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Banking Act 1987 [17 MIRC Ch.1]

MARSHALL ISLANDS


REVISED CODE 2012


TITLE 17.


BANKS AND FINANCIAL INSTITUTIONS


CHAPTER 1.


BANKING


ARRANGEMENT OF SECTIONS


Section


PART I - PRELIMINARY


§101. Short title.
§102. Interpretation.
§103. Use of the words "bank", "banking", "savings" or "savings and loan".


PART II - COMMISSIONER OF BANKING


§104. Commissioner.
§105. Disqualifications.
§106. Delegation.


PART III - BANKING LICENSES


§107. Requirement of License
§108. Applications for license.
§109. Grant or refusal of license.
§110. Banking license
§111. License fee.
§112. Approval of the Commissioner for any change
§113. Suspension, revocation or variation of license.
§114. Power to give directions.
§115. Cessation of business.
§116. Transacting business without a license.
§117. Penalty
§118. Transitional


PART IV - SUBSIDIARY CORPORATIONS


§119. Subsidiary corporations.


PART V - CAPITAL REQUIREMENTS, ETC.


§120. Capital requirements.
§121. Reserve fund.
§122. Liquid assets.


PART VI - OFFSHORE BANKING


123. Offshore banking.
§124. Capital requirements
§125. Resident Agent.


Section


§126. Disclosure
§127. Payments
§128. Maintenance of books and records


PART VII - LIMITATIONS ON CREDIT OPERATIONS


§129. Principles governing restrictions.
§130. Lending restrictions.
§131. Interest rates


PART VIII - FINANCIAL STATEMENTS, AUDIT, INFORMATION AND INSPECTION


§132. Financial statements.
§133. Provision for bad debts
§134. Auditors.
§135. Publication of the financial statements.
§136. Extension of time
§137. Reports.
§138. Information and inspection


PART IX - DIRECTORS AND OFFICERS


139. Directors.
140. Change of directors and officers.
141. Officers


PART X - RESTRICTIONS


§142. Unsound or unsafe practices.
§143. Directions by the Commissioner.
§144. Maximum percentage of shares.
§145. Accommodations.
§146. Business restrictions.
§147. Payment of dividends on profits.


PART XI - GENERAL


§148. Issuance and transfer of capital stock.
§149. Changes in corporate structure.
§150. Minimum capital ratios.
§151. Insurance of deposits.
§152. Declaration of interest.
§153.Trust business.
§154. Secrecy.
§155. Immunity.
§156. Regulations.
§157. Liability of directors
§158. Failure to comply with the provisions of this Chapter.
§159. Willfully making false entries.
§160. Declaration by the Commissioner.
§161. Bank disclosure of interest and fees.
§162. Lending Requirements with respect to Domestic Deposits Received
§163. Reserved


PART XII - PENALTIES AND EXCEPTIONS


§164. Offenses relating to this Chapter
§165. Exceptions


PART XIII - MONEY LAUNDERING


§166. Offenses and Penalties
§167. Authority of the Commissioner
§168. Verification of customer Id.
§169. Requirement to maintain Records
§170. Report Suspicious Transactions
§171. Seizure of suspicious currency
§172. Application for Confiscation Order
§173. Notice of Application
§174. Confiscation Order upon Conviction
§175. Effect of Order
§176. Payment instead of Confiscation
§177. Procedure for fines
§178. Suspicious transaction – Immunity
§179. Good faith – Immunity
§180. Currency Transaction Reports
§181. Assessment of Civil penalties
§182. Effective Date


____________________________________


An Act to provide for: (a) the protection of depositors; (b) the licensing, regulation and supervision of banks operating in and from within the Republic; (c) protection against, and penalties for transactions in money-laundering and (d) for matters connected therewith or incidental thereto.


Commencement: 20 March 1987

Source: P.L. . 1987-9

P.L. 1993-59
P.L. 1994-85
P.L. 1995-128
P.L. 1998-74
P.L. 1998-75
P.L. 2000-20
P.L. 2002-59
P.L. 2006-63
P.L. 2009-20
P.L. 2011-57

PART I - PRELIMINARY


§101. Short title.


This Chapter may be cited as the "Banking Act 1987". [P.L. 1987-9, §1]


§102. Interpretation.


In this Chapter


(a) "accommodation" means any loan, overdraft, advance or any commitment to grant any loan, overdraft or advance, including a commitment to accept a contingent liability;










(i) "corporation" means a corporation incorporated or registered under the provisions of the Associations Law 52 MIRC Part I[1], and regulations made thereunder;


(j) "director" (in relation to a licensed bank incorporated or registered in the Republic) means a person carrying out or empowered to carry out substantially the same functions as is carried out by a director of a corporation;

















(z) "qualified auditor" means a Certified Public Accountant, or firm of Accountants being a member of an institute approved or recognized by law possessing a certificate to practice as an Accountant issued by the council of such institute;


(aa)"resident" means:


(i) a citizen of the Republic residing in the Marshall Islands, or an individual domiciled therein;

(ii) a corporation incorporated in the Republic, a body corporate established under any written law of the Republic, or any firm, partnership or other organization formed in the Republic;


(iii) a branch, subsidiary, affiliate, extension, office, or any other unit of a corporation or other juridical person established under the laws of any foreign country, operating in the Republic;


(bb) "Resident Agent" means an agent, residing in Majuro, representing a bank holding an offshore license;


(cc) "savings and loan association" means a corporate or unincorporate savings association established for the primary purpose of making loans to members and others from the savings of contributors;


(dd) "serious offense" means an offense against a provision of


(i) Any other law in the Republic of the Marshall Islands, for which the maximum penalty is imprisonment or other deprivation of liberty for a period of not less than 12 months;

(ee) "substantial interest":

(i) in relation to a corporation, means the holding of a beneficial interest by an individual or his close relation whether individually or taken together, in the shares thereof, exceeding twenty-five percent (25%) of the paid-up capital, or the existence of a guarantee or indemnity given by an individual or his close relation on behalf of such corporation;


(ii) in relation to a firm, means the beneficial interest held therein by an individual or his close relation, whether individually or taken together, exceeding twenty-five percent (25%) of the total capital subscribed by all the partners of the said firm, or the existence of a guarantee or indemnity given by an individual or his close relation on behalf of such firm;

[P.L. 1987-9, §2.] [paragraphs re-numbered to accommodate additional definitions added by P.L. 2000-20]]


§103. Use of the words "bank", "banking", "savings" or "savings and loan".


(1) No corporation other than a licensed bank shall use as part of its name or its description any of the words "bank," "banking," "savings" or "savings and loan" or any of the derivatives or their equivalent in another language, and no licensed bank shall carry on the business of banking in the Republic unless it uses as part of its name at least one of such words.

(2) No person, firm, individual or group of individuals shall for the purpose of carrying on any business, use as part of it's or his name or description any of the words "bank," "banking," "savings" or "savings and loan" or any of the derivatives or their equivalent in another language. [P.L. 1987-9, §3.]

PART II - COM M ISSIONER OF BANKING


§104. Commissioner.


(1) There shall be appointed by the President, with the concurrence of the Cabinet, a Commissioner who shall be in charge of the administration and the enforcement of the provisions of this Chapter and the regulations made thereunder.

(2) The Commissioner shall be an employee of the government and shall not hold any office other than those that may be empowered under any other written law or assigned to him by the Cabinet.

(3) In addition to the provisions of Subsection (2) above, the office of the Commissioner shall perform, upon assignment, the functions and duties of Registrar of Corporations, in which event such functions and duties shall not be in the office of the Attorney-General notwithstanding the provisions of the Corporations, Partnerships and Associations Act, 52 MIRC Parts I, II, II and IV[2] .

(4) The Commissioner shall be paid such remuneration as may be fixed by the Public Service Commission and shall function under the Minister of Finance who will act in consultation with the Cabinet. [P.L. 1987-9, §4.]


§105. Disqualifications:


A person shall be disqualified for appointment as the Commissioner if:


(a) he is a member of the Nitijela;



§106. Delegation.


The Commissioner may delegate any of his powers and duties to any other officer of his staff, who shall exercise or perform the powers or duties delegated to him subject to the general or special directions of the Commissioner. [P.L. 1987-9, §6.]


PART III - BANKING LICENSES


§107. Requirement of license.


(1) No banking business shall be transacted in the Republic except by a corporation which is in possession of a valid license issued by the Commissioner of Banking, with the approval of the Cabinet, authorizing the transaction of banking business in or from within the Republic.

(2) No corporation which has as part of its name or description any of the words "bank". "banking", "savings" or "savings and loan" shall be incorporated unless the approval in writing of the Commissioner is first obtained.

(3) Any person desirous of obtaining approval for incorporation in terms of subsection (2) above for the purpose of making application for grant of a license under Section 108 shall apply in writing to the Commissioner in such manner as he may specify. [P.L. 1 98 7-9, §7, amended by P.L. 1998-74, §2.]

§108. Applications for license.


An application for the grant of a license shall be made in writing to the Commissioner and shall in addition to the information that may be required under the regulations, contain the following particulars:


(1) domestic bank in the case of an application for a license by a domestic bank











(k) the full names, addresses, nationalities and banking [[3]experience of the principal officer and his deputy:

(1) the name of each subsidiary corporation of the applicant, address of its registered office and principal place of business, and the type of business engaged in;]

(n) a letter or document from the Federal Deposit Insurance Corporation of the United States of America, or other approved body under Section 151 of this Chapter, indicating the current insurance covering deposits held;


(o) an initial non-refundable application fee of $500;


(p) such other particulars or information as may be required by the Commissioner under this Chapter or regulations made thereunder,


(q) where the application is with respect to an offshore license, the name and address of the Resident Agent and a letter of authority addressed to the bank or banks holding cash as required pursuant to Section 124(l)(b) of this Chapter or an application for a waiver of this condition;


(c) a list of the names of directors and chief executive officer certified by the secretary;


(d) the full names and banking experience of the manager of the branch in the Republic, and his deputy;

(f) a letter from the [central or state] banking supervisory authority responsible in the country where the bank is chartered confirming that the applicant is being supervised on a consolidated basis indicating that there is no objection to the establishment of a branch of that bank in the Republic;


(g) a copy of the certificate of corporate registration in the Republic;


(h) evidence of insurance by the Federal Deposit Insurance Corporation of the United States of America, or other approved body under Section 151 of this Chapter, relating to deposits in the Republic; however, the Commissioner may, with the approval of the Cabinet, waive the requirement of such insurance, in the case of any bank of international repute, if there is no such requirement under the law of the country where such bank is incorporated; and

§109. Grant or refusal of license.


(1) On receipt of the complete set of documents required under section 108, the Commissioner shall conduct an investigation of the application as deemed necessary to determine:


(a) that all the requirements of existing laws and regulations have been complied with; and


(b) whether the available financial resources, organization, controls, administration and integrity and banking experience of the organizers can reasonably assure the safe and sound operations of the proposed banking operation, and that it can effectively serve the needs of the public.


(2) On completion of his investigation, the Commissioner, with the approval of the Cabinet, shall grant, or without assigning any reason therefore, refuse to grant a license. [P.L. 1987-9, §9; amended in its entirety by P.L. 1995-128, §2.]


§110. Banking license.


(1) In granting a license to a bank (which license shall be in writing) the Commissioner, with the approval of the Cabinet:



(2) No person may be granted a license in a name which, in the opinion of the Commissioner, is likely to mislead or confuse the persons for which it is intended to provide any or all of its services.

(3) No license shall be issued or renewed except upon the payment of the license fee referred to in Section 111 of this Chapter.

(4) A licensed bank shall not engage in any banking business other than the business specified in the license.

(5) A domestic license granted under this Section shall remain valid unless revoked in accordance with Section 113. An offshore license granted under this Section shall initially be valid from the date of issue to the end of December of the same year and the offshore license shall thereafter be issued for a period of twelve (12) months beginning on the first day of January of each succeeding year.

(6) The application for renewal shall be made prior to the expiration of the current license along with the license fee and providing such information as may be required by the Commissioner under this Chapter or the regulations made thereunder.

(7) A copy of the license granted to a bank under this Chapter shall be kept displayed conspicuously in all places of business of the bank in the Republic.

(8) The Commissioner may from time to time by notice in writing to a licensed bank:



(9) Where the Commissioner intends to issue a notice under subsection (8) he shall inform the licensed bank of his intention to do so and afford it a period of 14 days in which to make representations in that regard; the Commissioner will take into account any such representations in deciding whether to proceed with the issue of the notice. [P.L. 198 7-9, §10, amended by P.L. 1998-74, §2.]

§111. License fee.


(1) Every bank shall pay to the Commissioner an annual license fee according to the following schedule:




(2) Each branch of a bank licensed to operate in the Republic shall be considered a separate entity and shall pay an annual license fee of $1,000. [P.L. 1987-9, §11, amended by P.L. 1998-74, §2.]

§112. Approval of the Commissioner for any change.

The prior approval in writing of the Commissioner shall be required:



(e) for a person, group of persons, partnership, company or corporation to acquire a substantial interest in a licensed bank incorporated in the Republic by or under any written law. [P.L. 1987-9, §12.]


§113. Suspension, revocation or variation of license.


(1) In the case of a licensed bank:













(2) A licensed bank may, within 30 days of the date of issue of notice of suspension of the license under subsection (l)(m) above, submit to the Commissioner reasons why the license should not be revoked or varied.

(3) The Commissioner shall, with the approval of the Cabinet, within 30 days of the receipt of the reasons referred to in subsection (2) above:


(4) A licensed bank may, within 14 days of the date of the issue of the notice of intention to revoke the license under Subsection (1)(m) above, submit to the Commissioner reasons why the license should not be revoked.


(5) TheCommissioner shall, with the approval of the Cabinet, within 14 days of the receipt of the reasons referred to in subsection (4) above, decide whether or not to proceed with the revocation.

(6) Notwithstanding the provisions of Subsections (2) and (4) above, no notice of intention to suspend or revoke a license in the circumstances in Subsection (l)(c), (d), (k) and (1) shall be required; in such case notice to be given shall comprise notice of suspension or revocation effective forthwith.

(7) Forthwith upon revocation of a license under this Section, the licensed bank whose license is revoked shall cease to carry on banking business in any manner whatever while the revocation is in effect. [P.L. 198 7-9, §13; amended by P.L. 1998-74, §2.] [P.L. 2000-20, §2(B)]

§114. Power to give directions.


(1) Where the Commissioner has given notice of suspension under Section 113 of this Chapter, he may give directions to the bank;





(2) Where a licensed bank has failed to comply with the directions issued under Subsection (1) of this Section, the Commissioner may make an application in court directing such bank to forthwith cease business in or within the Republic and may upon such order take charge, or authorize an officer in writing to take charge on his behalf, of all its books, records and all other material.

(3) In the case where the Commissioner withdraws the suspension unconditionally, under Section 113 of this Chapter, he shall deliver or direct the officer authorized to deliver to such bank forthwith, the books, records, and all other material taken into his custody.

(4) Notwithstanding anything contrary to any other law, no action or proceeding may be instituted in any court against the Commissioner, an authorized officer, or the Government of the Marshall Islands, with respect to any loss or damage incurred, likely to be incurred, or alleged to be incurred by reason of any action done in good faith under Sections 113 and 114(1), (2) or (3) of this Chapter. [P.L. 198 7-9, §14.]

§115. Cessation of business.


(1) Where a license has, been revoked under Section 113 of this Chapter, the Commissioner shall direct the bank forthwith to cease business in and from within the Republic, and he or an officer authorized by him in writing, may take charge of all of its books, records and other material and take such measures as may be necessary to prevent the continuance of the business of banking by the bank, except for the purpose of winding up the business of such bank under the supervision of the Commissioner or an authorized officer within a period of three (3) months.

(2) Where revocation has been made with respect to a foreign bank the Commissioner shall forthwith inform the parent office of the bank to honor the obligations and liabilities incurred in the conduct of the business of the branch office in the Republic. [P.L. 198 7-9, §15; amended by P.L. 1998-74, §2.]

§116. Transacting banking business without a license.


If the Commissioner has reasonable ground to believe that any person is transacting banking business without a license he may examine, or authorize an officer in writing to examine, the books, accounts and records of such person for the purpose of ascertaining whether such person has contravened or is contravening any of the provisions of this Chapter. Any refusal by such person to submit such books, accounts or records to the Commissioner or authorized officer shall be prima facie evidence that such person is transacting banking business without a license. [P.L. 1987-9, §16.]


§117. Penalty.


(1) If any person referred to in Section 116 of this Chapter is transacting banking business without a license he shall be guilty of an offense and shall upon conviction be liable to a fine not exceeding $10,000.

(2) Any applicant who knowingly or recklessly furnishes any information which is false or misleading in a material particular in connection with an application under this Chapter, shall be guilty of an offense and shall upon conviction be liable to a fine not exceeding $10,000 or to a term of imprisonment not exceeding six (6) months, or both. [P.L. 198 7-9, §17.]

§118. Transitional.


(1) Upon the commencement of this Chapter, a bank holding a valid license under the Business Licenses Act 1983 to conduct banking business within the Republic shall submit an application to the Commissioner two (2) months before the expiration date of the said license, for a license under the provisions of this Chapter. However, the initial application fee referred to in Section 108(1 )(o) of this Chapter shall not be required.

(2) Each bank to which Subsection (1) of this Section applies shall be deemed to be licensed for the purpose of carrying on banking business pending a decision by the Commissioner on the application for the license under this Chapter.

(3) Where a bank applying for a domestic license is not, at the time of application, operating in accordance with the conditions imposed by this Chapter, the Cabinet may, upon application and in special circumstances, grant an extension of up to two (2) years for completion of the outstanding requirements unless stated otherwise in this Chapter.

(4) An offshore license granted to a bank under the Banking Regulations Act 1985, shall, unless suspended or revoked, be considered valid under this Chapter until December 31, 1987. Two (2) months prior to the expiration date of the said license, an application for a renewal of the license may be made. [P.L. 198 7-9, §18.]

PART IV - RESTRICTIONS ON THE FORM ATION OF SUBSIDIARY CORPORATIONS


§119. Subsidiary corporations.


(1) A licensed domestic bank shall not have as its subsidiary a corporation which is not a licensed bank, provided that with the written permission of the Commissioner, it may have a subsidiary which:






(2) For the purpose of this Chapter a corporation shall be deemed to be a subsidiary if, but only if:

PART V - CAPITAL REQUIREM ENTS, RESERVE FUNDS AND LIQUID ASSETS OF DOM ESTIC LICENSED BANKS


§120. Capital requirements.


(1) Every domestic bank licensed to do local banking business shall at all times maintain unimpaired issued capital stock in an amount not less than one million dollars originally paid up in cash; and shall also comply with any prescription made under Section 150.

(2) A licensed bank shall not reduce its paid-up capital without the prior written approval of the Commissioner.

(3) Where the capital of a licensed bank has become deficient in terms of the provisions of the preceding Subsections, the Commissioner may grant a reasonable period of time for making good such deficiency. [P.L. 1987-9, §20; amended by P.L. 1998-74, §2.]

§121. Reserve fund.


(1) Everydomestic bank licensed to do banking business shall maintain a reserve fund and shall, out of the net profits each year, before any dividend is declared or any profits are transferred elsewhere, transfer to such reserve fund a sum equivalent to not less than twenty-five percent (25%) of such profits until the amount of the said reserve fund is equal to the paid-up capital; provided, that an amount not less than twenty-five percent (25%) of the net profits is applied to writing off such intangible assets as required in Section 147 of this Chapter before such profits are transferred to the reserve fund.

(2) The reserve fund shall not be reduced or impaired, provided that the Commissioner may, by regulation, specify circumstances in which it may be reduced and, shall permit a reduction when a transfer is made for the purpose of increasing paid-up capital. [P.L. 1987-9, §21.]

§122. Liquid assets.


(1) Every domestic bank licensed to do local banking business shall maintain liquid assets in an amount which shall not, as a daily average each month, be less than such percentage of the total of its liabilities, less liabilities to shareholders as may be determined by the Commissioner from time to time, but shall not be less than twenty percent (20%) of deposit liabilities or the amount required by the Federal Deposit Insurance Corporation. Deposit liabilities of a bank shall be deemed to be its gross demand, time and savings account liabilities for the purpose of this Section.


(2) For the purpose of Subsection (1) above, liquid assets means all or any of the following:


(a) notes and coins in U.S. Dollars and in foreign currencies freely convertible into U.S. Dollars;


(b) net balance at all and at short notice not exceeding ninety (90) days, in U.S. Dollars, held with other banks conducting a domestic banking business in the Republic;


(e) such other assets as are defined. [P.L. 1987-9, §22.]


PART VI - OFFSHORE BANKING


§123. Offshore banking.


A bank that has received a license to conduct offshore banking from within the Republic under Section 110 of this Chapter shall conduct the business only for which it has been licensed. [P.L. 1987-9, §23.]


§124. Capital requirements of offshore licensed banks.


(1) A bank holding an offshore license shall at all times maintain:


(2) Anychanges in the capital referred to in Subsection (1 )(b) of this Section shall be disclosed to the Commissioner and appropriate letters of authority by the licensed bank shall be provided.

(3) The provision of Subsection (1 )(b) of this Section shall not apply to any bank with respect to which it is proved to the satisfaction of the Commissioner that the aggregate reserves of such institution are adequate with respect to its business. [P.L. 1 98 7-9, §24.]

§125. Resident Agent.


(1) A bank holding a license to do offshore banking business shall appoint and maintain at all times a Resident Agent in Majuro, approved by the Commissioner, to whom all correspondence may be addressed by the Commissioner.

(2) The Resident Agent shall be deemed to be authorized to receive and respond to any legal process issued in the Republic with respect to any offshore bank he represents, or with respect to any shareholder, director or officer thereof. [P.L. 1 987-9, §25.]

§126. Disclosure.


The Commissioner may disclose the names and addresses of the principal shareholders of a domestic bank holding an offshore license notwithstanding the provisions of Section 154 of this Chapter. [P.L. 1987-9, §26]


§127. Payments.


No bank holding an offshore license may draw checks or drafts, or accept bills of exchange or time drafts, except for payment on an account at another licensed branch or banking institution in the Republic or elsewhere having acceptable clearing facilities. [P.L. 198 7-9, §27.]


§128. Maintenance of books and records.


The Commissioner may require each bank licensed to do offshore banking business from within the Republic to maintain in the Republic such books, minutes, accounts, documents, vouchers or such other documents as determined by the Commissioner. [P.L. 1987-9, §28.]


PART VII - LIMITATIONS ON CREDIT OPERATIONS


§129. Principles governing restrictions.


The powers conferred on the Commissioner and the Cabinet by this Part shall be so exercised as to regulate banks holding domestic licenses, and the supply, availability, cost and character of bank credit in accordance with the national monetary policy as determined by the Cabinet. [P.L. 1987-9, §29.]


§130. Lending restrictions.


(1) A licensed domestic bank engaged in local banking business shall not:



For the purpose of this Subsection the term "director" or "officer" includes the spouse, or children of a director or officer;


(c) grant or permit to be outstanding to its officers and employees unsecured loans or unsecured credit facilities which in aggregate amount, for any one officer or employee, exceed one year's emoluments of such person.


(2) In Subsection (1)(b) and (c) of this Section the expression "unsecured loans or unsecured credit facilities" means loans or credit facilities granted without security or collateral, or, with respect to any loan or credit facility granted with security, and any part thereof which at any time exceeds the market value of the assets constituting that security or collateral.

(3) Any bank which is in contravention of the provisions of this Section upon the commencement of this Chapter shall report the details to the Commissioner without revealing the names of the persons so involved. Such bank shall within twelve (12) months, or such further time as the Cabinet may determine, comply with the requirements of this Section. [P.L. 1987-9, §30.]

§131. Interest rates.


(1) The Commissioner may, with the approval of the Cabinet, from time to time make an order:


(a) fixing the minimum rates of interest which banks may pay upon various classes of deposits; or


(b) fixing the maximum rates of interest which banks may charge for different types of loans or other credit operations.


(2) Subject as hereinafter provided, the rate of interest fixed by order under Subsection (1) of this Section shall apply in relation to any deposit, or to any loan or credit operation, as the case may be, completed before the date on which the order comes into force; provided, however, that nothing in any such order:


(a) shall apply in relation to any interest accrued before that date; or


(b) shall require or be deemed to require the increase of the rate of interest payable upon any deposit completed before that date if such increase will constitute a breach of the contract or agreement relating to such deposit

(3) In making an order under Subsection (1) of this Section the Commissioner shall, in consultation with licensed banks and subject to Subsection (4) of this Section, take into consideration the rates of interest charged or paid by banks in other countries prevalent at the time of making such order; and in any event the difference, if any, in the rates shall not exceed five percent (5%) of the prime rate of the New York money center.

(4) The maximum rate of interest a licensed bank may charge for loans and other credit operations shall be twenty-four percent (24%).

(5) The Commissioner shall review and make recommendations to the Cabinet every six (06) months on the maximum rates of interest which banks may charge under Subsection (1)(b) of this Section. [P.L. 1987-9, §31; P.L. 1995-128, §2 contains an amendment identical to the prior text.][New subsection (5) added by P.L. 2006-63].

PART VIII - FINANCIAL STATEMENTS, AUDIT, INFORMATION AND INSPECTION


§132. Financial statements.


At the expiration of each financial year every licensed bank, with respect to its operations in the Republic that year, shall publish in the local press as prescribed by the Commissioner a balance sheet as of the last working day of each financial year and a profit and loss account with respect to that year within four (4) months of the close of the year. [P.L. 1987-9, §32; amended by P.L. 1995-128, § 2.]


§133. Provision for bad debts.


Every domestic bank shall:


(a) maintain provision for its bad and doubtful debts, if any; and

[P.L. 1987-9, §33.]


§134. Auditors.


(1) Every licensed bank shall, subject to the approval of the Commissioner, appoint annually an independent financial auditor, whose duties shall be to audit the financial statements of the bank.

(2) The audit of the financial statements shall be completed within three (3) months of the end of the financial year, and the auditor shall state that his examination was made in accordance with generally accepted auditing standards and in his opinion the financial statements present fairly the financial position of the bank at the date of the audit in conformity with the generally accepted accounting principles.

(3) If a licensed bank fails to appoint an auditor as required, the Commissioner shall have the power to appoint the auditor.

(4) The remuneration of the auditor, whether appointed by the licensed bank or by the Commissioner, shall be paid by the licensed bank and, in the case of an auditor appointed by the Commissioner in terms of Subsection (3) of this Section, it shall be determined by the Commissioner.

(5) No person who is a director, officer, employee or agent of such licensed bank shall be eligible for appointment as auditor for the bank. Any person appointed as auditor who may, after such appointment, become a director, officer, employee, or agent of such licensed bank, shall forthwith cease to be such auditor.

(6) It shall be the duty of the auditor to report forthwith to the Commissioner information relating to the affairs of the licensed bank obtained in the course of an audit, if he is of the opinion that:




(7) The Auditor may be required to discuss the audit directly with the Commissioner or be asked to provide additional information regarding the audit.

(8) Theauditor shall, before disclosing any information to the Commissioner under subsections (6) and (7), take reasonable steps to inform the licensed bank of the intention to disclose the information and the nature of the information.

(9) No civil, criminal, or disciplinary proceedings shall lie against any auditor arising from the disclosure in good faith of information to the Commissioner pursuant to subsections (6) and (7).

(10) Anyadditional remuneration payable to the auditor performing additional duties under subsections (6) and (7) above shall be determined by the Commissioner and paid by the licensed bank.

(11) The Commissioner may, by notice in writing to a licensed bank, require it to submit a report, prepared by the auditor, on such matters as the Commissioner may determine which may include an opinion on asset quality, adequacy of provisions for losses, and the adequacy of the accounting system and internal controls of the licensed bank. [P.L. 198 7-9, §34, amended by P.L. 1998-74, §2.]

§135. Publication of the financial statements.


(1) Every licensed bank shall transmit to the Commissioner and publish within four (4) months after the close of the financial year its audited financial statements which shall be made available throughout the following year in all places of business of the bank in the Republic.

(2) The Commissioner shall be provided with information he may reasonably require concerning a bank's financial statements and, with respect to the affairs of the bank, details of named individual accounts. The preceding provision shall include information which may be required from the auditor, through the bank, relating to the audited financial statements, and other affairs. [P.L. 1987-9, §35.]

§136. Extension of time.


Where any licensed bank has, in circumstances beyond its control, failed to comply with the provisions of Section 134 or 135 of this Chapter the Commissioner may, on an application made by such licensed bank, in his sole discretion, grant a reasonable period of time for compliance with the provisions of the Sections herein mentioned. [P.L. 1987-9, §36.]


§137. Reports.


(1) The Commissioner may from time to time, by notice in writing, require any bank or person engaged in a banking business in the Republic to submit such reports and returns as he may require for purposes of the administration and enforcement of the provisions of this Chapter and the regulations made thereunder.


(2) The Commissioner may vary the form of the statements and returns prescribed under subsection (1), and the dates when the information shall be submitted.

(3) Any such bank or person engaged in the banking business notified under subsection (1) shall comply with accurate and timely submissions or be subject to a fine prescribed by the Commissioner in an amount not to exceed $500 per diem until the correct information has been provided to the satisfaction of the Commissioner.

(4) The Commissioner may require any report or return submitted to him pursuant to this Section to be accompanied by a certificate of the bank's appointed auditor under this Chapter, giving an opinion on the correctness of the contents.

(5) The Commissioner may from time to time, by notice in writing, require banks to advise details of their training program to enhance the banking skills and knowledge of their Marshallese employees. [P.L. 1987-9, §37, amended by P.L. . 1995-128, §2; amended by P.L. 1998-74, §2.]

§138. Information and inspection.


(1) The Commissioner may, from time to time, cause an examination to be made by persons authorized as examining officers by the Commissioner of each licensed bank or any of its affiliates in the Republic, where in his judgment such examination is reasonably necessary or expedient in order to determine that such licensed bank is in a sound financial condition and that the requirements of the law have been complied with in the conduct of its business.

(2) Each licensed bank referred to in Subsection (1) of this Section shall provide for the inspection by an officer appointed by the Commissioner, at such time as the officer specifies, all books, minutes, accounts, cash, securities, documents and vouchers relating to its business and shall supply all information concerning its business as requested by such officer.

(3) If any books minutes, accounts, cash, securities, documents, and vouchers are not produced or information is not supplied, or if any item produced is false in any material particular, the defaulting bank or affiliate or both, shall be guilty of an offense and shall upon conviction be liable to a fine not exceeding $10,000. [P.L. 1987-9, §38 amended by P.L. 1998-74, § 2.]

PART IX - DIRECTORS AND OFFICERS


§139. Directors.


(1) No person shall be appointed or elected as a director of a licensed domestic bank if:




(2) A director of a licensed domestic bank shall cease to be a director if:

(b) he becomes permanently incapable of performing his duties; or


(c) he has been convicted of any act or thing which is of a fraudulent or illegal character, or which is manifestly opposed to the objectives and interests of the licensed bank.

[P.L. 1987-9, §39.]


§140. Change of directors and officers.


Except with the prior approval of the Commissioner, no domestic bank shall change its directors or principal officer. An application for such change shall be made in writing along with the information required in Section 108(l)(e) and (k) of this Chapter. [P.L. 1987-9, §40.]


§141. Officers.


(1) Notwithstanding anything contained in any other written law, a person shall be disqualified for employment or appointments as the manager or other official in a licensed bank, and such manager or other official shall cease to be so employed if:



(2) No person who has been a director or a chief executive officer of a bank which has been wound up by the court shall, without the express authority of the Commissioner, act or continue to act as a director or the chief executive officer of a licensed domestic bank. [P.L. 1987-9, §41.]

PART X - RESTRICTIONS


§142. Unsound or unsafe practices.


(1) Where the Commissioner is of the opinion that a licensed bank:




(2) A cease and desist order shall become effective thirty (30) days after the issuance of an order under Subsection (1) of this Section upon the licensed bank concerned, and shall remain effective except if and to the extent that the Cabinet decides otherwise, either before or after the effective date of the order. [P.L. 1987-9, §42.]


§143. Directions by the Commissioner.


The Commissioner may give directions to licensed banks, either to all or any category of licensed banks in particular as to the maximum amount of accommodation which, having regard to the paid-up capital, reserves and deposits of a licensed bank and other relevant considerations, may be made by specified classes of licensed banks to any one company, firm, association of persons or individuals, their close relations, or a corporation or firm in which the licensed bank has a substantial interest. [P.L. 1987-9, §43.]


§144. Maximum percentage of shares.


The Commissioner may, with the approval of the Cabinet, regulate the maximum percentage which may be held by way of shares in a licensed domestic bank incorporated in the Republic conducting local banking business, by a corporation or firm or individual or in the aggregate by an individual, his close relations and a corporation or firm in which his close relations have a substantial interest. [P.L. 1987-9, §44.]


§145. Accommodations.


(1) The provisions of this Section shall apply only to a bank incorporated in the Republic that is licensed to do local banking business.


(2) No licensed bank shall grant a sum by way of accommodation against the security of:


(a) its own shares; or


(b) shares of a corporation in which the bank has a substantial interest. [P.L. 1987-9, §45.]


§146. Business restrictions.


(1) Notwithstanding anything contained in any other written law or in any contract, no licensed domestic bank shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realization of security given to or held by it, or engage in any trade, or buy, sell or barter goods for others otherwise than in connection with bills of exchange received for collection or negotiation. This Subsection shall not apply to any such business as aforesaid which was in the course of being transacted at the commencement of this Chapter, provided that the said business shall be completed before the expiration of one year from such commencement.


(2) No licensed domestic bank may issue bearer certificates of deposit.


(3) Without the prior written approval of the Commissioner, no licensed bank incorporated in the Republic holding a domestic license may pledge any of its assets as security for or guarantee any obligations of others except for the issuance of its letters of credit in connection with the shipment of goods or letters of guarantee, bid bonds, performance bonds, or collateralization of deposits.

(4) No licensed bank incorporated in the Republic holding a domestic license shall purchase, acquire or lease real estate, except, as may be necessary for the purpose of conducting its business or housing its staff or providing amenities for its staff having regard to any reasonable requirements for future expansion of its business or staff; but in the event of a bank acquiring real estate in full or part satisfaction of a debt owing to it, the property shall be sold at the earliest suitable opportunity within a maximum period of one year or within such longer period as the Commissioner may allow in any particular case. [P.L. 1987-9, §46.]

§147. Payment of dividends on profits.


No licensed domestic bank shall pay any dividend on its shares until all its capitalized expenses including preliminary expenses and other items of expenditure not represented by tangible assets have been completely written off. [P.L. 198 7-9, §47.]


PART XI - GENERAL


§148. Issuance and transfer of capital stock.


(1) A domestic bank shall issue shares only to registered and named holders, who shall be the beneficial owners, and the articles of incorporation and by-laws shall not permit the issuance of shares in bearer form.

(2) If shares are issued in the name of a corporate body or a partnership, the names of the shareholders or subscribers to the stock of that corporate body, or partners in the partnership, shall be supplied with personal details as required in Section l08(l)(d) and (e) of this Chapter and shall be subject to such investigation as the Commissioner deems necessary.

(3) Without the prior approval of the Commissioner, no domestic bank shall agree to sell, transfer or dispose of its capital stock to any one person who, upon acquiring the stock, would hold in total more than ten percent (10%) of the stock issued by the bank. At the time of application for approval of the sale, transfer or disposition, documentation shall be submitted pursuant to Section 108(1)(d) and (e) of this Chapter. In special circumstances, where the sale, transfer or disposition does not affect the control of the bank, the Commissioner may, at his discretion, waive provisions of the said documentation. [P.L. 1987-9, §48.]

§149. Changes in corporate structure.


(1) Within two (2) months of a bank making changes in its articles of incorporation or by-laws, such changes shall be furnished to the Commissioner in the form of a copy of the resolution authorizing the charge, certified by a director and secretary of the bank

(2) In the case where any licensed domestic bank intends to change its name or the authorized capital, such bank shall obtain the prior written approval of the Commissioner for such change. [P.L. 1987-9, §49.]

§150. Minimum capital ratios.


In the case of a domestic bank conducting local banking business the Commissioner may, from time to time by order, prescribe the minimum ratios which the capital and surplus of banks shall bear to the total volume of their assets or liabilities or to any specified categories of such assets or liabilities. [P.L. 1987-9, §50.]


§151. Insurance of deposits.


(1) Every bank holding a domestic license shall insure all deposits held by the bank, and keep such deposits insured at all times, with the Federal Deposit Insurance Corporation of the United States, or in some other manner approved by the Commissioner as being equally as reliable. The amount of insurance shall be the maximum provided by the Federal Deposit Insurance Corporation to the banks.

(2) The Federal Deposit Insurance Corporation shall have the right to be subrogated to the rights of depositors in the case of a domestic bank being closed or wound up where depositors are insured by the Corporation.

(3) Notwithstanding Subsection (1), the Cabinet on the written recommendation of the Commissioner may, in the public interest, wave the requirement of deposit insurance. [P.L. 1987-9, §51; amended by P.L. 1995-128, §2.]


§152. Declaration of interest.


(1) Every director of a licensed domestic bank who is in any manner whatsoever, whether directly or indirectly, interested in any accommodation or proposed accommodation from the licensed bank shall, as soon as is practicable, declare the nature of his interest to its Board of Directors, and its secretary or manager shall cause the declaration to be circulated forthwith to all directors.

(2) A director shall not take part in any deliberation or decisions of the Board with regard to any business transacted or proposed to be transacted by a licensed domestic bank in which the director or a close relation of the director, or a concern in which the director has a substantial interest, is interested, and the director shall withdraw from the meeting of the Board at which such business is discussed or transacted while the deliberation is in progress or decision is being made. [P.L. 1987-9,s 52.]

§153. Trust business.


A licensed bank may conduct trust business and act as a fiduciary, subject to the provisions of any Act relating to trust of fiduciary relationship which may be in force in the Republic at the time. [P.L. 1987-9, §53.]


§154. Secrecy.


(1) Except in the performance of his duties under this Chapter, every officer and employee of every licensed bank shall preserve and aid in preserving secrecy with regard to all matters relating to the affairs of the bank and of any clients of such bank that may come to his knowledge in the performance of his duties, and he shall, before entering upon his duties, sign a declaration pledging himself to observe strict secrecy with respect to such matters and not to reveal such matters except when required to do so:


(a) by a customer to whom such matters relate or by his personal representative;

(2) Except in the performance of his duties under this Chapter the Commissioner, and every officer or employee working under the Commissioner, shall preserve and aid in preserving secrecy with regard to all matters relating to the affairs of any licensed bank, or of any of its clients that may come to his knowledge in the course of his business.


(3) Every person who contravenes the provisions of Subsection (1) or (2) above shall be guilty of an offense and shall upon conviction be liable to a fine not exceeding $5,000. [P.L. 1987-9, §54.]


§155. Immunity.


Neither the Cabinet nor the Commissioner nor any of the officers or employees working under the Commissioner shall be subject to any action, claim or demand by or liability to any person with respect to anything done or omitted to be done in good faith in pursuance of, or in execution, or intended execution of, or in connection with the execution of, any power conferred upon the Cabinet or the Commissioner, or an officer or employee under the Commissioner by this Chapter.
[P.L. 1987-9, §55.]


§156. Regulations.


Notwithstanding the provisions of the Administrative Procedure Act 1979, 6 MIRC 1, the Commissioner may make regulations with respect to any matter affecting, or connected with, or incidental to, the proper carrying out of the provisions of this Chapter including, but not limited to, capital and liquidity adequacy, loan concentrations or other risk exposures and provisioning against doubtful credits, provided, however, the Commissioner shall, before the regulations are made, give adequate opportunity to the licensed banks to make representations on the intended regulations. [P.L. 1987-9, §56; amended by P.L. 1995-128, §2.]


§157. Liability of directors.


Where the person convicted of an offense under this Chapter is a body corporate, every person who at the time of the commission of the offense was a director or an officer of the body corporate shall be deemed to be guilty of that offense unless he proves that the offense was committed without his knowledge, or that he exercised all due diligence to avoid the commission of such offense. [P.L. 1987-9, §57]


§158. Failure to comply with the provisions of this Chapter.


Any person who, being a director or manager of a licensed bank who;


(a) fails to take reasonable steps to secure compliance by the bank with the requirements of this Chapter; or

[P.L. 1987-9, §58.]


§159. Willfully making false entries.


Any director, manager, trustee, auditor, employee or agent of any licensed bank who:


(a) willfully makes or causes to be made a false entry in any book or record or in any report, slip, document, or statement of the business, affairs, transactions, conditions, assets or liabilities or accounts of such bank;


§160. Declaration by the Commissioner.


Notwithstanding anything to the contrary in any other Section of this Chapter, the Commissioner may, by order, from time to time:


(a) declare any person to be engaged in the banking business or to be a bank for the purpose of this Chapter, in which case the relevant provisions of this Chapter as prescribed by the Commissioner shall apply to such person; or (b) make a declaration as under subsection (a) of this Section with respect to any agency of a licensed bank for the purposes of this Chapter. [P.L. 1987-9, §60; amended by P.L. 1995-128, §2.]


§161. Bank disclosure of interest and fees.


Each bank holding a domestic license shall:


(a) upon opening a savings account of whatever nature or issuing a certificate of deposit, inform the customer in simple and clear written language about the manner in which interest is calculated, the periods for which and the circumstances under which interest is and is not payable, the rate of interest, and the penalties and forfeitures, if any;



§162. Lending Requirements with respect to Domestic Deposits Received.


(1) Subject to the capital, reserve and liquidity requirements and lending restrictions contained in this Chapter, banks holding domestic license shall make available for lending purposes in the Republic at least seventy percent (70%) of outstanding deposits held by residents of the Republic.

(2) Banks holding a domestic license shall publish annually an audited financial statement showing deposits and loans outstanding, and the Commissioner shall monitor on a quarterly basis the ration of loans to deposits of banks holding a domestic license. [Added by P.L. 1993-59, §2; amended by P.L. 1994-75, §2]

§163. Reserved [added by P.L. 1994-85,§2, former Section 163 "M inimum Term for Certain Loans and Credit Facilities" was repealed by P.L. 1994-75, §3 on 27 April 1998.]


PART XII - PENALTIES AND EXCEPTIONS


§164. Offenses relating to this Chapter.


(1) Every person who contravenes or fails to comply with any of the provisions of this Chapter or any rule, regulation, order, direction or requirement made or given under this Chapter shall be guilty of an offense and shall upon conviction be liable to a fine not exceeding $10,000.

(2) Every person who is guilty of an offense for which no punishment is prescribed in the preceding provisions, shall upon conviction be liable to a fine not exceeding $10,000.

(3) Any person who attempts to commit, or does any act preparatory to the commission of any offense under this Chapter, shall be deemed to be guilty of such offense.

(4) This section does not apply to Part XIII of this Act. [P.L. 1987-9, § 62.][(4) added by P.L. 2000-20, §2(C)]


§165. Exceptions.


The provisions of the Business Licenses Act 1983 shall not apply to banks licensed under this Chapter. [P.L. 1987-9, §63; note this section is now obsolete as the Business Licenses Act 1983, 20 MIRC 2, has been repealed.]


PART XIII – ANTI – MONEY LAUNDERING OFFENSES


§166. Money laundering offenses and penalties.


(1) A person commits the offense of money laundering if the person:

(i) the conversion or transfer of property, with the aim of concealing or disguising the illicit origin of that property, to evade the legal consequences thereof; and


(ii) concealing or disguising the true nature, origin, location, disposition, movement or ownership of the property.


(2) Nothing in this Act shall prevent a person that committed any other offense that generated the proceeds of crime from being convicted of an offense of money laundering in respect of those proceeds of crime.

(3) A person who attempts, facilitates, conspires, or aids and abets any other person to commit an offence of money laundering commits an offense and is liable on conviction to the penalties specified under this section.

(4) For the purpose of this section, when proving that property is the proceeds of crime, it is not necessary that a person is convicted of the serious offence that generated the proceeds of crime.

(5) For the purposes of this section, it is not necessary that the serious offense that generated the proceeds of crime was committed within the Marshall Islands.

(6) Where a person is convicted of any of the offenses specified under this Section, in the case of a natural person, such person shall be liable to imprisonment for a term of imprisonment not exceeding twenty (20) years or a fine not exceeding $ 2,000,000, or both, and in the case of a body corporate five (5) times such a fine or double the amount of money involved in the offense scheme, whichever is greater.[Section 166 amended by P.L. 2011-57]

§167. Commissioner's authority in prohibiting money laundering activity.


(1) The Commissioner, amongst other duties:

(a) shall receive, analyze, and disseminate reports of transactions issued by financial institutions or cash dealers pursuant to Section 170 and Section 170A of this Act.


(b)shall send any such report to the appropriate law enforcement authorities, if there are reasonable grounds to suspect that the transaction is suspicious;


(c) may enter the premises of any financial institution or cash dealer during ordinary business hours to inspect any record and ask any question relating to such record, make notes and take copies of the whole or any part of the record;








(m)shall have the authority and ability to obtain information under this Section notwithstanding any secrecy or other restrictions on disclosure of information imposed by this Act; and


(n) shall conduct, in association with law enforcement authorities, investigations into the proceeds of crime, money laundering, and or the financing of terrorism, only where the Commissioner has reasonable grounds to suspect money the proceeds of crime, money laundering activity, and or the financing of terrorism is occurring.

§168. Financial institutions and cash dealers to verify customers identity.


(1) A financial institution or cash dealer shall maintain accounts in the name of the account holder. They shall not open or keep anonymous accounts or accounts which are in fictitious or incorrect names.

(2) A financial institution or cash dealer shall record and verify the identity, representative capacity, domicile, legal capacity, occupation or business purpose of persons, as well as other identifying information on those persons, whether they be occasional or usual clients, through the use of documents providing convincing evidence of their legal existence and the powers of their legal representative, or any other official or private documents, especially when opening new accounts or passbooks, entering into fiduciary transactions, renting of safe deposit boxes, or performing cash transactions over an amount pursuant to the requirement outlined in paragraph 1 of Section 170 (1) of the Act.

(3) If it appears to a financial institution or cash dealer that an applicant requesting it to enter into any transaction, whether or not in the course of a continuing business relationship, is acting on behalf of another person, the institution or cash dealer shall take reasonable measure to establish the true identity of any person on whose behalf or for whose ultimate benefit the applicant may be acting in the proposed transaction, whether as trustee, nominee, agent or otherwise.

(4) Nothing in this Section shall require the production of any evidence of identity where:

(b) there is a transaction or a series of transactions taking place in which the applicant has already produced satisfactory evidence of identity. [Subsection (2) and paragraph (4) (b)amended by P.L. 2002-59]


§169. Financial institutions and cash dealers to establish and maintain customer records.


(1) Every financial institution or cash dealer shall retain records for all transactions. These records shall be kept in a readily recoverable form.

(2) Financial institutions and cash dealers shall maintain records on customer identification, account files and business correspondence for six (6) years after the account has been closed, and all records necessary to reconstruct financial transactions for six (6) years after the conclusion of the transactions.

(3) Records regarding financial transactions shall contain particulars sufficient to identify the following:










§170. Financial institutions and cash dealers to report suspicious transactions.


(1) Financial institutions and cash dealers shall, within 3 days of the transaction, report to the Commissioner all suspicious transactions, including but no limited to those which are ten thousand dollars ($10,000) or more or multiple transactions which, altogether, exceed ten thousand dollars ($10,000) if they are undertaken by or on behalf of any one person during any twenty-four hour period or, complex or unusual transactions, whether completed or not, and all unusual patterns of transactions, and otherwise significant but periodic transactions, which have no apparent economic or lawful purpose. The Commissioner may provide additional information or criteria to be used in identifying suspicious transactions under this subsection.

(2) A financial institution or cash dealer which has reported a suspicious transaction in accordance with this Section shall, if requested to do so by the Commissioner or Attorney-General, give such further information as it has in relation to the transaction.

(3) The Commissioner, Attorney-General, financial institutions and cash dealers shall maintain reports required by this Section for a period of fifteen (15) years.

(4) Financial institutions and cash dealers, its employees, officers or directors, shall not notify any person or entity other than the Commissioner or Attorney-General, a court of competent jurisdiction upon process issued, or other person as may be authorized by law, of the information, record, or report that has been prepared, or otherwise referred or furnished to the Commissioner, Attorney-General or court of competent jurisdiction, or other lawfully authorized person. Any person or financial institution or cash dealer who improperly discloses such information commits an offense, punishable by a fine of not more than $2,000,000.00 or imprisonment for not more that 20 years, or both.

§170A. Reporting of suspicious transactions and activities related to terrorist financing.


(1) Financial Institutions and cash dealers must report any transaction, attempted transaction or other activity where they suspect or have reasonable grounds to suspect that the transaction, attempted transaction or other activity may be related to terrorism, terrorist acts, a terrorist organization, an individual terrorist, terrorist property or financing of terrorism.

(2) All suspicious transactions, attempted transactions and other activities that may be related to terrorism, terrorist acts, a terrorist organization, an individual terrorist, terrorist property or financing of terrorism must be reported regardless of the amount involved in the transaction, attempted transaction or activity.

(3) Such suspicion must be reported in writing to the Banking Commissioner as soon as reasonably practicable and in any event within three days of the forming of such suspicion.

(4) A financial institution or cash dealer, its employees, officers or directors willfully violating the requirements of this section commits an offence punishable by a fine of not more than $2,000,000 or imprisonment for not more than twenty (20) years, or both.

(5) Where a person is employed by a financial institution or cash dealer and his or her employer has an established procedure for the reporting of suspicious, it is a defense for him to prove that he reported his suspicion in accordance with that procedure.

(6) For the purposes of this section the "financing of terrorism" shall have the same meaning as financing of terrorism prohibited in §120 of Counter Terrorism Act (15 MIRC Ch.1). [§170A added by P.L.2009-20].


§171. Seizure and detention of suspicious imports or exports of currency.


(1) The Commissioner or Attorney-General may seize and, in accordance with this Section detain, any currency which is being imported into or exported from the Republic of the Marshall Islands, if:




(2) Currency detained under Subsection (1) of this Section shall not be detained for more than twenty-four (24) hours after seizure, unless a judge orders its continued detention for a period not exceeding three (3) months from the date of seizure, upon being satisfied that:





(3) A judge may subsequently order continued detention of the currency if satisfied of the matters mentioned in Subsection (2) of this Section, but the total period of detention shall not exceed two (2) years from the date of the order made under that Subsection.

(4) Subject to Subsection (5) of this Section, currency detained under this Section may be released in whole or in part to the person on whose behalf it was imported or exported:



(5) No currency detained under this Section shall be released where:



§172. Application for confiscation order.


(1)Where a person is convicted of a serious offense, the Commissioner or Attorney-General may, not later than six (6) months after the conviction, apply to the High Court for the following order:


(a) a confiscation order against property that is tainted property in respect of the offense.


(2) An application under Subsection (1) may be made in respect of one or more than one offense.

(3) Where an application under this Section is finally determined, no further application for a confiscation order may be made in respect of the offense for which the person was convicted without the leave of the High Court. The High Court shall not give such leave unless it is satisfied that:

(c) it is in the interest of justice that the new application be made.


§173. Notice of application.


(1) Where the Commissioner or Attorney-General applies for a confiscation order against property in respect of the person's conviction of a serious offense:


(a) the Commissioner or Attorney-General must give no less than fourteen (14) days written notice of the application to the person and to any other person who the Commissioner or Attorney-General has reason to believe may have an interest in the property;

(i) give notice of the application to any person who, in the opinion of the High Court, appears to have an interest in the property;


(ii) publish in a newspaper published and circulating in the Marshall Islands, a notice of the application.


§174. Confiscation order on conviction.


(1) Where upon application by the Commissioner or Attorney-General, the High Court is satisfied that property is tainted property in respect of a serious offense of which a person has been convicted, or a person charged who dies or absconds, the High Court may order that specified property be confiscated.

(2) In determining whether property is tainted property the High Court may infer, in the absence of evidence to the contrary:


(3) Where the High Court orders that property, other than money, be confiscated, the High Court shall specify in the order the amount that it considers to be the value of the property at the time when the order is made.

(4) In considering whether a confiscation order should be made under Subsection (1) of this Section, the High Court shall have regard to:





(5) Where the High Court makes a confiscation order, the High Court may give such directions as are necessary or convenient for giving effect to the order.

§175. Effect of confiscation order.


(1) Subject to Subsection (2) of this Section, where a Court makes a confiscation order against any property, the property vests absolutely in the Republic of the Marshall Islands by virtue of the order.


(2) Where property ordered to be confiscated is registered property:



(c) the Commissioner or Attorney-General has power on behalf of the Republic of the Marshall Islands to do or authorize the doing of anything necessary or convenient to obtain the registration of the Republic of the Marshall Islands as owner, including the execution of any instrument to be executed by a person transferring an interest in property of that kind.

(3) Where the High Court makes a confiscation order against property:

§176. Payment instead of a confiscation order.


(1) Where the High Court is satisfied that a confiscation order should be made in respect of the property of a person convicted of a serious offense, but that the property or any part thereof or interest therein cannot be made subject to such an order and, in particular:


(a) cannot, on the exercise of due diligence be located;


(b) has been transferred to a third party in circumstances which do not give rise to a reasonable inference that the title or interest was transferred for the purpose of avoiding the confiscation of the property;


(c) is located outside of the Marshall Islands;


(d) has been substantially diminished in value or rendered worthless; or

§177. Application of procedure for enforcing fines.


(1) Where the High Court orders a person to pay an amount under Section 176, that amount shall be treated as if it were a fine imposed upon him or her in respect of a conviction for a serious offense, and the High Court shall:


(a) Where a person is convicted of any of the offenses specified in Subsection (1), in the case of a natural person, such person shall be liable to imprisonment for a term of imprisonment not exceeding twenty (20) years or a fine not exceeding $2,000,000, or both, and in the case of a body corporate five (5) times such a fine or double the amount of money involved in the offense scheme, which ever is greater.

§178. Immunity where suspicious transaction reported.


No action, suit or other proceedings shall lie against any financial institution or cash dealer, or any officer, employee or other representative of the institution acting in the ordinary course of the person's employment or representation, in relation to any action taken in good faith by that institution or person pursuant to this Act.


§179. Immunity where official powers or functions exercised in good faith.


No suit, prosecution or other legal proceedings shall lie against the Government, or any officer or other person in respect of anything done by or on behalf of that person, with due diligence and in good faith, in the exercise of any power or the performance of any function under this Act or any rule of order made thereunder. [P.L. 2000-20]


§180. Currency Transaction Reports


The Commissioner of Banking may prescribe a regulation that requires a financial institution or cash dealer involved in a transaction for the payment, receipt or transfer of currency to file a report on the transaction with the Commissioner's office and collect and maintain supporting documentation pertaining to such transaction. The requirements for a when a currency transaction report must be filed may include, but are not limited to, a currency transaction that exceeds $10,000 or involves multiple transactions, taken by or on behalf of a single person within a 24 hour period and, when aggregated, exceeds $10,000. The Commissioner of Banking may also prescribe under the regulation the right to exempt certain transactions, including a class of transactions, from the filing requirement by the use and maintenance of an exemption registry by financial institutions and cash dealers. The Commissioner has the authority to revoke any exemption granted under the regulation. [P.L. 2002-59]


§181. Assessment of Civil Money Penalties


(1) In addition to any criminal penalties or fines authorized by Part XIII of the Banking Act, 1987, each financial institution and cash dealer, and any partner, director, officer, employee, or person participating in the conduct of the affairs of the financial institution or cash dealer who violates any provision of Part XIII, or any regulation promulgated by the Banking Commissioner implementing any provision of Part XIII shall be liable for a civil money penalty of not more than $10,000 per violation.

(2) Collection: The Banking Commissioner shall refer all violations under subsection (1) above to the office of the Attorney-General for enforcement proceedings in the High Court of the Republic of the Marshall Islands; and


(a) all monies collected under the authority of this paragraph shall be deposited into the Treasury of the Republic.


(3) Theresignation, termination of employment or termination of participation in the affairs of any partner, director, officer, employee, or person participating in the conduct of the affairs of a financial institution or cash dealer shall not affect the jurisdiction of the court to issue judgement against such person or entity within six years of their resignation, termination of employment or termination of participation in the affairs of the financial institution or cash dealer.

(4) The Banking Commissioner may prescribe regulations establishing criteria and procedures not inconsistent with these provisions as may be necessary to carry out the provisions of this Part XIII. [P.L. 2002-59][sections 66 to 82 re-numbered to conform with style and format of the Code. Subsection (4) herein was incorrectly numbered as (5) in P.L. 2002-59]

§182. Effective Date


This Chapter shall take effect in accordance with Article VI, Section 21 of the Constitution. [Sections 166 -183 re-numbered to accommodate new provisions and to conform to new Code format P.L. 2002-59[Rev2003]


[1] [correct citation inserted Rev2003]

[2] [Correct citation inserted by Revisor[Rev2003]
[3] The text in brackets was contained in the electronic version of P.L. 1995-128, it is not contained in the paper version that was certified. This appears to be because of a printing error in producing the certified copy.


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