FIC Clarifies its role in response to EIP inquiries

Financial Institutions Commission issued a statement yesterday to clarify its roles and responsibilities under the law in response to letters from both Minister of Finance Elbuchel Sadang and Chairman of House Ways & Means Committee Jonathan “CIO” Isechal regarding the issue of individual accounts at Bank of Guam, frozen after receiving the Economic Impact Payment from IRS.
A letter from FIC Commissioner Semdiu Decherong yesterday stressed that the primary role of FIC is to “ensure the liquidity and solvency of financial institutions in the Republic of Palau. This means the FIC works to ensure that a bank, on overall basis, is secure in its financial condition, has enough funds on hand to pay depositors when they demand their funds and ensures that the banks have enough of their own funds or capital to withstand actual or potential losses.”
It adds, “With respect to the recent matter relating to Economic Impact Payments made available through US Cares Act and FAS citizens residing in or outside of United States, the FIC has no jurisdiction to instruct or otherwise advise on the way the banks handle these funds, which Palau residents with US Social Security numbers have opted to apply for and have received through their banks.”
Minister of Finance Elbuchel Sadang, in his June 26th letter to FIC Commissioner Decherong regarding the US Economic Impact Payments, said that the banks in Palau that received EIP payments for individual account holders, should not use the press release from the Ministry of State regarding the EIP as basis for bank’s official action.
Bank of Guam had frozen the accounts of some of its customers that have received the economic impact payments from US IRS, citing Palau’s Ministry of State’s press release which had earlier warned Palauans in Palau not file for EIP saying they were not eligible.
Minister Sadang in a letter to FIC said that financial institutions in Palau be advised that any official request for action on EIPs would come from United States and not from Palau.
Following up Minister Sadang’s letter, Delegate Jonathan Isechal, Chairman of House Ways & Means Committee, wrote Minister Sadang this week inquiring about the FIC’s response or other sources regarding the EIP payments and the frozen accounts.
Delegate Isechal inquired in his letter if there has been any official communication from the US Embassy in Palau stating that the EIP were “received in error and whether the rules for EIP include eligibility and return of funds if they were received in error.” He stated that Bank of Guam “is maintaining the actions it took in response to receipt of EIPs on many of our citizens’ accounts.”
Delegate Isechal, Chairman of House Ways & Means, in an interview with Island Times said he will pursue the matter to find out why and on what basis were these citizens’ accounts frozen?
FIC responded, it “has not and will not instruct any licensed bank on how to evaluate “non proceeds of crime” transactions that been processed through a bank and are proceeds from a US economic aid or stimulus package made available through US Federal Government laws.”