Virgin Islands Deposit Insurance Act, 2016

Summary

This Act establishes the Virgin Islands Deposit Insurance Corporation and a Deposit Insurance Fund to provide limited compensation to insured depositors if a member institution (bank or other deposit taking financial institution) fails or enters financial distress. It sets out the Corporation's governance, powers, and functions, including managing the Fund, providing financial assistance to troubled institutions, and acting as receiver or liquidator where necessary.

• Corporation and Board: Creates the Deposit Insurance Corporation as a body corporate with a Board of Directors, a Chief Executive Officer, and staff, governed by rules in the Schedule (meetings at least six times a year, quorum of three directors, etc.).
• Deposit insurance scheme: Requires member institutions to be insured, and for the Corporation to issue policies and certificates of deposit insurance covering insurable deposits up to an insured limit.
• Deposit Insurance Fund: Establishes the Fund, funded by annual premiums and special contributions from member institutions, used to pay depositors and cover resolution costs.
• Resolution powers: Gives the Corporation powers to provide financial assistance, manage and resolve failing insured institutions, use a bridge bank mechanism, and act as receiver or liquidator.
• Reporting and inspection: Requires member institutions to provide data and reports to the Corporation and submit to annual inspections and examinations.
• Payments to depositors: Sets rules for payments out of the Fund, including treatment of restructuring transactions, amalgamations, transferred deposits, and depositors who profited from an institution's insolvency.
• Appeals: Establishes the Deposit Insurance Appeal Process through the Financial Services Appeal Board for decisions affecting members or depositors.
• Offences and penalties: Creates offences for carrying on deposit taking business without deposit insurance, failure to provide information, offences by corporate officers, and offences relating to depositors, with monetary penalties and recovery mechanisms.
• Confidentiality: Imposes confidentiality obligations on the Corporation, its officers, and members in relation to information obtained under the Act.

The Act applies primarily to banks and other deposit taking institutions declared to be 'member institutions', as well as the Corporation itself, the Financial Services Commission, and depositors. It comes into force on a date to be appointed by the Minister by Notice in the Gazette, rather than on a fixed date in the text.

Key obligations

• Member institutions must be insured by the Corporation and hold a policy and certificate of deposit insurance for their insurable deposits
• Member institutions must pay annual premiums to the Deposit Insurance Fund
• Member institutions must pay special contributions to the Fund when required under section 29
• Member institutions must provide data, information, and reports to the Corporation as required under sections 14, 15 and 62
• Member institutions must submit to annual inspections and examinations by or on behalf of the Corporation
• Member institutions and their officers must not carry on deposit taking business without deposit insurance, on pain of offence and monetary penalties
• Directors, officers and employees of the Corporation must maintain confidentiality of information obtained under the Act
• The Corporation must prepare accounts, undergo audit, and publish an annual report
• The Board must meet at least six times per calendar year

Applies to

banks, member institutions (deposit taking financial institutions), depositors, Deposit Insurance Corporation, Financial Services Commission

Deadlines

• such date as the Minister may by Notice published in the Gazette appoint: Commencement date of the Act's provisions
• at least six times in every calendar year: Minimum frequency of Board meetings required by the Schedule
• five years after the order comes into force: Duration of an exemption granted under section 8 allowing the Corporation to acquire, hold or dispose of shares in a member institution, unless extended by the Cabinet