Law 480-08 on International Financial Zones in the Dominican Republic provides the legal framework that regulates the Independent Financial Centre of the Americas. The Law establishes that the National Council of International Financial Zones will dictate the complementary regulations, which are to meet the highest international standards of integrity, transparency, compliance and good governance, as well as strict measures against money laundering and the financing of terrorism.
Law 480-08 specifically requires the regulations to follow the standards set by the Financial Action Task Force, Basel Committee Principles, International Association of Insurance Supervisors, International Organization of Securities Commissions, International Accounting Standards Board, International Federation of Accountants and the Wolfsburg Group.
Article 52 of Law No. 480-08 dictates that Financial Services Regulations shall, at a minimum:
- Stipulate the requirements and processes to obtain licenses, including the fitness and propriety of a potential Financial Services Provider to provide the services or carry out the business for which it is requesting a license
- Identify and establish the mechanism to approve the persons or entities that exercise or will exercise control or perform other significant functions in reference to Financial Services Providers
- Stipulate the rules that shall govern the conduct of the banking, insurance, investment or other financial services and related activities in the International Financial Zones
- Prohibit the issuance of a license to any Financial Services Provider until the competent authority of the jurisdiction where said provider is domiciled consents to exercising consolidated cross-border supervision
- Prohibit the establishment of any entity or structure that is designed to impede effective consolidated supervision
- Facilitate an effective consolidated supervision by the competent authorities of the jurisdiction of the main domicile of a Financial Services Provider and allow the exchange of information with these authorities to ensure that said Provider is subject to consolidated cross-border supervision
- Establish the principles or codes of practice which the Financial Services Providers shall observe in the conduct of their business and in the provision of financial services
- Ensure that the Financial Services Providers have and maintain appropriate standards and controls of good governance
- Establish minimum, prudent and appropriate requirements of capitalization that reflect the risks undertaken by the Financial Services Providers, defining the capital components, and taking into account the capacity thereof to absorb losses
- Establish minimum capitalization requirements for Financial Services Providers, which are sufficient to satisfy third-party claims and, if necessary, liquidate the company with no loss to clients
- Require that Financial Services Providers implement an appropriate risk management process (including the oversight of boards of directors and upper management) to identify, evaluate, monitor and control or mitigate all their risks, and evaluate capital sufficiency in relation to the risk profile
- Facilitate the formation of an international securities market for the exchange of public and/or private securities
- Facilitate the formation of an international clearing and settlement center
- Establish the levels and types of human and financial resources which the Financial Services Providers shall maintain
- Establish the auditing and accounting standards; the appointment, termination or resignation of auditors and accountants; the rights and obligations of auditors and accountants; and, the obligation of auditors and accountants to disclose information to the competent authorities
- Manage bankruptcy, insolvency, default or liquidation of the Financial Market Participants and related effects, as established in the Law
- Require the disclosure of information to the competent authorities to facilitate the exercise of their supervisory duties and the cooperation with the investigations conducted by the competent authorities
- Establish the appropriate controls on communications that are intended to or have the effect of promoting financial products, services or activities
- Establish the appropriate controls on communications regarding the protection of deposits, to ensure that they are accurate, complete and not deceptive, and that the communications do not indicate that the deposits with a Financial Services Provider shall be guaranteed by the Dominican State, the National Council and its administrative agencies, or the Operators of International Financial Zones
- Stipulate the procedures to review and approve or reject proposals for the transfer of control, in whole or in part, of the business of a Financial Services Provider, the ceasing of operations, the surrendering of a license or voluntary withdrawal from an International Financial Zone
- Protect the capital and securities of the Market Participants
- Manage and prevent market abuse with respect to financial services and related activities
- Establish any other measure necessary to ensure that the financial services and related activities carried out by the Financial Market Participants or others in International Financial Zones are conducted in accordance with the requirements of Law 480-08, the applicable laws of the Dominican Republic, the Regulations and Instructions which govern International Financial Zones and the highest internationally accepted standards and practices of integrity, transparency, governance and compliance
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