Watchdogs or Obstacles?
“Consumers and entrepreneurs know that their cash flow is being checked on all sides. If it’s not the government or the tax office, a bank will be checking their accounting. But who controls the government and financial institutions? And do they offer the consumer and the entrepreneur any protection?”
Money, it’s a crime. Share it fairly, but don’t take a slice of my pie,” the English band, Pink Floyd, sang in the seventies. Everything in a capitalist state is about money. And because it can go terribly wrong with money as a foundation of the economy, there is a need to control the authorities. And so it is here in the Caribbean part of the Kingdom of the Netherlands. Aruba, Curacao, and St. Maarten know everything about it. On Curacao and St. Maarten, the College financieel toezicht (Cft) Curaçao en St. Maarten, together with the Central Bank of Curacao and St. Maarten, supervise the government’s finances. Aruba has struggled for decades with high indebtedness and major government deficits and has long been known for withdrawing from too much intervention and control of Dutch government bodies, but came round after a “directive” in 2014.
Since 2015, the College Aruba financieel toezicht supervises the state treasury, in collaboration with the other Cft’s, a situation that, as agreed,
will be revised in 2018.
Healthy public Finances
The BES islands, which account for around 200 million euros of the budget of the Dutch government each year, are under the supervision of Cft Bonaire, St. Eustatius en Saba. For convenience, this Cft consists of some of the same members appointed by the Dutch government as Cft Curaçao en St. Maarten. These Cft’s are focused on “realizing the common purpose of all governments within the Kingdom of the Netherlands” which is to achieve sustainable and healthy public finances. For this reason, entrepreneurs and consumers are of the utmost importance. They generate the money streams. They are the customers of companies working with money as the main product, such as the banks that lend money and the insurance companies that insure for loss of money. There is a simple danger in this familiar model. If the hunger for money exceeds the interests of the consumer or entrepreneur, it can go wrong, very wrong. A good example is the Dutch “usury policy affair” in 2006. Many investment and life insurance companies proved to be obscure, bringing high costs to consumers and yielding much less than was anticipated. The banks and insurers earned tons of money, while the advisors got payed high premiums.
Solvency and Integrity
The authority that revealed this affair is the Autoriteit Financiële Markten (AFM). Since 2002, it has been responsible for the supervision of companies and persons engaged in financial products, such as savings, investments, insurance, loans, and asset management. These are activities that require a license, also in the Caribbean Netherlands. The AFM is, in its own words, an independent company. It takes the necessary funds from the contributions of the licensees and since 2014, has also had its own Pension Fund which makes the organization not only the supervisor but also a player in the financial market. But this aside, the AFM may independently issue warnings and “directives”, impose fines and report to the Prosecution. The AFM cooperates with De Nederlandsche Bank (DNB), with DNB paying particular attention to the solvency of financial companies and the AFM to their behavior, also in the Caribbean Netherlands. On the BES Islands, the AFM and DNB are directly responsible for the supervision of advisors, mediators, authorized agents, credit providers, investment advisers, securities brokers, asset managers and investment institutions. It is not only the integrity of the providers, but also possible misleading information in brochures and advertisements that has their attention. Guidelines and touchstones are always the Dutch Law in the financial markets on the BES.
Foreign
In the other parts of the kingdom, the AFM is active through partnerships, as with the Central Bank of Aruba. This is convenient, as various financial institutions have branches on various islands. Yet the question remains, what can AFM and DNB mean for the consumer and the entrepreneurs on Bonaire and Aruba, because there is much to be improved. “For Dutch institutions, Bonaire is still foreign”, is a common complaint among business owners. When a Bonairean consumer or entrepreneur contacts the Dutch tax office, he needs to contact the “foreign” department. And when he wants to exchange US dollars for euros with a regular bank in the Netherlands, he returns empty-handed. “Bonaire is Dutch territory”, a business owner says not understanding. “And DNB initiated the dollar as a legal tender on this Dutch territory.” And there is more. How can big Dutch banks like ING and Rabobank freely provide mortgages to Dutch coffee shops, where the sale of weed is more than the law allows, while a Bonairean or Aruban entrepreneur can’t pay an online order at a Dutch company with his credit card from a very solvable local bank? Or has to deal with much higher bank charges than initially stated? And there is also the fact that, being consumers and business owners, they twice have to fill out huge questionnaires about the origin of their money because a bank is checked by AFM for any malicious cash flows.
For the interests of the consumer?
What can the AFM and DNB mean to consumers and business owners, especially in the Caribbean Netherlands? An answer to that is not easy to find. AFM points out that companies in the Caribbean Netherlands that provide credit in the form of purchase on payment, must ask for a paid-up license with that same AFM or DNB, but it does not care when you, as a consumer or business owner, ask for an explanation or want to point out issues. Now it seems that supervision of the financial infrastructure is mainly motivated by what is good for themselves, and is ultimately a model for earning extra money. And that gives rise to dissatisfaction by both consumers and entrepreneurs. The AFM says that the interests of the consumer are of utmost importance to them. That is beautiful, but it would be even more beautiful if the interests of the consumer and entrepreneur, who is in fact a consumer, are more closely guarded and considered in the framework of Caribbean laws, rules, and habits.