FSM Banking Board General Guidelines

FMBB General Guidelines
Pursuant to title 29 of the code of the Federated States of Micronesia, the authority to engage in "banking business" as defined therein is vested with the FSM Banking Board or Commission. The Banking Board or Commission considers banking business to be very near to the passing of public trust to the organizer(s) of a bank applicant.

The process of organizing a bank can be rigorous and takes considerable time, energy, money and resources, not only on the part of the organizer(s) but also on the part of the FSM Banking Board or Commission. The process and various requirements can stress both organization and planning so to ensure the resulting bank is fundamentally strong, sound and safe during the initial stage of its existence and remains strong, sound, safe and healthy, going forward.

In addition to safety, soundness, health, among others, the fitness and propriety of applicant, persons associated with applicant, regulated bank, and person who occupies a position of influence is important and a prerequisite. Influence person include, for example, shareholders who exercise a certain level of voting power, chief executives, managing directors, directors, managers, among others.

The FSM Banking Board has to be satisfied that the applicant is fit and proper before the applicant is allowed to carry on banking business in the FSM. Particularly for banking business, the fit and proper, sound, safe and stability standards are a high one for protecting public interest. Therefore, if the FSM Banking Board or Commission is left with a substantial doubt as to the fitness and propriety, soundness, safety, healthy and stability, the correct course would be for the applicant not to be approved.


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