Our Supervisory Approach
GLOFSA regularly reinforces its supervisory framework in response to international challenges in order to promote robust regulation of its licensees, safeguard public interest, foster investors’ confidence and ensure more effective enforcement.
The over-arching aims of the GLOFSA’s supervisory framework include:
- Ensuring that licensed entities are compliant with its legislative framework and are financially sound;
- Identifying licensees engaged in activities that are unlawful or contrary to public interest for appropriate enforcement action;
- Fostering public and investor confidence in the financial system;
- Maintaining the good repute of Marshall Islands as an International Financial Centre.
The Risk-Based Supervision (RBS) framework, which caters for both compliance-driven supervision and risk-based supervision, was implemented to assist GLOFSA to:
- Monitor the progress of licensees in terms of their operational and compliance aspects;
- Identify supervisory actions required in relation to the risk profile of entities;
- Focus on entities whose potential failure could lead to a systemic crisis;
- Target and prioritize the use of its resources for supervision.
The adoption of the RBS framework led to the review and harmonization of the GLOFSA’s inspections process and priorities. The RBS framework further enables the planning and the conduct of thematic inspections across its licensees.
On-site Inspection and Off-site Monitoring
On-site inspections are conducted to ascertain that licensees are compliant with the regulatory and supervisory framework.
Key objectives of on-site inspections include:
- Assessing the market conduct of licensees for fairness and transparency;
- Ensuring soundness of corporate governance of licensees;
- Evaluating risk management processes established by licensees;
- Evaluating the internal control procedures established by licensees;
- Maintaining the sound repute of the Marshall Islands jurisdiction.
Off-site supervision is also fundamental in monitoring the conduct of business activities of licensees. It entails reviewing and analyzing of the audited financial statements, statutory returns and any other reports submitted by licensees. The review allows the GLOFSA to ascertain inter alia the:
- Compliance status of licensees with relevant laws;
- Financial soundness and solvency position of licensees,
- Ongoing assessment of licensees.
Obligations of Licensees
Once licensed, it is the responsibility of a licensee to ensure inter alia:
- Adherence to the legal framework and licensing conditions;
- Filing of audited financial statements within the prescribed time frame;
- Submission of undertakings by management companies;
- Necessary approvals are sought from the GLOFSA;
- Necessary notifications are sent to the GLOFSA
- Timely settlement of the GLOFSA fees,