BANKING
1. What is the definition of a bank?
Bank means a company which carries on a banking business and holds a licence granted under Section 4 and Section 23 of the Banking Order, 2006. This includes all branches and offices in Brunei Darussalam of any such company for the purposes of this Order.
2. What is meant by a banking business?
A banking business means a business which consists of or includes the receiving of deposits or other repayable funds from the public and the granting of credits for its own account and includes the activities such as:
financial leasing, money transmission services, credit cards, charge cards, travellers’ cheques and bankers’ drafts, guarantees and commitments, share issues, service relating to mergers and undertakings, money broking, portfolio management and advice, safe keeping and administration of securities, credit reference services, safe custody services, bank assurance.
3. Who is responsible for the supervision and the regulation of the banks in Brunei Darussalam?
The Financial Institutions Division, under the Ministry of Finance is responsible in carrying out the supervisory and regulatory functions governed under the Banking Order, enacted in March 2006.
The Authority that administers the Banking Order is the Permanent Secretary of the Ministry of Finance.
4. How can one apply for a banking license?
A company which desires to carry a banking business in Brunei Darussalam shall, in the prescribed form and on payment of the prescribed fee, make an application to the Authority for a license accompanied by:-
a) a copy of the Memorandum of Association and Articles of Association or other instrument under which it is incorporated; and
b) a copy of its latest balance sheet together with such other documents (if any) as may be prescribed.
After receiving an application, the Authority may require the applicant to submit such further information to enable the application to be fully assessed for the purpose of the Banking Order, 2006.
5. What are the criteria for granting a banking license?
The need to protect public interest or the interests of depositors, customers, creditors as well as the need to protect the security, reputation and economic interests of Brunei Darussalam in relation to financial matters.
Maintain adequate accounting and other records and adequate systems of control of its business and records.
In the case of an applicant which is incorporated in Brunei Darussalam, its capital issued and paid up is not less than BND100 million, deduction having made in respect of a debit balance, if any, appearing in the profit and loss account of the applicant.
In the case of the applicant whose head office is situated outside Brunei Darussalam:-
(a) its capital issued and paid up is not less than the equivalent BND1 billion; and
(b) it holds net head office funds of not less than BND30 million in respect of its business in Brunei Darussalam, in the form of assets approved by the Authority.
6. Do banks require approval from the Authority to open branches?
Any banks intending to open up a branch must submit an application in writing to the Authority in the Ministry of Finance.
Any bank which fails to do so is guilty of an offence and liable on conviction not exceeding B$ 50,000 and, in the case of a continuing offence, to a further fine not exceeding B$ 2,000 for everyday during which the offence continues after conviction.
7. How many licensed banks are there in Negara Brunei Darussalam?
Currently, there are 8 banks in Negara Brunei Darussalam of which 6 are foreign banks and 2 are local banks including 1 Islamic bank.
8. What and how much licence fees are imposed on banks?
For a head office of a bank, an annual fee of B$ 50,000 is imposed.
For a branch office of a bank, an annual fee of B$ 10,000 is imposed.
For an ATM machine, an annual fee of B$ 3,000 per machine is imposed.
9. Is a bank required to maintain a reserve fund?
As required in the Banking Order 2006, every bank is required to maintain a reserve fund determined as follows:
(a) the amount of the reserved fund is less than 50 percent of the paid up capital and the sum not less than 50 percent of the net profits
(b) the amount of the reserve fund is 50 percent or more but less than 100 percent of the paid up capital, the sum not less than 25 percent of the net profits
(c) the amount of the reserve fund is 100 percent or more of the paid up capital, the sum not less than 5 percent of the net profits.
10. What is the Minimum Cash Balance required for a bank?
The Authority require each banks to maintain a minimum cash balance not exceeding 30 percent of each bank’s deposit and other liabilities, on deposit with the Authority as reserves against their deposits and other liabilities.
11. Are banks required to exhibit its audited accounts?
Within 3 months after the close of each financial year or within such longer period as the Authority may approve, the information listed below must be sent to the Authority prior to the first publication:-
(a) a copy of its latest audited annual balance sheet, and a copy of the profit and loss account, and a copy of the auditors report;
(b) the full and correct names of all persons who are directors of the bank
(c) the names of all subsidiary companies of the bank;
(d) in the case of a bank incorporated outside Brunei Darussalam, the accounts of its head office and of its local operations.
A bank is required to publish its audited balance sheet in the local newspaper not later than 3 months after the close of each financial year.
12. Are banks required to furnish information and statistical data to the Authority?
Every bank shall furnish to the Authority:-
(a) Not later than 15 days after the last day of each month a statement in the prescribed form showing the assets and liabilities of its offices and branches in Brunei Darussalam at the close of business on the last business day of the preceding month.
(b) Not later than one month after the last day of each quarter of a calendar year, a statement in a form approved by the Authority giving an analysis of loans and advances of its offices and branches in Brunei Darussalam as at the 31st day of March, 30th day of June, 30th day of September and 31st of December respectively.
(c) Not later than 3 months after the close of its financial year a statement in a form approved by the Authority showing the income and expenditure in respect of its banking business in Brunei Darussalam.
(d) Any such statistical or other such information as may be requested by the Authority at any time.
13. Are banks subjected to confidentiality?
Banks are subjected to permitted disclosures so as to maintain their confidential purposes. Customer information shall not be disclosed by a bank to any other person except as expressly provided in the Banking Order 2006.
14. Do banks need to submit ‘suspicious transaction reports’ (STR’s) to the Authority?
Under the Money Laundering Order, 2000, banks are required to submit STR’s relating to money laundering. Banks must designate a compliance officer for this purpose.