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Inspections and Audits of Banks Under Bahamian Law

Posted by M. Margaret Gonsalves-Sabola | Nov 08, 2018 | 0 Comments

Bahamian law provides for specific inspections and audits of banks located in The Bahamas. If you work in the banking industry, it is helpful to become familiar with the rules for inspections so you know what to expect.

What Happens During a Bank Inspection?

An inspection involves checking the financial position and solvency of the bank, making sure the bank is safely and prudently conducting business, evaluating policies and procedures for issuing bank products such as loans, reviewing management structures, and seeing that the bank monitors and addresses business risks.

An Inspector of Banks and Trust Companies appointed by the Governor of the Central Bank must regularly inspect banks operating in The Bahamas. Alternatively, for banks based in foreign countries with branches in The Bahamas, the Inspector may allow outside authorities to carry out inspections.

What Happens During a Bank Audit?

During a bank audit, an independent auditor does an evaluation of the bank's financial statements and reports. The auditor assesses assets and liabilities, and ensures that the statements and reports the bank provides are accurate.

The Inspector may require any bank to pay for an audit of its books to (1) make sure the bank has a sound financial position and (2) make sure the bank is following all applicable laws. These laws include the Banks and Trust Companies Regulation Act and the Financial Transactions Reporting Act, among others. The auditor will have to report to the Inspector to provide the results of the audit and answer the Inspector's questions about the bank's financial position and internal procedures.

Why Does the Government Inspect and Audit Banks?

To protect Bahamians who keep their money in banks and to protect the Bahamian financial system, the government requires periodic bank inspections and audits. The government wants to make sure that banks are following the laws and appropriately accounting for risk.

To find out more about banking laws in The Bahamas, visit Gonsalves-Sabola Chambersonline or call the office at +1 242 326 6400.

About the Author

M. Margaret Gonsalves-Sabola

M. Margaret Gonsalves-Sabola is a civil and commercial litigation attorney and an accredited civil and commercial mediator. Margaret has over 21 years' experience in legal practice in the United Kingdom, Jamaica and The Bahamas.


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