The Cook Islands Parliament passed the Trustee Companies Act 2014 which will improve the Financial Supervisory Commission's ability to carry out its functions in line with current international standards. The new Act replaces the Trustee Companies Act 1981-82 and puts the Cook Islands in a fully compliant position with respect to regulation of trustee companies.
The main new requirements or controls that the Act will bring in are:
- Intervention grounds which if breached will allow the FSC via the Courts to take over the running of a Trustee Company if they were breaking the law or have become financially distressed. This allows greater protection of a trustee company's customers.
- Powers of the FSC to refuse a licence or revoke an existing one if those associated with it are not fit and proper persons or have criminal records. The powers also allow FSC to protect the reputation of the Cook Islands in financial matters.
- Vetting by the FSC for key staff and shareholders.
- Allows the FSC to issue directions to a licence holder and take other enforcement action.
- Powers of the FSC to investigate unlicensed Trustee Companies.
- Provides the FSC with information seeking powers.
- Provides various offences for not running a Trustee Company properly and honestly e.g. making false statements to customers, concealing facts etc.
- Provides for proper recourse to the Courts for licence holders unhappy with FSC actions and other checks and balances on the activities of the FSC in this area.
The Cook Islands was last evaluated against the OECD Financial Action Task Force (FATF) Forty Recommendations on Combatting Money Laundering and the Financing of Terrorism and Proliferation standards in 2009 and received one of the highest assessments and markings in the Pacific region. However, the international standards have since been revised and rewritten since that assessment. The new Act strives to ensure the resilience of the Cook Island's financial regulatory regime to stand-up to modern scrutiny by our peers and international bodies.
All Trustee Companies operating in the Cook Islands were consulted on in the drafting of this Act and have contributed to its final wording. The Act brings the regulatory regime for Trustee Companies in line with that already in existence for banks and other financial institutions.
Minister of Finance Mark Brown commented, "The passing into legislation of the Trustee Companies Act 2014 is very important for the Cook Islands and the future good governance of our financial industry. It helps ensure that we continue to make the Government's regime, to help protect our financial industry from abuse by criminals and terrorists, one of the best in the world. This Act will greatly help the Cook Islands in any future assessments or international scrutiny."
"The present Government is committed to meeting international and recognised world standards wherever it can, to help protect the Cook Islands, its people, its industries and its reputation. The passing of the Trustee Companies Act 2014 continues that commitment and strengthens our nation's defences against money launderers and the financiers of terrorism abusing our facilities and services."
Paul Heckles, FSC Commissioner, stated, "This is a very important Act, which the passing of will significantly help the Cook Islands when international bodies evaluate and scrutinise whether we have effective and serious regulatory control of our financial industry."