In his recent address to parliament, Minister of Finance, Dr. Irving McIntyre, emphasized the need for increased regulation of financial institutions to counter security threats in the global environment. Dr. McIntyre acknowledged that criminal elements exploit such institutions, prompting various jurisdictions to establish international standards for their operation. While Dominica has not been directly involved in crafting these standards, the government is compelled to comply to facilitate business within the international financial space.
To meet these standards, the government has invested in enhancing supervision of financial institutions by increasing staffing and upgrading IT and security systems at the Financial Services Unit, the Inland Revenue Division, the Registrar of Companies, and the Financial Intelligence Unit. Despite the significant costs incurred, Dominica’s efforts have been successful in avoiding placement on the European Union’s ‘negative list’ and receiving a favorable Mutual Evaluation report by the Financial Action Task Force (FATF) in 2023.
Given the increased expenditure, Dr. McIntyre proposed that some of these costs be recovered from the financial institutions regulated by the government. Effective January 1, 2024, the annual license fee for offshore banks under the Offshore Banking Act will be increased from US$8,000.00 to US$25,000.00. Similarly, the annual license fee for insurance companies operating under the Insurance Act will be raised to EC$50,000.00.
Dr. McIntyre also addressed credit unions, stating that they must obtain a license to operate, as defined by the Financial Services Unit Act. Starting January 1, 2024, credit unions will be required to obtain a renewable annual license with fees varying based on their total assets:
- Credit unions with total assets below $25.0 million will pay $10,000 per year.
- Credit unions with total assets between $25.0 million and $50.0 million will pay $20,000 per year.
- Credit unions with total assets between $50.0 million and $100.0 million will pay $40,000 per year.
- Credit unions with total assets between $100.0 million and $500.0 million will pay $60,000 per year.
- Credit unions with total assets of $500.0 million or above will pay $100,000 per year.
In addition to credit unions, Money Service Businesses will also face increased license fees under the Money Services Businesses Act, effective January 1, 2024. Money transmission businesses will pay a license fee of $15,000 annually, while pay-day advances businesses will pay the same amount.
Dr. McIntyre emphasized that these fee adjustments are necessary to uphold international standards and strengthen the financial sector’s resilience to security threats, ultimately safeguarding Dominica’s financial reputation on the global stage.
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