets or liabilities in Antigua and Barbuda other than
in the ordinary course of its business;

(b) effect a reduction of its paid up or, as the case may
be, assigned capital established under section 13;

(c) alter its name as set out in its licence;

(d) enter into a merger or consolidation within Antigua
and Barbuda; or

Actions of
fundamental
change requiring
approval.

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The Banking Act, 2005. No. 14 of 2005.14

(e) in the case of a local financial institution, amend
the instrument or charter under which it is formed
in Antigua and Barbuda.

(2) Every foreign financial institution shall notify the Min-
ister and the Central Bank of any amendment to the instrument
or charter under which it is formed, within 60 days of such
amendment.

(3) In recommending any proposed action under subsec-
tion (1), the Central Bank shall be guided by the criteria speci-
fied in section 5 (2)

11. (1) The Minister, acting upon the recommendation of
the Central Bank, may revoke any licence to carry on banking
business in Antigua and Barbuda if the licenced financial insti-
tution:

(a) fails to commence operations within a period of
12 months following the granting of the licence;

(b) fails to comply with the conditions of its licence or
the measures required by the Central Bank in ac-
cordance with section 22;

(c) is in breach of any of the provisions of this Act
which is applicable thereto;

(d) ceases to carry on banking business in Antigua and
Barbuda;

(e) is conducting its affairs in a manner detrimental to
the national interest or to the interest of its deposi-
tors;

(f) fails to maintain sufficient capital or liquidity to
meet its liabilities;

(g) has not fulfilled or is unlikely to fulfill the minimum
criteria for licensing under this Act; or

(h) merges or amalgamates with another company or
institution and the licence is no longer required.

(2) Before revoking any licence under subsection (1), the
Minister shall give the financial institution concerned notice in
writing of his intention to do so, specifying therein the grounds

Revocation of
licence and
declaration of
discontinuance of
service.

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No. 14 of 2005. inn 15The Banking Act, 2005.

upon which he proposes to make the revocation and shall re-
quire the financial institution to submit to him within a speci-
fied period being not less than 30 days, a written statement of
objections to the making of the revocation and thereafter, the
Minister shall advise the financial institution of his decision.

(3) Where the decision referred to in subsection (2) is to
revoke the licence, the notice shall include a statement of the
reasons for the decision.

(4) Notice under subsection (2) shall be served at the last
known address of the financial institution or shall be published
in the Gazette or in any local newspaper.

(5) If any financial institution is aggrieved by any decision
made under subsection (1), that financial institution may ap-
peal to the High Court within fourteen days of such decision.

(6) Where a licence to carry on banking business in Antigua
and Barbuda has been revoked, the Minister shall, as soon as
possible thereafter cause a notice of the revocation to be pub-
lished in the Gazette and a newspaper circulating in Antigua
and Barbuda and cause such other steps to be taken as he deems
necessary to inform the public of such revocation.

12. (1) Every financial institution shall pay such annual li-
cence fee as the Minister, may by Order published in the Ga-
zette, prescribe.

(2) The Minister, after consultation with the Central Bank,
may prescribe different licence fees in respect of different classes
or categories of financial institutions and such fees shall apply
uniformly to such classes or categories.

(3) All licence fees paid under this Act shall be payable to
the Government and form part of the Consolidated Fund.

(4) A person who fails to comply with any requirement of
this section and where such person is a company, the company
and every director, manager, secretary or other officer of the
company who knowingly authorises or permits the default com-
mits an offence and is liable on summary conviction to a fine
not exceeding ten thousand dollars and in the case of a continu-
ing offence to a further penalty of one hundred dollars for each
day on which the offence is continued after conviction thereof.

Licence fees and
penalty for
default.

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The Banking Act, 2005. No. 14 of 2005.16

PART II
FINANCIAL REQUIREMENTS AND LIMITATIONS

13. (1) Every licensed financial institution shall maintain in
Antigua and Barbuda unimpaired,
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