All banks and financial service providers alike must be licensed to operate in the Cook Islands by the Cook Islands financial regulator.

CSB holds both an international and domestic banking license.

A full list of the licensed banks operating in the Cook Islands is available on the regulator’s website via the below link,

https://www.fsc.gov.ck/cookIslandsFscApp/content/business-contacts/banks

The Cook Islands Financial Supervisory Commission (FSC) and Financial Intelligence Unit (FIU) ensure that banks and other financial institutions of the Cook Islands are operating within the laws and regulations.

The FSC came into existence in the Cook Islands on 1 July 2003, replacing the former Off-shore Financial Services Commission

The FSC,

• Is an independent body responsible for the supervision of regulated financial entities and financial services in the Cook Islands;
• Comprises the Board, the Commissioner, the Head of the FIU and its staff, supervisory staff, and the Registrar of International Companies and International Trusts.
• Is the licensing authority for all financial institutions being banks, insurers (including captives), money-changing and remittance businesses, and trustee companies;
• Operates the Registry of International & Foreign Companies, Limited Liability Companies, International Trusts, International Partnerships, and Foundations. 

The Cook Islands Financial Intelligence Unit (FIU) was established in 2002 as an independent agency of the Government of the Cook Islands.

The functions of FIU are to collect, analyse and disseminate financial information and intelligence on suspected money laundering, the financing of terrorist activities, and other serious offenses to the appropriate authorities in the Cook Islands and internationally with approved organisations or countries.

The Cook Islands Banking Act 2011 and Financial Transactions Reporting Act 2017 provides comprehensive security and confidentiality for customers of CSB.

These acts are in line with international banking standards, and compliance with the acts is testing once a year during an annual onsite supervisory review.

The annual supervisory visit conducted by both the FSC and FIU on top of testing compliance with the above-mentioned acts comprises of a thorough testing of internal policies and procedures, internal risk controls, accounting, strategic planning, quality of senior management and directorship.

Going hand and hand with the Cook Islands Banking Act 2011 and Financial Transactions Reporting Act 2017, banks must comply with several prudential statements which cover everything from Capital Adequacy, Liquidity Risk Management, Fit and Proper Persons, Management of Operational Risk etc.

Compliance with these statements is confirmed by CSB each quarter to the FSC.

A full copy of all the Cook Islands financial providers legislation and prudential statements is available at the FSC and FIU website via the below links,

https://www.fsc.gov.ck/cookIslandsFscApp/content/regulatory-framework/legislation

https://www.fsc.gov.ck/cookIslandsFscApp/content/regulatory-framework/prudential

The Cook Islands Banking Act 2011 requires that all licensed banks engage a regulator approved external auditor.

The external auditor used as per the Act must fit several criteria such as being experienced in banking business, has no financial interest in the bank and must not be a shareholder of the bank.

CSB is audited annually by PWC and copy of the 2020 Financial Report is available here. 

CSB’s banking technology is provided by Primacy Corporation which is owned by TrustQuay.

Primacy Corporation was established in 1998 and specialises in servicing the needs of Private Banks such as CSB.

The banking system provided simply named Workplace is a state-of-the-art banking system that provides a number of safe guards to client funds such as,

• Highly flexible but robust access level security system
• Separate input and approval processes meaning no one staff member can execute transactions against a client account or open new accounts solely
• Sophisticated reporting and account reconciliation modules
• Sophisticated anti money laundering modules
• Highly encrypted data

More information about Workplace is available at Primacy Corporations website via the below link,

https://www.microgenfs.com/wealth-management/other-wealth-solutions/

CSB maintains up to date banking and accounting procedures and controls in line with international standards including,

• A dedicated compliance manager overlooking and testing the bank's internal procedures and controls
• Separation of duty through its three lines of defense model meaning no one staff member can process transactions against a client account or open new accounts without a supervisor approval
• Dual signing is required against all the bank accounts meaning no one staff member has the ability to draw funds from the bank. The shareholders of the bank have no signing authority at all meaning there is no possibility of shareholder fraud being committed against the bank's funds
• Daily second day checks run against the previous day’s transactions and accounting
• Daily capital and liquidity management reporting
• Daily reconciliation of all bank funds
• Weekly accounting and compliance management reporting

These procedures are refreshed and updated annually with Board approval required.

All staff and directors of CSB are bound by the bank's code of conduct and code of ethics.

CSB has strict criteria for new staff onboarding including full background checks, reference checks, and police checks being required as part of the employment process.

In line with the Cook Islands Fit and Proper Persons prudential statement all key management, directors, and shareholders of the bank must be approved by the FSC. 

On top of the prudential statement requirements, the Cook Islands Financial Transactions Reporting Act 2017 enforces harsh penalties on any banking staff member at an individual level who breaches key aspects of the act.