Published legislation and draft legislation - Dominican Republic

Guidelines for vetting suitability and appropriateness

BA Circular 004/17

The Dominican Republic’s Banking Authority has published its “Guidelines for vetting suitability and appropriateness of shareholders, board members, senior management and key personnel in financial intermediation institutions” (hereinafter, the “Guidelines”).

The main aim of this provision is that financial intermediation institutions should assess significant shareholders (defined as those with more than 3% of their capital), members of the board of directors, senior management and key members of staff, before they join the entity, and afterwards, on an ongoing basis, in order to reinforce the quality of input by significant members of staff and, similarly, safeguard the checks and balances that are in place to prevent money laundering and the financing of terrorism.

The regulatory authority aims to reinforce the Dominican financial system with these guidelines, which provide closer supervision which will help to gain greater understanding of the main players in the system and how they are related to each other, preventing financial crises that might require restricting the activities of any institution or even to shutting it down.

Sworn statement

In order to comply with the Guidelines, institutions must set up internal policies and procedures for assessing and monitoring the suitability and appropriateness of the subjects being vetted, at least once a year.

Significant shareholders, board members, senior management and the institution’s key staff will have to fill out a form, which they should sign and have notarised. This will declare:

  • Financial solvency, in the case of shareholders.
  • Integrity and reputation, in the case of shareholders, members of the board of directors, senior management and key members of staff.
  • Competence and skill-set, in the case of members of the board, senior management and key staff.

Assessment procedure

Financial intermediation entities should send these assessments to the Banking Authority, and keep a copy for their records. They should also have a list of the domestic and foreign companies with which members of the board of directors have any kind of relationship, whether as shareholders or in management.

Corrective measures

The Guidelines provide for the possibility of corrective measures if the suitability resulting from the assessment is not entirely satisfactory. The measures will vary depending on each individual’s situation or deficiencies, but could be: changing their responsibilities, providing training, replacing or dismissing someone, etc.