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Financial Services Unit Act

Financial Services Unit Act

The Financial Services Unit Act, enacted in 2008, is the primary legislation establishing the Financial Services Unit (FSU) within Dominica’s Ministry of Finance. This law empowers the FSU to regulate the non-bank financial sector, including offshore banks, credit unions, insurance companies, money service businesses, and gaming companies, to maintain sector integrity and curb financial crimes.

Establishing the Authority and Structure

Section 3 of the Act officially creates the FSU and names the Director as its chief administrative officer. The Director and staff are granted the power to supervise and enforce compliance with all financial services legislation under the FSU’s mandate. The Unit operates under the oversight of the Ministry and is structurally independent from the Eastern Caribbean Central Bank (ECCB), which regulates commercial banks.

Mandate and Powers

Under Sections 5 to 9, the Act empowers the FSU to:

  • License financial entities and maintain a registry of overseen institutions
  • Conduct on-site examinations and monitor compliance with the Money Laundering (Prevention) Act 2011 and Terrorism Financing law.
  • Investigate unsanctioned financial activity and enforce licensing requirements
  • Issue directives, administrative penalties, or revoke licenses for non-compliant entities
  • Maintain the offshore registry and advise the Minister on needed legislative reforms.

These powers reinforce the Act’s overarching goal: to elevate Dominica’s non-bank financial sector to internationally accepted regulatory standards.

Role in Anti-Money Laundering (AML)

Crucially, Section 7 designates the FSU as the Money Laundering Supervisory Authority, making it responsible for ensuring that regulated entities follow AML and counter-terrorism financing (CFT) policies, including suspicious activity reporting. The FSU also chairs the Anti-Money Laundering Advisory Committee, which includes senior officials from police, customs, and the Financial Intelligence Unit (FIU).

Enforcement, Sanctions & Appeals

Sections 11–13 enable the FSU to impose sanctions including warnings, fines up to EC$5,000, and the suspension or revocation of licenses. These actions may target non-compliance, criminal conduct, or violations of FSU directives. Affected parties are granted the right to appeal administrative decisions in court.

Oversight and Interagency Coordination

The Act mandates that the FSU collaborate with domestic and international regulators, including the Financial Intelligence Unit, ECCB, and foreign financial authorities. It also includes measures for staff protection when actions are taken in good faith.

Outcomes and Recognition

Since its enactment, the FSU has emerged as a leading regulator in the region. In November 2024, it received the Financial Services Regulatory Authority of the Year – Caribbean award from Wealth & Finance International. The accolade acknowledges its strong enforcement of AML/CFT standards and contribution to market stability.

Overall, the Financial Services Unit Act provides Dominica with a robust, transparent, and enforceable framework to supervise non-bank financial activities and combat financial crime, reinforcing the country’s reputation as a secure financial jurisdiction.