## tarea2026048 ## Source details **Canonical URL:** [tarea2026048](https://www.imf.org/-/media/files/publications/tar/2026/english/tarea2026048.pdf) ## Other formats - [Markdown version](/-/media/files/publications/tar/2026/english/tarea2026048.pdf.md) - [Structured JSON version](/-/media/files/publications/tar/2026/english/tarea2026048.pdf.json) --- ### Preface and mission scope - TA mission visited Majuro, Marshall Islands from March 23 to April 2, 2026, at the request of RMI authorities to assist in establishment of a Monetary Authority and implement payments and banking systems. - Principal meetings: - Minister of Finance Mr. David Paul; Acting Secretary Ms. Deeann K. Reimers. - Chairman of the Board and Governor Mr. Sultan Korean; independent Board members Mr. Leo Seewald, Dr. Gerd-Peter Dittus, Ms. Lindsay Motil Timarong. - Representatives of three banks: Bank of Guam; Bank of Marshall Islands; Pacific Regional Bank. - Use of AI-enabled tools: report prepared with AI-enabled tools for grammar, text editing, drafting support, and preliminary qualitative synthesis; no data-driven ML methods applied; no personal/confidential data used to train AI models. ### Executive Summary — mission objectives and sequencing - Mission timing and purpose: - TA mission visited Majuro from March 23 to April 2, 2026 to advise on operationalizing the recently established MIMA. - Focus: establish key functions, set up a risk management framework (RMF), financial reporting, and internal governance arrangements. - Prior engagement: March 2023 mission developed a conceptual model and draft bill; March 23–April 2, 2026 mission elaborated components to make MIMA operational. - Organizational strategy: - Adopt a comprehensive and holistic strategy implemented in phases. - Priority: establish the Banking Operations Department (BOD) first to deliver reliable and efficient payment services and products to financial market participants, government entities, SOEs, and households. - Statutory capital and currency: - Part VIII of the MIMA Act provides for an initial statutory capital injection of USD 20 million (in equity) under Section 447(1). - An initial USD 1 million has been made available. - The Marshall Islands uses USD as its official currency under Section 443(1). ### Key organizational design and staffing (BOD focus) - BOD composition (three divisions): - Payment Operations Division (POD): operate the integrated payment and clearing system (ICPS), covering large-value and retail transactions. - Banking and Treasury Division (BTD): provide banking services to government bodies, financial institutions, and public entities; manage cash flow and debt administration; operate a central securities depository (CSD) for government debt instruments; manage currency circulation. - Foreign Exchange Reserve Management Division (FRMD): administer RMI’s official foreign currency holdings. - Staffing estimates and IT: - BOD: 18 staff members would be needed to manage the department. - Payment Oversight and Policy Division (OVD): 5 staff members (figure excludes IT specialists). - IT specialists for central banking system, integrated payment system, and reserve management system not included in staffing figures; recommendation to outsource IT functions to an external provider. - Executive manager — BOD: - Responsibilities: operate critical financial infrastructure (payment, clearing and settlement systems, cash and debt management, foreign reserves management, currency operations); lead selection/deployment of core banking and integrated payment systems; develop internal procedures; assist Governor in recruitment and staff development; ensure compliance. - Qualifications: minimum bachelor’s degree (preferably master’s) in economics/finance/banking or related; 7–10 years managerial experience with at least 3–5 years in senior management; strong central bank operations experience and regulatory knowledge (AML/KYC). ### Integrated Payment and Clearing System (IPCS) — design, phasing, and features - Current payments landscape (exact figures preserved): - Average of 35,270 checks settled each month, corresponding to about USD 68.7 million in 2025. - Approximately 370 point-of-sale (POS) terminals across the 29 inhabited atolls and five islands. - Monthly POS transactions average 67,300 in volume and USD 4.5 million in value. - Debit card payments average 60,000 transactions per month, amounting to USD 3.9 million. - Credit cards are seldom issued or utilized. - Population of RMI is roughly 40,100. - GDP per capita of USD 6,800 based on 2025 nominal prices. - Universal Basic Income (UBI) program distributed payments to over 33,000 residents as digital cash payments in 2025. - Remittances amounting to USD 36.4 million in 2025. - Transaction costs for remittances range between 10 percent and 12 percent of the transferred amount. - IPCS recommendations and phasing: - Develop and operate an IPCS consolidating RTGS, ACH, and IPS into a single platform to enhance safety, cost efficiency, and interoperability. - Phased approach: - Initial focus: enable electronic clearing for wire transfers and check payments; require all payment transfer instructions processed digitally, including checks (check truncation). - Settlements via accounts managed by MIMA for banks, government entities, and other stakeholders. - Activate RTGS when large-value transactions increase considerably. - After ACH and RTGS operate smoothly, assess IPS functionality based on business evaluation. - RTGS key features: - Immediate and final settlement; high security (tokenization, encryption, two-factor authentication); CPMI-IOSCO PFMI and ISO 20022 compliance; modular, event-driven architecture; liquidity management, queuing and gridlock resolution. - ACH key features: - Batch processing for large volumes of low-value retail payments; prefunding or collateralization options; operational rules and risk management for credit, fraud, operational, and compliance risks. - IPS key features: - Instant, continuous 24/7 payments with near-instant settlement; multiple initiation platforms; supports P2P, P2M, B2B, B2G, G2P; requires advanced real-time fraud detection and interoperability with RTGS/ACH. ### Governance, board composition, and oversight - Legal and board recommendations: - MIMA’s Act provides governance guidance; recommend amending Section 413(2) to include the Deputy Governor on the Board. - Board responsibilities: approve budgets and financial statements, appoint senior executives and auditors, oversee risk management, compliance, IT security, and internal controls. - Recommend establishing Board Committees with clear Terms of Reference (TOR): Audit Committee (AC), Human Resources Compensation and Nominations Committee (HRCNC), Project and Investment Committee. - Appoint a Board Secretary and prepare a Board Governance Manual; Secretariat to manage agenda, minutes, and self-assessments. - Note: MIMA indicated it expects to table amendments to the Monetary Authority Act in August 2026. ### Internal controls, audit, and financial reporting - Internal controls and audit functions: - Implement robust internal control framework: key controls, Delegation of Authority, documented processes. - External audit: procure and contract a qualified audit firm promptly; audits to follow International Standards on Auditing and target an unqualified opinion. - Internal audit: adopt a hybrid model — appoint Chief Internal Auditor (CIA) in-house to manage an outsourced internal audit service provider; CIA reports administratively to Governor and functionally to AC. - Internal Audit deliverables: Internal Audit Manual, Audit Universe, risk taxonomy, three-year risk-based Audit Plan, quarterly reporting to AC. - Accounting and financial management: - Adopt International Financial Reporting Standards (IFRS) from the outset; amendment to the MIMA Act required for IFRS adoption (Part IV Section 414(o); Sections 449 and 452 referenced). - Interim arrangements: MOU with MOF for interim payroll, accounting, asset management and procurement of temporary accounting software. - Prepare accounting manual, segregation of duties, structured budget processes including a five-year financial plan and a budgetary reserve (a budgetary reserve of five percent of the budget suggested as not unreasonable in the first year). - Financial management specifics: - Distinguish start-up vs ongoing expenditures; capitalizable vs non-capitalizable; consider excluding interest revenue and other policy-related cash inflows from the budgeting process via amendment to Section 452. - Initial fiscal 2027 budget including a 5-year forecast to be finalized and approved — Near-term. ### Risk management, compliance, and business continuity - Risk Management Framework (RMF): - Implement a central risk register capturing likelihood, impact, mitigation status; assign risk owners; set review timelines. - Consider ISO 31000 or COSO methodologies; align BCM with ISO 22301 principles. - Integrate Business Continuity Plans (BCP), Crisis Management Plans (CMP), and Disaster Recovery Plans (DRP); maintain CRO independence from development of these plans. - CRO role: define risk appetite, escalate critical threats, submit formal Statement of Risk opinion to AC; bi-annual reporting to AC. - Compliance and ethics: - Establish Compliance Framework grounded in BIS definition of compliance risk. - AC to approve compliance policy and review effectiveness at least annually. - Implement Code of Ethics, Conflict of Interest Policy, Whistleblower Protection Policy, Financial Disclosure Policy, anti-corruption measures, and annual attestations. ### Payment Oversight and Policy Division (OVD) - Organizational placement and mandate: - OVD to be part of the Financial Prudential Department to separate IPCS operations from oversight and reduce perceived conflict of interest. - Responsibilities: develop oversight and policy framework, issue regulations, license payment systems and electronic money providers, conduct off-site and on-site examinations. - Staffing recommendation: - Personnel with legal, accounting, and economic expertise. - Division organized into two teams: - Oversight Team: two staff for regulation and oversight of RTGS, ACH, IPS and e-money providers. - Policy Team: two staff for policy promoting innovation, digitalization, and financial inclusion. - Estimated staffing: 5 staff members (as noted in Executive Summary). ### National Payments Strategy (NPS) and National Payment Council (NPC) - NPS: - OVD to lead formulation of a comprehensive NPS to define objectives, timelines, and stakeholder engagement; scope includes infrastructure, legal/regulatory frameworks, retail payments, digitalization, high-volume payment streams, and oversight delineation. - NPC: - Proposed advisory body to engage stakeholders and guide MIMA on payment system strategy; may be established by decision of the Governor; membership to include commercial banks, card schemes, public agencies, and major market participants. - NPC objectives: advise on strategy, facilitate collaboration, support infrastructure development, promote innovation, digitalization, financial inclusion, and consumer confidence. - MIMA/POD to provide support (organize meetings, take minutes, submit documents). ### Information Technology (IT) and procurement - IT leadership and architecture: - Recruit Director, Information Technology reporting to EM‑CSD. - Develop enterprise architecture covering business, data, application, technology, and security domains. - Apply strict access controls, logging, and cybersecurity standards (ISO 27001, ITIL, TOGAF, NIST recommended). - Sourcing and hosting: - Determine balance of insourcing, outsourcing, co-sourcing; procure major applications via RFPs with well-defined business requirements. - Define hosting models (on-premises, off-premises, cloud, SaaS) guided by security, scalability, cost, and regulatory compliance. - Operational SLAs and targets: - Example operational targets: 24/7 availability; 99 percent uptime; rapid recovery times. - Adopt “configure, don’t customize” approach; institutionalize structured project management and supplier documentation. ### Communications, stakeholder engagement, and transparency - Communications strategy: - Assign accountability to Governance & External Liaison; appoint communications specialist and designate spokespersons (Board Chair / Governor and alternates). - Objectives: position MIMA as credible, transparent, and responsive; prioritize disclosure of legislative decisions, appointments, institutional objectives, and progress. - Multichannel outreach: traditional media, town halls, social media, digital platforms; start with MIMA website populated with key information. - Monitor feedback using “understanding metrics” and structured surveys; prepare crisis communication protocols. - Stakeholder engagement: - Target audiences: financial sector actors, MOF, government agencies, SOEs, business associations, advocacy groups, international donors, institutional investors. - Use consultations (NPC, Strategy Team) to build consensus on payment modernization and NPS. ### Recruitment, capacity building, and use of external expertise - Recruitment and timelines: - Rapid recruitment of senior staff critical; recommended recruitment to be initiated in May 2026 for priority positions (Corporate Services Executive Manager, Internal Auditor). - MIMA will operate with a staff complement of approximately 50 positions across specialized central banking, policy, and operational functions. - Appendix III: Executive Manager—Corporate Services Department (EM‑CSD) job description; Application Deadline: April 30, 2026. - Human capital strategy: - Develop competitive, market-aligned compensation and benefits plan with grading, differentiated pay for scarce expertise, and retention incentives. - Use workload-based staffing model; integrate capacity-building: targeted technical training, leadership development, mentoring, secondments, and internships. - External experts and IMF engagement: - Use external technical experts to bridge immediate skill gaps and provide knowledge transfer. - Continue IMF TA contingent on measurable progress; consider placement of a long‑term central banking expert subject to funding. ### Roadmap and implementation timing - Timing definitions: - Immediate: 0–3 months. - Near-term: 3–6 months. - Medium-term: 6–12 months. - Long-term: 12 months plus. - Selected near-term/immediate actions (excerpts): - Recruit executive manager to lead the BOD — Immediate. - Develop NPS — Near-term. - Prepare RFPs for central banking system and ICPS — Near-term. - Recruit Legal Counsel, EM‑CSD, Controller, Director HR, Director IT, CIA, Procurement Officer, Communications Specialist, Director Risk Management, Corporate Secretary — Immediate. - Agree MOU with MOF for interim administrative services — Immediate. - Select and issue contracts for External Audit Firm and outsourced Internal Audit services — Immediate. - Define IT Enterprise Architecture and initiate installation of IT infrastructure (HW/SW), security posture, networking applications, DRP frameworks — Near-term. - Roadmap timeline overview: - Activities scheduled across 2026, 2027, 2028, and 2029 by quarter (2026 Q2–Q4; 2027 Q1–Q4; 2028 Q1–Q4; 2029 Q1–Q4) covering Board committees, internal/external audit procurement and plans, Corporate Services establishment, accounting and IFRS adoption, HR, procurement, IT, risk management, compliance, communications, and monitoring. ### Audit Committee (AC), external audit, and internal audit governance - AC role and practices: - Provide Board independent assurance on internal controls, risk management, compliance, and financial reporting. - Meet quarterly minimum, plus one additional meeting with External Auditors; meet External Auditors at least twice per audit cycle. - Conduct annual self-assessments; maintain independence through private sessions when necessary. - External Audit: - Board to appoint qualified External Auditors per Sections 414(l)/(m) and Section 458; audits under International Standards on Auditing. - Aim for unqualified audit opinions; assess auditor independence and consider flexibility in tenure (Section 458(2) five-year rotation may be impractical—recommend legislative amendments or lead partner rotation). - Internal Audit: - Hybrid model recommended: CIA in-house with outsourced service provider. - CIA responsibilities: develop Internal Audit Manual, own Audit Universe, coordinate three-year risk-based Audit Plan, quarterly reporting to AC. - Outsourced provider independent of External Auditor; annual performance reviews of provider. ### Risk escalation, monitoring, and reporting - Risk Event Escalation Protocol: - Deploy risk indicators and dashboards linked to thresholds that trigger escalation. - CRO to submit formal Statement of Risk opinion to AC and bi-annual reports. - Monitoring tools: - Use dashboards and real-time indicators for detection and escalation; integrate IT controls and penetration testing; pair RMF with General Computing Controls (GCCs) and a Cybersecurity Strategy. - Governance implications: - RMF outputs to enable prioritized resource allocation by senior management and Board. ### Job description highlight — Executive Manager, Corporate Services Department (Appendix III) - Position overview: - Job Title: Executive Manager—Corporate Services Department, MIMA. - Location: Majuro, Republic of the Marshall Islands. - Opportunity: Executive Level, Full-Time 3-Year Contract. - Application Deadline: April 30, 2026. - MIMA staff complement: approximately 50 positions. - Role summary and leadership responsibilities: - Lead Corporate Services: Accounting, HR, IT, Procurement, Facilities & Asset Management. - Report to Governor; contribute to establishment of core MIMA functions. - Strategic financial stewardship, human capital leadership, IT leadership, procurement and contract management, facilities & asset management, organizational development & governance. - Candidate profile and terms: - Essential: Certified Public Accountant (CPA) or equivalent; Master’s or Bachelor’s in Accounting/Finance/Business Administration; minimum 10 years’ progressive experience with 5–7 years in senior leadership. - Terms and Benefits: competitive international remuneration, housing and vehicle allowance, health insurance, performance-based bonuses, professional development opportunities. - Application instructions: submit CV and cover letter to skorean@rmiobc.org, Sultan T. Korean, Governor, MIMA before April 30, 2026. *IMF | Marshall Islands Technical Assistance Report — tarea2026048* ### Preface ................................................................................................................ ### Preface ### Mission purpose and scope - At the request of the authorities of the Republic of Marshall Islands (RMI), a Monetary and Capital Markets (MCM) Department mission visited Majuro, Marshall Islands from March 23 to April 2, 2026, to assist the authorities in the establishment of a Monetary Authority through the institutionalization of good governance practices and the implementation of a payments and banking system. ### Principal meetings and stakeholders consulted - Met with Minister of Finance Mr. David Paul and Acting Secretary Ms. Deeann K. Reimers. - Met with the Chairman of the Board and Governor Mr. Sultan Korean, and the three independent Board members: - Mr. Leo Seewald - Dr. Gerd-Peter Dittus - Ms. Lindsay Motil Timarong - Discussed key payments and banking processes with representatives from the three banks that operate in the Republic of the Marshall Islands: - Bank of Guam - Bank of Marshall Islands - Pacific Regional Bank ### Acknowledgments - The Mission thanks all stakeholders for their cooperation and especially the Governor of the MIMA and his team for their insights into the establishment of the MIMA and their continuous hospitality. ### Use of AI-enabled tools - This report was prepared with the support of AI-enabled tools in accordance with IMF guidelines. The AI applications were used exclusively for functions such as grammar and text editing, drafting support, and preliminary qualitative synthesis. No data-driven machine learning methods were applied, and no personal or confidential data was used to train AI models. *IMF | Marshall Islands Technical Assistance Report | Preface* ### Executive Summary ### Executive Summary ### Mission purpose and timing - TA mission visited Majuro from March 23 to April 2, 2026, to advise on key steps to operationalize the recently established MIMA. - Mission focus: establishing key functions and tasks, and setting up a risk management framework (RMF), financial reporting, and internal governance arrangements to ensure effective operations and achievement of MIMA objectives. - Prior TA engagement: a mission visited Majuro in March 2023; the 2023 mission developed a conceptual model and draft bill. The follow-up mission in March 23–April 2, 2026 elaborated components to make MIMA operational. ### Organizational design and sequencing - Recommendation: adopt a comprehensive and holistic strategy for organizational structure, implemented in phases to align with core mandates and essential functions. - Priority: establish the Banking Operations Department (BOD) first, given MIMA’s immediate focus on delivering reliable and efficient payment services and products to financial market participants, government entities, state-owned enterprises (SOEs), and households. - BOD composition (three divisions): - Payment Operations Division (POD): operate the integrated payment and clearing system (ICPS), covering large-value and retail transactions. - Banking and Treasury Division (BTD): provide banking services to government bodies, financial institutions, and public entities; manage cash flow, debt administration; operate the central securities depository (CSD) for government debt instruments; manage currency circulation. - Foreign Exchange Reserve Management Division (FRMD): administer RMI’s official foreign currency holdings. - Detailed structure, responsibilities, and procedures for each BOD division are provided in the report. ### Staffing and IT support - Estimated staffing needs: - BOD: 18 staff members would be needed to manage the department. - Payment Oversight and Policy Division (OVD): 5 staff members (figure excludes IT specialists). - IT specialists for ongoing development and support of the three main systems (central banking system, integrated payment system, and reserve management system) are not included in the above staffing figures. - Recommendation: outsource IT functions to an external provider. ### National Payments Strategy and stakeholder engagement - MIMA should prioritize formulation of a comprehensive National Payments Strategy (NPS) to set and achieve goals within a specified period and build a common understanding among public authorities, market participants, and the public. - NPS acts as a framework for strategic objectives: inclusive payment policies, products and services to expand payment access for businesses, households, and the public sector, considering the RMI economy’s specific needs. - Recommendation: set up a consultation mechanism with banks and relevant stakeholders to discuss payment matters. - Recommendation: establish a Service Level Agreement (SLA) with the Ministry of Finance (MOF) outlining operational, financial, and reporting requirements for services (consolidated account management, cash handling, fiscal agency responsibilities). ### Integrated Payment and Clearing System (IPCS) - Current context: no centralized payment system in the RMI; three banks provide payment services, dominated by check payments; no e-money services provider. - Recommendation: develop and operate an IPCS consolidating RTGS, ACH, and IPS into a single platform to enhance safety, cost efficiency, and interoperability. - Phased approach recommended: - Initial focus: enable electronic clearing for wire transfers and check payments between banks, government bodies, SOEs, and related agencies. - Require all payment transfer instructions to be processed digitally, including checks. - Settlements via accounts managed by MIMA for banks, government entities, and other stakeholders. - Activate RTGS when large-value transactions increase considerably. - After ACH and RTGS operate smoothly, assess IPS functionality based on a business evaluation. - Report provides comprehensive analysis of IPCS key components. ### Governance, oversight, and legal framework - MIMA’s Act provides governance guidance; however, Board membership should include the Deputy Governor. - Priority actions: - Strengthen governance to ensure transparency, accountability, and strategic oversight. - Establish the Board and its Committees with clearly defined mandates and adopt Terms of Reference (TOR) for each committee. - Appoint a Board Secretary and develop a Board Governance Manual. - Where necessary, pursue amendments to the enabling Act to align legal foundation with operational and regulatory objectives. - Note: During the Mission, MIMA indicated it expects to table amendments to the Monetary Authority Act in August 2026. ### Internal controls, audit, and financial management - Implement a robust internal control framework to safeguard assets, ensure compliance, and promote operational efficiency: - Identify and embed key controls, formalize a Delegation of Authority, and document all functional and administrative processes. - Establish internal and external audit functions. - External audit: procure and contract a qualified audit firm promptly, with timelines for planning, execution, and reporting. - Internal audit: appoint a Chief Internal Auditor (CIA), develop an Internal Audit Manual, define a risk taxonomy, and agree a multi-year audit plan; regular reporting to the Audit Committee (AC). - Accounting and financial management: - Adopt International Financial Reporting Standards (IFRS) from the outset. - Interim arrangements: a Memorandum of Understanding (MOU) with the MOF and procurement of temporary accounting software to bridge capacity gaps. - Prepare an accounting manual, segregation of duties, structured budget processes including a five-year financial plan and budgetary reserves. - Define framework distinguishing start-up and ongoing expenditures and funding channels; conduct a capacity assessment to determine optimal mix of insourced and outsourced services. - Statutory capital and funding: - Part VIII of the MIMA Act provides for an initial statutory capital injection of USD 20 million (in equity) under Section 447(1). - An initial USD 1 million has been made available. - The Marshall Islands uses USD as its official currency under Section 443(1); the capital injection should be held in highly secure and liquid USD-denominated instruments until utilized to acquire plant and property. ### Human capital, corporate services, and communications - Human capital priorities: - Appoint Director, Human Capital and agree organizational design for start-up and steady-state phases. - Develop a human capital strategy aligning recruitment, sourcing, and retention with MIMA’s mandate; implement a competitive, market-aligned compensation and benefits framework. - Rapid recruitment of skilled senior personnel and targeted capacity building is critical. - Immediate need to recruit an executive manager to set up the BOD and prepare the request for proposal (RFP) for the integrated payment system. - Recruitment should be complemented by structured training, mentoring, and knowledge transfer. - Corporate services: establish core functions—accounting, procurement, facilities management, IT—with strong governance controls, strategic vendor relationships, and clear SLAs. - Communications: develop a proactive communications strategy with designated spokespersons and tailored stakeholder engagement plans. ### Risk management, compliance, and business continuity - Embed risk management, compliance, and communications functions early: - Appoint a Director, Risk Management to lead development of a comprehensive risk framework (including appetite, tolerance, escalation protocols). - Establish and test a robust Business Continuity Plan (BCP). - Set up Compliance Frameworks covering ethics, conflicts of interest, whistleblower protection, anti-corruption, and financial disclosure policies. ### Implementation sequencing and use of external expertise - Emphasize rapid establishment of governance mechanisms, core functions, and administrative support through timely recruitment and capacity building. - Strategic use of external technical expertise to bridge immediate skill gaps; continued IMF TA for guidance. - Early action is essential to avoid operational delays and embed sustainable systems, controls, and oversight. ### Key recommendations (selected from Table 1 with timeframes) - Banking Operations Department - Recruit executive manager to lead the BOD — Immediate. - Phase in recruitment of heads of divisions, starting with head of POD, followed by head of BTD, later FRMD and OVD — Near-Term; Medium-term. - Develop a NPS — Near-term. - Set up coordination mechanism with the MOF for MIMA’s services — Near-term. - Set up a consultation mechanism with relevant stakeholders to discuss payment matters — Near-term. - Develop a Payment System Law — Medium-term. - Establish a National Payment Council (NPC) — Medium-term. - Payment and IT procurement - Prepare RFP for the central banking system — Near-term. - Prepare RFP for the ICPS — Near-term. - Prepare RFP for CSD/securities settlement system (SSS) — Medium-term. - Governance and administrative setup - Agree organizational structure, sourcing strategies, and assign key divisional accountabilities — Immediate. - Recruit Legal Counsel, EM-CSD, Controller, Director HR, Director IT, CIA, Procurement Officer, Communications Specialist, Director Risk Management, Corporate Secretary (employee or contractual) — Immediate. - Agree MOU with MOF for continuation of administrative services — Immediate. - Select and issue contracts for External Audit Firm, outsourced Internal Audit services — Immediate. - Define IT Enterprise Architecture and initiate installation of IT infrastructure (HW/SW), security posture, networking applications, business environments and DRP frameworks — Near-term. - Amend MIMA Act to include Deputy Governor on Board; clarify roles between Board, AC and Internal Audit; adopt IFRS as accounting standard — Near-term. - Finalize and approve fiscal 2027 budget including 5-year forecast — Near-term. - Assign communication spokespersons, develop communications strategy, implement multi-channel outreach — Near-term. - For administrative roles, recruit all vacant management positions; initiate recruitment of administrative support positions as demands arise — Near-term. - Define Delegation of Authority framework, segregation of duties, and embed key internal controls — Near-term. - Develop initial draft of RMF — Medium-term. - Establish a Compliance Framework with ethics, anti-corruption, and whistleblower policies — Medium-term. - Finalize accounting policies and financial statements based on September 2026 year-end — Medium-term. - Establish Board Committees, agree TORs, draft Board Governance Manual — Medium-term. - Establish Internal Audit function, agree Audit Universe, and multi-year Audit Plan, develop Internal Audit Manual — Medium-term. - Draft and approve policies and detailed operating procedures for administrative and operational units — Long-term. - Timing definitions: Immediate: 0–3 months; Near-term: 3–6 months; Medium-term: 6–12 months; Long-term: 12 months plus. All recommendations are considered high priority due to interdependencies. *IMF | Marshall Islands Technical Assistance Report — Executive Summary* ### 8. The MIMA should adopt a comprehensive and holistic strategy in establishing its ### tarea2026048 - 8. The MIMA should adopt a comprehensive and holistic strategy in establishing its ### Organizational strategy and phasing - Adopt a comprehensive and holistic strategy for MIMA’s organizational structure while remaining strategically forward-looking and aligned with core mandates and essential functions. - Implement structure and staff divisions in phases, prioritizing immediate needs and specialized skills. - Initial efforts should focus on creating the BOD because MIMA’s primary and immediate objective is to deliver reliable and efficient payment services and products to financial market participants, government entities, SOEs, and households. - A comprehensive roadmap for establishing operations is included in Appendix II(a). ### BOD: functions, leadership, and staffing - BOD’s primary divisions and functions: - POD: Manages and operates an ICPS for both large value and retail transactions. - BTD: Provides banking services to the government, financial institutions, and public entities, cash and debt management, and CSD for government debt instruments; and manages currency in circulation. - FRMD: Administer the RMI’s official foreign currencies, gold reserves, and other international assets. - Leadership and staffing: - An executive manager will head the BOD, supported by around 18 staff members. - Ideal background: most team members should bring experience from central banking or a commercial bank. - Executive manager responsibilities: - Operate MIMA’s critical financial infrastructure, including payment, clearing and settlement systems, cash and debt management system, foreign reserves management system and currency operations. - Oversee development of the BOD’s strategy, policy, and operating procedures. - Lead selection and deployment of MIMA’s core banking system and the integrated payment system. - Develop BOD’s internal procedures and put in place a transparent decision-making mechanism. - Assist the Governor in recruitment, management and promotion of the career development of the BOD’s staff. - Ensure compliance with relevant regulatory framework. - With approval of the Governor, represent the MIMA in various committees and external and international engagements. - Executive manager qualifications: - Academic background: A higher education degree, minimum bachelor's degree and preferably master’s degree in economics, finance, banking, or related field. - Work experience: 7–10 years of strong managerial and coordination skills in central banking or commercial banking, with a proven track record of at least 3–5 years in a senior management role. - Operational expertise: Strong experience in central bank operations, including payment operations, clearing houses, foreign reserve management, and currency management. - Regulatory knowledge: Deep understanding of banking, payment, and financial market regulations, anti-money laundering (AML)/know your customer (KYC) policies, and central bank prudential regulations. ### A. Payment Operations Division (POD) – mandate and structure - Mandate and systems: - Tasked with operating the new integrated payment system comprising the RTGS system, ACH, and IPS. - Future capability: when the government issues bonds and treasury bills, MIMA may establish a CSD for government debt instruments and incorporate this into the integrated system. - Provide technical support to participant banks and other financial institutions. - Ensure multi-step payment process with authorization, instruction validation, clearing, and settlement, supported by a robust RMF covering liquidity, credit, settlement, and operational risks. - POD staffing and roles: - Manager: oversees operations of payment infrastructure, implements payment policies, evaluates payment innovations, develops medium- to long-term strategic plans, ensures efficient and timely operations. - Operations Team: three staff members to operate the integrated system, facilitate onboarding, and provide helpdesk support. - Compliance Team: two staff members to maintain and develop internal rules and procedures for the integrated system. - Development Team: two staff members to analyze and propose new digital services and features; technical development managed by MIMA’s IT division or outsourced provider. - Operational rules, procedures, and risk management: - MIMA will establish participation rules specifying eligibility and membership criteria; generally membership extended to licensed financial institutions regulated by MIMA, the MOF, and other authorized domestic entities. - System operational procedures to be defined after system specifications and external development, including network type (VPN or international network provider), messaging standards, STP, PKI-based digital signatures and certificates, operating schedule, cut-off times. - RMF elements: queue management, gridlock resolution, return payments; prefunding requirements; intraday liquidity facility access with appropriate collateral mechanisms. - Business continuity and resilience: participants must establish robust BCP and DRP including secondary site, periodic reviews, and regular testing. - Participant default management: rules to specify finality and irrevocability of transactions and protocols for pending transactions in defaulting participant queues. - Further design details are provided in the section titled “Introduction of New Payment System”. ### B. Banking and Treasury Division (BTD) – responsibilities and structure - Primary responsibilities: - Treasury Services: maintain and manage MOF accounts, process MOF revenues and expenditures. - Fiscal agent: manage issuance of and operate primary market for government securities. - Payments Processing: maintain and process accounts of banks, other financial institutions, public entities and funds of special agencies and programs; maintain minimum reserve requirement of banks; make electronic payments on behalf of public financial institutions and agencies. - Currency in circulation: ensure adequate circulation of good quality USD bills and coins. - BTD staffing and team structure: - Manager: oversees staff, payment infrastructure operations, payment policy implementation, evaluates payment innovation, sets mid- to long-term strategic plans, ensures quality and promptness of activities. - Account Services Team: two staff members managing accounting and record-keeping systems; one executes government payments and SOE transactions, the other assigned to banking sector and private entities. - Fiscal Services Team: three staff members managing business segment of CSD/SSS related to issuance of government securities; system operations handled by POD when incorporated into integrated system. - Currency in Circulation: one staff member for vault, collection and distribution planning and oversight; may undertake additional duties as necessary. ### BTD operations and systems - Treasury services to the RMI Government: banker and treasury manager, manage government domestic debt, oversee cash management, receive revenues, custody and disbursement of government funds, process deposits and checks payable to Government, facilitate holding and transfer of funds, provide short-term cash flow forecasts. - Single treasury account: - MIMA will manage the government’s consolidated ‘single treasury account’ to reduce idle balances and improve cost efficiency and optimal use of cash resources. - Account structure: master account with multiple sub-accounts; main operational account reflects net balances from dedicated accounts for ministries and agencies; cash disbursement ceilings can be imposed on spending entities if necessary. - Foreign currency needs of MOF: - MOF to obtain foreign currency from MIMA as needed; MIMA decides to acquire currency from market or use foreign reserves. - Option: MOF could hold foreign currency sub-accounts within the single treasury account. - Government debt management and CSD: - MIMA to operate primary market for government bonds and bills via an auction system with standardized procedures for announcement, allocation, settlement, and debt servicing. - MIMA to operate a CSD for government securities handling issuance, settlement, servicing, and redemption; payments may later be added to integrated payment system after priority establishment of payment and clearing system. - Coordination, agreements, and service-level expectations with MOF: - Prepare an MOU covering: flow of information from MOF on expected cash flows; flow of information to MOF on government’s actual balance at MIMA (ideally close to real time); information on modality and timing of market interventions and timing of auctions or other money market operations. - Establish an SLA outlining operational, financial, and reporting requirements covering: Account Management (real-time, daily, monthly reporting on flows), Banking Services (turnaround times for fiscal/payment/settlement agent roles), Financial Terms (fees reflecting actual costs and remuneration rate for government balances), Operational Risk (business continuity procedures), Performance Evaluation (mechanisms for reviewing performance and compensation for breaches). - Bank accounts and liquidity facilities: - All commercial banks required to maintain deposit accounts with MIMA’s central banking account system for transaction settlement and cash reserve requirements. - MIMA may provide liquidity to commercial banks via an Intraday Liquidity Facility governed by a collateral management framework. - Once payment system operational, functions will be automated and electronic; MIMA needs to install a central banking system and prepare the RFP for development and installation. - Currency management operations: - Because RMI won’t initially issue its own national currency, BTD will ensure availability and quality of U.S. dollars—banknotes and coins—and withdraw old/damaged currency. - MIMA must routinely check banknote authenticity, establish business relationships with relevant U.S. authorities (e.g., Federal Reserve System or a major U.S. bank) to guarantee supply. - MIMA to manage a currency warehouse requiring forecasting, equipment to assess banknote quality, and secure storage facilities. ### C. Foreign Exchange Reserves Management Division (FRMD) - Mandate: - Responsible for managing the country’s foreign exchange reserves to meet balance of payments obligations, financing requirements, and other related functions. - Reserve assets typically include monetary gold, special drawing rights, reserve positions in the Fund, currency and deposits, securities, financial derivatives, and other claims. - Management focus: preserve capital value and maintain sufficient liquidity for government debt service and other payments, and MIMA’s own account. - FRMD structure and staffing: - Managed by a team of three staff members. - Typical allocation: approximately 25 percent of employees handling policy and strategy formulation, 25 percent portfolio management, 25 percent working in risk management, and 25 percent focusing on back-office and technology. - MIMA may consider outsourcing specific aspects of foreign reserve management but will retain policy formulation and strategic oversight. - Investment posture: - Given the RMI’s predominant use of USD, a significant portion of foreign exchange reserves is likely to be held in non-complex USD instruments prioritizing capital preservation and liquidity over earnings. *IMF | Marshall Islands Technical Assistance Report* ### 35. This function will be further developed after establishing and staffing the BOD. ### tarea2026048 - 35. This function will be further developed after establishing and staffing the BOD. ### Operationalizing Payment System Oversight and Policy Division (OVD) - OVD will be part of the Financial Prudential Department to separate decision-making for IPCS operations from MIMA oversight and minimize appearance of conflict of interest. - OVD responsibilities: - Establish MIMA’s oversight and policy framework, issue regulations and rules compatible with international standards to regulate payment systems and payment service providers operating in the RMI, including systems operated by MIMA. - Outline responsibilities, objectives, guiding principles, standards, scope, activities and tools governing oversight of payments, systems, payment service providers and other infrastructure such as the CSD. - License payment systems and electronic money providers. - Evaluate soundness and resilience of entities via off-site and on-site examinations. - Recommended staffing and organization: - Personnel with legal, accounting, and economic expertise. - Managed by an individual with comprehensive knowledge of the payment ecosystem and regulatory frameworks, with policy analysis and leadership capabilities. - Division organized into two teams, each led by a manager: - The Oversight Team consists of two staff members responsible for regulating and overseeing the integrated system (RTGS, ACH, IPS) as well as e-money service providers. - The Policy Team is composed of two staff members dedicated to formulating policies aimed at promoting innovation, digitalization, and financial inclusion. - Governance and separation: - Clear mechanisms to prevent perceived conflict of interest; OVD distinctly separated from MIMA's payment operation functions of the POD. - Independent decision-making and reporting structures aligned to different senior managers. - OVD situated within the Financial Prudential Department but operationally distinct from banking supervision duties. - Capacity and resourcing needs: - Secure adequate funding, engage skilled personnel, and implement continuous training programs. - Staff should receive extensive and targeted training in payment and settlement systems, oversight and risk management practices and strategic planning. - Sufficient resources required for robust regulation of key systems (RTGS, ACH, IPS), comprehensive policy development, licensing, examinations, innovation, digitalization, financial inclusion, consumer protection, and supporting the work of the council (NPC). ### Payment Oversight and Policy Framework of the MIMA - Developing an oversight policy is crucial to support safe, efficient and inclusive payment and settlement systems in the RMI. - Implementing a risk-based oversight policy framework requires development and completion of the following components: 1. Developing a NPS 2. Developing payment system law and regulations 3. Detailing payment system oversight framework 4. Manuals for implementing a risk-based oversight approach 5. Procedures for collecting and processing data 6. Manuals for implementing offsite oversight 7. Manuals for implementing onsite examinations ### 1. Developing a national payment strategy (NPS) - Primary responsibility of OVD is to formulate a comprehensive NPS to define objectives within an established timeframe and engage public authorities, market participants, and the public. - NPS aims: - Provide strategic framework for MIMA, payment service providers, and stakeholders to develop inclusive policies, products, and solutions to broaden access for businesses, households, and the public sector. - Recommend design of national payment infrastructure aligned with international standards and adapted to RMI circumstances. - Scope and topics: - Infrastructure: RTGS, ACH, IPS, electronic payments. - Legal and regulatory frameworks: payment laws, regulations, rules. - Retail payments: account structures, payment product design, access. - Digitalization including electronic money. - High-volume payment streams: government payments, correspondent banking relationships, international remittances. - Delineation of oversight functions as a central focus. - Current payments landscape (preserve exact figures): - Cash remains the main payment method; checks widely used with an average of 35,270 checks settled each month, corresponding to about USD 68.7 million in 2025. - Approximately 370 point-of-sale (POS) terminals across the 29 inhabited atolls and five islands, mostly in Majuro. - Monthly POS transactions average 67,300 in volume and USD 4.5 million in value. - Debit card payments average 60,000 transactions per month, amounting to USD 3.9 million. - Credit cards are seldom issued or utilized. - Population of RMI is roughly 40,100. - GDP per capita of USD 6,800 based on 2025 nominal prices. - Universal Basic Income (UBI) program distributed payments to over 33,000 residents as digital cash payments in 2025. - Remittances from abroad, especially the United States, amounting to USD 36.4 million in 2025. - Transaction costs for remittances range between 10 percent and 12 percent of the transferred amount. - Financial literacy and inclusion: - NPS should emphasize digital technology to address geographical isolation and connectivity challenges. - Government payment programs can advance financial inclusion through transaction accounts and investment in infrastructure. - UBI is a significant advancement but the extent to which government payments have promoted broader electronic payments remains limited. ### 2. Developing payment system law and regulations - Establishing a solid legal and regulatory framework ensures certainty and stability in payment activities. - MIMA’s act grants authority to operate, promote, regulate, license, register, and oversee payment, clearing, and SSSs, and to issue regulations, monitor compliance, and enforce corrective actions including remedial changes and administrative penalties. - Advisability of a national payment law: - Provide legal certainty for payment transactions and define rights and obligations of participants and system operators. - Require implementation of risk mitigation frameworks including settlement finality in line with international standards such as the Principles for Financial Market Infrastructures (PFMI). - Ensure high standards of security and transparency, prevent money laundering, protect customer data. - Grant MIMA authority to issue regulations for payment service providers (electronic money, card payments) and set consumer protection standards. ### 3. Defining payment system oversight framework - Purpose: ensure payment systems, service providers, and instruments are safe, efficient, reliable, and inclusive; support monetary policy, financial stability, and public trust. - MIMA must: - Define objectives and scope (safety, efficiency, integrity across payment systems, securities depositories, clearing and settlement processes, electronic instruments). - Regularly monitor, identify, assess, and address risks: legal, settlement, liquidity, credit, operational (cybersecurity, IT failures). - Ensure robust and transparent governance. - Develop procedures for corrective actions (mandating changes, imposing penalties, influencing governance). ### 4. Manual for implementing a risk-based oversight approach - Oversight guided by international standards and best practices using offsite reporting, onsite inspections, and independent third parties (external auditors). - Evaluate risk levels, governance structures, RMFs, internal controls, and mitigation methods. - Review payment system providers against the CPSS-IOSCO PFMI using assessment methodology addressing legal, settlement, financial, operational risks, governance, decision-making, responsibility allocation, and internal controls. ### 5. Procedures for collecting, processing, and reporting data and other information - Prepare a comprehensive manual outlining guidelines for onsite and offsite examinations and baseline information and data requirements. - Formalize procedures to standardize internal controls and guarantee consistent quality of information and data across systems and over time. - MIMA will verify regulatory compliance through regular and ad-hoc reports and information submitted by regulated entities, assessed via offsite evaluation supplemented by onsite examinations and targeted audits. ### 6. Manuals for implementing offsite oversight - Offsite activities focus on standard indicators and benchmarks providing insights into safety, efficiency, internal control effectiveness, and related risks. - Indicators include system participation, turnover, credit risk, liquidity risk, operational risk, concentration. - Quantitative and statistical data collected: value and volume of processed payments, number and value of failed transactions, incidents associated with settlement failures, occurrences of fraud, customer complaints, security-related events, and other operational risks. - Qualitative information may be requested to supplement quantitative data when analyzing specific issues or incidents. ### 7. Manuals for implementing onsite examinations - MIMA should have authority to conduct onsite examinations periodically and on a need basis. - Onsite examinations require comprehensive planning and procedures before, during, and after the review, potentially involving: - Inspection planning and scoping - Review of off-site oversight reports and statistical data to investigate specific activity - Inspection procedures - Evaluation of board of directors, management, and staff - Evaluation of internal procedures and auditing processes - Assessment of change management processes - Identification of various risks - Assessment of data protection and cyber-resilience and information security and business continuity planning arrangements ### National Payment Council (NPC) - NPC proposed to engage stakeholders and provide guidance to MIMA on payment systems, service providers, design, framework, and operational matters. - NPC establishment: - Could be established by decision of the Governor. - Might comprise representatives from commercial banks, card payment schemes, public agencies, and major market participants. - NPC role and objectives (Terms of Reference should define objectives, composition, procedures): - Advise on the MIMA’s payment system strategy. - Facilitate collaboration among public and private stakeholders in payments modernization process. - Support development and implementation of new payment infrastructure. - Enhance innovation, digitalization, financial inclusion and literacy. - Advise on emerging risks, regulatory developments, and technological trends. - Promote cashless payments and reduce cash usage and check payments by strengthening electronic payments. - Promote consumer confidence, safety and accessibility in innovative payment solutions. - NPC support and operations: - Activities supported by MIMA staff, particularly the POD. - MIMA/POD to organize meetings, take minutes, and submit supporting documents for NPC discussions. ### Introduction of New Payment and Clearing System - Robust and efficient payment and settlement systems are essential for financial market functioning and financial stability in the RMI. - Typical modern payment architecture: RTGS, ACH, IPS, potentially integrated with a CSD and SSS for securities issuance, registration, and settlement. - No “one-size-fits-all”; systems must be tailored to country-specific needs. - Rationale for central bank operation of retail infrastructures in some economies: commercial banks may lack resources, capacity, or consensus. ### Objectives of Payment and Clearing System Modernization - MIMA should implement a modern payment and settlement system tailored to RMI’s institutional, demographic, and market growth characteristics. - Stakeholder consultations via NPC or comparable entity and a “Strategy Team” are recommended: - Strategy Team to include representatives from commercial banks, non-bank financial institutions, government agencies, business sectors, and network operators (including telecommunications and electricity companies). - POD expected to support the Strategy Team under the direction of the Director General of the BOD. - Strategy Team involved in developing the RFP for the IPCS, including business requirements and system specifications; similar process for CSD later. - Emphasize transparency and accountability to build public confidence. - Strategy must address consumer protection, risks, benefits, and costs of payment services, and enforce rigorous regulation and governance to enhance reliability and accessibility. *Source: tarea2026048 - 35.* ### 63. A further goal is to strengthen and widen financial markets. An advanced payment system ### tarea2026048 - 63. A further goal is to strengthen and widen financial markets. An advanced payment system ### An Integrated Payment and Clearing System - Section 64–65: An integrated payment infrastructure combining RTGS, ACH, and IPS into one platform is recommended to create a safer, more cost-effective, and fully interoperable financial ecosystem for the RMI. - Rationale: - The limited size of the financial system and constraints in resources and capacity at the MIMA require a customized, integrated, and scalable solution to lower operating and development costs. - Initial activation priority: clearing capabilities to facilitate wire transfers and check payments among banks, government entities, SOEs, and relevant agencies. - Electronic clearing is required: mandate adoption of check truncation mechanisms (electronic transfer of digital images rather than physical paper). - Settlements to be conducted on accounts maintained by banks, government and other entities at MIMA. - Activation sequence suggested: begin with ACH/clearing; when large-value transaction volumes become significant, consider activating RTGS; later evaluate introduction of IPS functionality as operational experience is gained. - Implementation role: MIMA is recommended to spearhead IPCS implementation and carry out a rigorous campaign for adoption of the PS by the MRMI population. ### Key Features of the IPCS — RTGS - Section 66: RTGS as cornerstone for real-time, final interbank settlements and clearing positions generated by the ACH and foreign exchange transactions. - Functions and risk mitigation: - Processes each transaction individually and instantaneously to mitigate systemic, counterparty, settlement, credit, and liquidity risks. - Enhances liquidity management and enables participants to deliver improved, real-time services. - Enumerated key features: - Immediate and final settlement: transactions are settled instantly and irrevocably and cannot be reversed. - High security: employs tokenization, encryption, and two-factor authentication. - Transparent status tracking: real-time notifications and continuous visibility from initiation through settlement. - Efficiency and effectiveness: liquidity management, optimized cash flows, automated funding and defunding, oversight of non-settling (indirect) participants, queuing of transactions, continuous monitoring and adjustment of bank liquidity during the day. - International standards compliance: meets CPMI-IOSCO PFMI and ISO 20022 messaging requirements. - Modular, event-driven architecture: decoupled, scalable components with message queues and Application Programing Interfaces (APIs). ### Key Features of the IPCS — ACH - Section 67: ACH designed to manage large volumes of low-value payments (retail, card payments, direct debits/credits) and facilitate gradual phase-out of physical checks. - Processing and operational design: - Processing: transactions collected, bundled, and submitted in batches at scheduled times; may impose a maximum limit per transaction. - Participants send batches of electronic credit and debit transfers; ACH edits, sorts, delivers to receiving institutions, and settles net payments by crediting and debiting settlement accounts at the central bank or private bank. - Use cases: direct deposit, payroll, social security benefits, tax (credit transfers); recurring mortgages and utility bills (direct debits). - Operational rules: define roles, responsibilities, procedures, file format, operating time, etc.; U.S. example: governed by Nacha Operating Rules & Guidelines. - Risk management: multiplayer framework with ACH operating rules and regulatory framework addressing credit (default), fraud (unauthorized transactions), operational (system or processing failure), and compliance risks. - Credit risk mitigation: many ACHs operate on a prefunded modality or set up a collateralization framework. ### Key Features of the IPCS — IPS - Section 68: IPS handles instant, continuous payment processing 24/7 with transfers usually completed within seconds. - Access and use: - Multiple initiation platforms: online banking, mobile wallets, card networks, ATM, SMS, web browsers, physical branches. - Identifiers: aliases or quick response (QR) codes. - Supports P2P, P2M, B2B, B2G, and G2P payments. - Risks and challenges: - Fraud and Security Risks: instantaneous processing limits opportunity to detect/prevent fraud before completion; transactions are irrevocable once executed. Recommendation: investment in advanced, real-time fraud detection and prevention; consider Confirmation of Payee (COP) schemes for prior verification of payee and payer identities. - Investment in technology: substantial upgrades required (APIs, back-end systems, security). - Interoperability: broad adoption and compatibility with RTGS, ACH, mobile payments; standardization of customer accounts into internationally compliant formats across banks and financial institutions. ### Communication Network and Standards - Section 69: Reliable, secure, efficient, and resilient IPCS requires a communication network based on international standards. - Requirements: - Real-time connectivity between MIMA and participants (government, banks, SOE, agencies, payment service providers). - Capability to handle bulk payment file transfers. - SWIFT cited as a global benchmark for messaging services, but proprietary mechanisms may be used if they comply with international standards. ### Roadmap and Governance Overview - Sections 70–75: - A comprehensive roadmap (Appendix II(a) and Appendix II(b)) provides staged guidance for launching new functions, developing regulatory frameworks, and setting up systems and procedures; timelines may require adjustment. - Governance fundamentals: autonomy, accountability, transparency, and professional competence must be embedded and legally safeguarded by the Monetary Authority Act. - Board responsibilities include approving budgets and financial statements, formulating internal policies, appointing senior executives and auditors, and overseeing risk management, compliance, and internal controls. - Transparency practices: regular engagement with MOF and Parliament; public disclosure of progress, audited financial statements, policy decisions, regulations, and performance outcomes. - Staffing: as senior positions are recruited, lower-level managerial and support positions must begin immediately. ### Establishing Robust Governance — Board Oversight and Institutional Design - Sections 76–82: - Legal provisions: Act specifies objectives (Section 406), functions (Section 407), governance arrangements (Part IV, Sections 413–427), procedures for Board and Executive Committee (Part V, Sections 428–430), and exemption from Public Service Commission procedures (Section 403). - Board composition: - Current: Governor and three non-executive members (Section 413). - Recommendation: amend Section 413(2) to include the Deputy Governor as a Board member; Section 424 allows delegation to Deputy Governor; amendment also implies Section 429 change to avoid conflict of interest if Deputy Governor becomes Board member. - Operational oversight: Part IV, Section 413(n) mandates Board oversight of financial reporting, risk management, compliance, IT, security, and internal controls; Section 413(g) empowers Board to appoint Advisory Committee (AC) and Internal Auditor; Part IX (Sections 455–458) requires internal and external audits. - Committees and secretariat: - Recommend specialized committees with clear TORs: AC (three non-executive members) to assume Risk Committee responsibilities; Human Resources Compensation and Nominations Committee (HRCNC); Project and Investment Committee for major initiatives and capital investments. - Appointment of a Board Secretary to coordinate agendas, manage documentation, and track follow-up. - Secretariat to prepare a Board Governance Manual and manage annual self-assessments. - Executive Management Committee (EMC): - Composition: Governor, Deputy Governor, Legal Counsel, Heads of Departments, with the CIA (Chief Audit Executive) attending ex officio. - Role: translate Board strategies into operational delivery, oversee work plans and budgets, monitor financial performance, ensure compliance with laws and audit recommendations, coordinate departments. EMC is advisory to the Governor; executive authority remains with the Governor. ### Audit Committee - Sections 83–84: - Legal clarification: Part IV, Section 414(g) suggests discretionary appointment “... on the recommendation of the Governor,” but Section 457 directs that “... the Board shall appoint an Audit Committee.” Appointment should not be interpreted as discretionary. - AC governance: - Adopt a Charter based on the Institute of Internal Auditors’ (IIA) model, adapted to MIMA context. - Secretarial duties should be assigned to the Board Secretariat rather than the CIA to avoid conflict of interest. - The Charter must define AC scope, authority, and reporting lines; AC should approve the Charter for Internal Audit. *IMF | Marshall Islands Technical Assistance Report* ### 85. The AC’s core function is to provide the Board with independent assurance on the ### tarea2026048 - 85. The AC’s core function is to provide the Board with independent assurance on the ### Audit Committee (AC): core role and operational practices - Core function: provide the Board with independent assurance on the adequacy and effectiveness of internal controls, risk management, compliance, and financial reporting. - Inputs for AC opinion: - Systematic review of evidence from internal and external assurance providers, risk assessments, compliance monitoring, and operational control evaluations. - Integration of these inputs to form a holistic view, identify systemic weaknesses, recommend corrective measures, and monitor follow-up on unresolved issues. - Meeting and planning expectations: - Maintain a disciplined annual work plan and meeting schedule, with agendas and minutes formally documented. - Minimum meeting frequency: meet quarterly, plus one additional meeting with the External Auditors to discuss the audit plan. - AC should meet with External Auditors at least twice per audit cycle to align scope, timing, and methodology. - Independence and evaluation: - Preserve independence by holding private sessions when necessary and inviting the Governor or other executives as appropriate. - Conduct annual self-assessments of the AC’s performance, alongside evaluations of internal audit, external audit, risk management, and compliance functions. - Reporting responsibility: - Provide the Board with a clear opinion on the effectiveness of systems and controls governing the authority’s operations and outcomes. - Distinguish AC assurance (controls functioning as intended) from Board strategic direction and assessment of policy alignment. ### Box 1 — Specific roles and disciplines the AC draws on - External Audit: - Recommend appointment, fees, and rotation of external auditors; ensure independence; agree on audit scope; meet auditors at planning and reporting stages. - Discuss any Qualifications or Matters of Emphasis raised by the Audit Firm. - Post-completion, assess the appropriateness quality of the work conducted by the audit firm. - External Auditors Report should be published with the financial statements on the MIMA’s website. - Internal Audit: - Approve the Internal Audit Charter and risk-based multi-year plan; ensure adequate resourcing and independence. - Monitor the CIA’s progress against the plan, review high-priority findings, and track implementation of management’s corrective actions with documented verification. - Financial Reporting Oversight: - Approve accounting policies and monitor integrity of externally reported financial statements. - Ensure accurate disclosures for complex operations (payments, banking, reserve management). - Scrutinize quarterly results against Board-approved budgets to advise on resource constraints or cost overruns / underspend. - Risk Management: - Review identification and mitigation of strategic, operational, financial, legal, and reputational risks. - Challenge risk frameworks and mitigation strategies; assess business continuity readiness. - Compliance & Ethics: - Oversee adherence to laws, regulations, and codes of conduct; monitor whistleblowing mechanisms and impartiality of investigations into fraud or ethical breaches. - Internal Control: - Evaluate effectiveness of internal control framework and policies; provide an opinion to the Board on whether these structures offer reasonable assurance against errors and irregularities; recommend enhancements where emerging risks or weaknesses are identified. ### Internal Control Framework (design, responsibilities, and culture) - Design and accountability: - Management accountable for design and implementation of internal controls; Board and Management must promote internal controls through visible leadership and clear expectations. - Internal control viewed as a dynamic, people-driven process aimed at operational, reporting, and compliance objectives, providing reasonable—though not absolute—assurance. - Independence of AC: - AC must ensure the internal control framework operates effectively while maintaining independence from its design and implementation. - Adopt the Institute of Internal Auditors’ Three Lines Model to clarify governance boundaries: operational management (first line), specialist functions (second line), internal audit (third line). - Continuous evaluation and embedding of controls: - Institutionalize continuous evaluation to meet objectives related to operational efficiency, compliance, asset safeguarding, and reliable financial and performance reporting. - Embed controls in operational processes, system designs, and contractual arrangements; ensure complete and accurate reporting with regular reconciliations; systematically track follow-up on critical recommendations. - Risk-aware culture: - Cultivate strong leadership, structured processes, and a culture of accountability with clear roles, responsibilities, and delegations of authority. - Reduce ambiguity in decision-making to enhance operational integrity and align governance with strategic objectives. ### Box 2 — Attributes of robust governance and internal controls - Tone at the top prioritizing ethics, accountability, and independent oversight. - Rigorous and continuous risk assessment processes to prioritize vulnerabilities. - Segregation of duties across key processes and explicit, documented delegations of authority (e.g., four‑eyes principle). - High‑quality, timely, and accurate information flows supported by integrated systems as a single source of truth. - Documented policies and procedures covering financial management, procurement, asset management, and human resources with embedded system controls and strict access rights. - Continuous monitoring, internal reviews, independent audits, routine reconciliations, inventory checks, system‑based validations, and verifiable audit trails. - Culture of risk awareness reinforced through capacity building, ethics training, and clear conflict‑of‑interest policies. - Transparency through public disclosure of financial and non‑financial results, audit findings, and risk exposures. ### External Audit: standards, selection, independence, and follow-up - Legislative authority and standards: - Board must appoint qualified External Auditors in accordance with the Act and international best practice. - Sections 414(l) and (m) empower the Board to select and appoint auditors; Section 458 requires audits to be conducted under International Standards on Auditing by independent firms with recognized global experience. - Desired auditor expertise: - Target firms with proven experience auditing central banks or monetary authorities; where lacking, appoint an international review partner with requisite exposure. - Auditors must demonstrate competence in auditing IFRS-compliant statements given recommended adoption of International Financial Reporting Standards (IFRS). - Independence safeguards: - Clear internal guidance on provision of audit and non-audit services by the same firm; mitigate risks by assigning separate partners or offices and documented assurances. - Audit opinion objective and follow-up: - Aim to consistently achieve an unqualified audit opinion. - Structured process for following up on audit recommendations integrated with Internal Audit tracking. - AC to discuss any “Emphasis of Matter” disclosures in otherwise unqualified opinions. - Planning, meetings, and declarations: - AC should meet with External Auditors at least twice per audit cycle; planning meetings should confirm tailored audit scope and include private sessions to address independence or undue pressures. - Annual written independence declaration from auditors detailing relationships, services, and potential conflicts. - Timely agreement on audit schedules to meet statutory deadlines under Section 453 for submission to Parliament and for public disclosure. - Performance assessment and tenure flexibility: - AC should conduct an annual performance assessment of External Auditors to inform reappointment decisions (see Section 458(3)). - Review independence, professional skepticism, industry expertise, adherence to the audit plan, and quality of communication. - Consider legislative amendments to provide flexibility in external auditor tenure: Section 458(2) mandatory five-year rotation may be impractical in small markets; allow a one-year extension or rotate the lead partner and audit team instead of rotating the entire firm. ### Internal Audit: role clarity, legislative updates, and reporting - Role delineation: - Clearly delineate roles between internal audit, external audit, risk management, compliance, and management to avoid duplication and gaps. - Internal Audit: independent risk-based assurance on governance, risk, and controls. - External Audit: opines on fairness of financial statements and compliance. - Risk Management: maintains and reports on management’s view of risk exposures with assigned owners. - Management: designs and owns operational processes including identifying, assessing, and mitigating risks. - Legislative recommendations: - Update legislative provisions governing Internal Audit to reflect modern, risk-based audit practices in line with Global Internal Audit Standards (GIAS). - Part IV, Section 414(g) currently empowers the Board to “appoint an ... Internal Auditor on the recommendation of the Governor.” - Section 414(p) requires the Board to “approve the internal audit report prepared by the AC and monitor implementation of the internal auditor’s recommendations.” Recommend this refer to the AC’s report to the Board rather than narrowly the ‘internal audit report’, and delegate accountability to the AC to monitor implementation of recommendations. - Sections 455 and 456 provide for appointment and duties of the CIA; current wording in 456(1)(e) (“preparing and delivering” reports) alludes to a compliance‑based methodology and overlaps with management and external audit. - Modern internal auditing should review but not prepare management’s information; CIA should focus on high‑risk areas with quarterly reporting to strengthen oversight. - Consultation with the IMF’s Legal Department is recommended to ensure drafting consistency with current international norms. ### Box 3 — IIA’s Three Lines Model elaborated - First Line — Operational Management: - Own and manage risk in day-to-day operations; design and execute processes; maintain accurate transaction records; embed compliance into workflows. - Second Line — Risk Management and Compliance Oversight: - Develop frameworks, policies, and monitoring systems; support first line; log, monitor, and mitigate risks using integrated risk logs and governance instruments. - Accountability for ensuring risks are managed within agreed tolerances; monitoring often quarterly or annually. - Third Line — Internal Audit and Independent Assurance: - Provide independent assurance to governing body and senior management; evaluate effectiveness of governance, risk management, and compliance processes; report objectively and recommend improvements. - Accountability linkages: - Clear definition of roles, responsibilities, and reporting lines to avoid duplication and gaps: first line accountable for execution, second for oversight and monitoring, third for independent validation. *IMF | Marshall Islands Technical Assistance Report* ### 103. The MIMA should adopt a hybrid model, with the CIA providing in-house leadership and an ### tarea2026048 - 103. The MIMA should adopt a hybrid model, with the CIA providing in-house leadership and an ### Internal Audit: model, governance, and resourcing (paras 103–109) - Recommendation: adopt a hybrid model with one senior internal auditor appointed as the Chief Internal Auditor (CIA) to manage an outsourced internal audit service provider. - Outsourced provider requirements: - Must be independent of the External Auditor. - Selected through a competitive process with clear evaluation criteria including technical expertise, relevant sector experience, ethical track record, and demonstrated compliance with international standards. - CIA appointment and reporting: - CIA appointed transparently. - Administrative reporting to the Governor; functional reporting to the Audit Committee (AC). - CIA priorities guided by AC-approved Internal Audit Charter tailored to MIMA’s mandate and risk profile. - Independence and standards: - Governor’s administrative role must not affect audit scope, findings, staffing independence, or transmission of reports to the AC, consistent with the IIA Global Internal Audit Standards. - Internal Audit should align with the IIA’s GIAS. - External Quality Assessments to validate compliance at least every five years. - Until compliance is achieved, external auditors unlikely to rely on internal audit work. - Capacity bridging: - Outsourcing to a compliant service provider can bridge capacity gaps, reduce duplication, and lower costs. - Annual performance reviews of the outsourced provider should assess quality, timeliness, independence, and value added. - Audit methodologies and documentation: - CIA (with outsourced assistance if needed) should prepare an Internal Audit Manual defining: Audit Universe, Risk Taxonomy, entity ranking methodology, findings rating system, procedures for audits, recommendations, reporting, and follow-up. - Ownership of the manual rests with the CIA; AC may review but should avoid formal approval to prevent conflicts of interest. - AC’s formal roles: approve the three-year risk-based Audit Plan, review progress, discuss critical findings, and annually assess the CIA’s performance. - Audit planning and reporting: - Implement structured, risk-based audit planning and execution cycle. - Three-year Audit Plan should prioritize high-risk areas aligned with MIMA’s strategic objectives. - CIA to coordinate with External Audit, risk management, and compliance units to avoid duplication and optimize coverage. - Reports to the AC should provide clear, evidence-based opinions on internal controls, summarize key risks, critical findings, status of management’s implementation of recommendations, and include an “aging” analysis of outstanding actions. - Less critical issues should be summarized to focus on priority matters. - Risk appetite alignment: - Risk appetite statements must be realistic and aligned with operational capacity. - Failure to implement agreed recommendations effectively constitutes acceptance of the associated risk. - Audit recommendations should reflect achievable levels of control aligned with risk appetite and be supported by timely corrective action. ### Corporate Service Department (paras 110–111) - Recruitment priorities: - Expedite recruitment of the Executive Manager, Corporate Services Department (EM‑CSD). - Ensure the EM‑CSD holds a Certified Public Accountant (CPA) or equivalent qualification. - Staffing and structure: - Senior leadership capacity must be complemented by dedicated staff to ensure effective execution. - Quickly agree high-level structure and accountabilities for the Corporate Services Department. - As administrative units are established and staffed, draft and approve policies and detailed operating procedures to ensure consistency and embed control and risk management mechanisms. ### Accounting and External Financial Reporting (paras 112–118) - Accounting framework: - MIMA should adopt IFRS as its accounting framework to ensure global comparability and credibility. - Adoption will require an amendment to the MIMA Act (Part IV Section 414(o); Sections 449 and 452 referenced). - Until amendment is approved, MIMA must comply with sections 414, 449, and 452 in adoption of US GAAP. - Interim arrangements: - Establish an interim MOU with the MOF to provide payroll, accounting, asset management, safekeeping, and other administrative services on a cost‑recovery basis. - MOU should specify transactional detail retained by MOF to be transferred monthly to MIMA for integration into its MIS once implemented. - Interim and long-term systems: - Procure a basic, reliable interim accounting software package to meet immediate needs, to be replaced (or outsourced) within 12–24 months. - Once EM‑CSD is appointed, procure off‑the‑shelf system ideally with integrated accounts payable, payroll, asset ledgers and procurement. - Plan for a long‑term, fully integrated MIS solution capable of linking automatable administrative processes and interfacing with other core operational environments; decision needed whether to maintain MIS in-house or outsource. - Accounting manual and reporting deadlines: - EM‑CSD and Controller should develop an accounting manual detailing chart of accounts, transaction recording procedures, documentation requirements, processing limits, and reconciliation/reporting timelines. - Manual must respect reporting deadlines provided for in Section 453 of the Act. - Internal controls and reporting: - Implement robust internal controls from the outset: segregation of duties, authorization limits, secure cash handling, regular reconciliations. - Prepare monthly financial reports (project progress reports, income statements, balance sheets, budget-to-actual comparisons) and share with management and the Board as operations begin. - Future state MIS can include budgeting, procurement, cash management, bank reconciliations, payroll, asset management, project management, inventory and financial reporting and potentially include embedded automated hard controls. - Segregation of duties and delegation: - Enforce segregation of duties so no individual can authorize a transaction end-to-end. - An interim Delegation of Authority policy will be necessary; full Delegation of Authority will evolve as functions and positions are established. ### Aligning authority, escalation, appetite, and reporting (Box 4) - Four integrated elements to support operational efficiency and risk management: - Delegation of Authority empowers timely action within safe boundaries, structured around materiality, activity type, and transaction sensitivity. - Risk Event Escalation ensures risks identified operationally are communicated promptly; escalation thresholds can tie to delegated authority limits. - Risk Appetite provides strategic boundaries; align delegation and escalation to risk appetite to ensure consistency with strategic tolerance. - Reporting Framework provides feedback loops; reports should focus on decision-relevant information and avoid excessive data. - Practical implementation: - Embed risk appetite parameters into delegation matrices, define escalation triggers based on those parameters, and regularly report in light of evolving risk profiles. ### Financial Management and Budgeting (paras 119–125) - Budgeting and revenue treatment: - Amend Section 452 of the Act to exclude interest revenue and other policy related cash inflows from the budgeting process. - Interest revenue can be forecasted but not held as a target or guaranteed source of income. - Investment of foreign reserves: priority of capital preservation first, liquidity second and earnings last. - Financial management focus: - Establish financial management processes from inception to support planning, directing, monitoring, and controlling financial resources aligned with strategic and operational objectives. - Core functions to be operational before MIMA commences functional operations: budgeting, procurement, cash management, bank reconciliations, payroll, asset management, and financial reporting. - Medium-term planning and budgets: - Initial annual budget should be anchored in a five-year plan based on a phased development plan of the MIMA. - Forecast should cover financial and human capital requirements to anchor budget envelopes, asset acquisition, staffing plans, and recruitment strategies. - Budgets follow workplans; develop work-planning process before establishing robust budgeting process. - Budget categorization and reserve: - Expenditures should be categorized: - One time start up/project expenditures (e.g., systems procurement, office fit-up, legal services, advisory, initial training, etc.) segregated from recurring operational expenditures (e.g., salaries, utilities, consumables, maintenance, training, travel, etc.). - Capitalizable expenditures segregated from non-capitalizable expenditures in line with accounting policies. - Operations provided in an agency role clearly segregated, including costs if provided under a fees-for-service model. - A budgetary reserve could be contemplated; a budgetary reserve of five percent of the budget would not be unreasonable in the first year. - Outsourcing decisions: - Strategic decisions required on which functions to retain in-house vs. outsource based on capacity and strategic importance. - Outsourced functions require strong oversight and internal technical expertise to manage service providers. - Outsourcing does not typically reduce direct costs; downstream significance relates to competencies, resiliency, security and facility requirements. - Coordination and transparency: - EM‑CSD must ensure close coordination MIMA-wide across procurement, HR, internal audit, risk management, and IT. - Five-year plan resource requirements should be tied to measurable outputs and milestones. - Progress reports should provide concise, timely information on start-up progress, variances in scope, timing, and costs, and identify risks with recommended actions. - Consider publishing summary budgets, performance reports, and key policies to reinforce public trust. ### Human Capital (para 126) - HR leadership: - Prioritize creation of a dedicated HR leadership role: Director, Human Capital. - Director should have clear mandate to design and operationalize HR systems, policies, and structures in alignment with Sections 413(h), 425, and 426 of the legal framework. - Recruitment and partnerships: - Director to leverage existing recruitment partnerships in the Marshall Islands, the Philippines, regional central banks, and elsewhere. - Explore secondment opportunities with regional monetary authorities to fill specialized skill gaps quickly. *IMF | Marshall Islands Technical Assistance Report | 38–43* ### 127. The MIMA needs to develop a comprehensive human capital strategy that should guide ### 127. The MIMA needs to develop a comprehensive human capital strategy that should guide ### Human capital strategy — core objectives and components - Guide immediate recruitment, retention, and motivation to attract and retain top talent in a competitive market. - Require a competitive, transparent compensation framework with: - clear grading; - differentiated pay for scarce expertise; - remuneration above local benchmarks for critical roles where necessary. - Begin with an organizational design exercise defining: - structure, functions, staffing levels, and competency frameworks; - supported by digital HR systems, policy manuals, and standardized performance tools. - Embed transparent, merit-based recruitment, diversity and gender equality measures, and balanced staffing models to strengthen credibility, inclusivity, and institutional resilience. ### Organizational design and staffing model - Agree a near-to-medium term organizational design for the startup phase and a long-term steady-state design. - Ground organizational design in a workload-based staffing model rather than fixed ratios to enable agility during establishment. - Targeted allocation of resources to priority functions such as: - payment operations; - banking; - regulatory oversight; - foreign reserves management; - currency (bank note) management; - financial inclusion initiatives. - Integrate capacity-building measures into strategic staffing plans: - targeted technical training; - leadership development; - mentoring programs to build resilience against turnover and strengthen institutional capacity. ### Sourcing strategy: insource, outsource, co-source - Adopt a pragmatic, function-by-function sourcing strategy balancing cost, flexibility, and institutional capacity. - Startup phase emphasis: - retain accountability for core, high-value functions (policy, oversight, institutional credibility) in-house; - use outsourcing or strategic partnerships with other central banks where secure, redundant, and reputable external providers exist to access specialized expertise and advanced systems rapidly. - Manage reliance on external providers to avoid long-term dependency and ensure knowledge transfer. ### Recruitment, onboarding, and retention - Streamline recruitment and onboarding to avoid delays undermining operational readiness. - Use early recruitment planning, proactive outreach, and well-defined terms of reference. - Complementary measures during start-up: - temporary specialist appointments; - structured knowledge transfer; - secondments from partner institutions. - Institutionalize over time: - career development pathways; - performance appraisal systems; - retention incentives. - Mitigate risks (high turnover, unclear roles, weak onboarding) through robust induction programs, succession planning, and institutionalized knowledge management. ### Total Compensation and Benefits - Agree on a Total Compensation and Benefits Plan to ensure ability to attract staff and retain relativities across positions and between levels. - Combine competitive, market-aligned compensation with non-financial incentives: - career progression opportunities; - recognition systems; - participatory management practices. ### I. Procurement and Facilities Management — objectives and controls - Establish a dedicated procurement and facilities management function led by a qualified procurement specialist (ideally with or working toward professional certification). - Use agile, fit-for-purpose procedures while maintaining safeguards against fraud, conflicts of interest, and collusion. - Ensure all contracts are subject to legal review and procurement decisions are documented to provide a clear audit trail. ### Procurement policies and operational measures - Formalize procurement policies covering: - needs assessment; - market research; - competitive bidding where appropriate; - evaluation criteria and award protocols; - flexibility for direct contracting in low-value or low-risk scenarios. - Use framework agreements, vendor-of-record systems, and advance procurement planning to reduce delays. - Implement digital procurement tools and supplier performance databases. ### Facilities and asset management integration - Integrate facilities, inventory, and asset management into the procurement role: - building maintenance, utilities, security, office equipment, and physical asset lifecycle management; - supported by an Asset Management Manual and inventory control systems. - Preserve segregation of duties among procurement, contract management, and payment authorization. - Focus role more on vendor and contract management given MIMA’s size. ### J. Information Technology (IT) — leadership and strategy - Hire and onboard a seasoned Director, Information Technology, reporting to the EM-CSD, accountable for establishing and maintaining the MIMA’s technological environments. - Expect need for independent and impartial technical advisors in the immediate term. - Recognize it will not be possible nor cost effective to establish and maintain all technical environments in-house; prioritize security and resiliency. ### IT governance, architecture, and security - Establish a robust IT governance and oversight framework to define roles, responsibilities, decision-making authority, and protocols for system use, data management, access control, and cybersecurity. - Embed compliance-by-design and continuous oversight mechanisms including: - regular audits; - real-time monitoring; - Artificial Intelligence (AI)-driven anomaly detection. - Develop a comprehensive enterprise architecture covering: - business architecture; - data architecture; - application architecture; - technology architecture; - security domains. - Promote interoperability via standardized APIs while avoiding tightly integrated dependencies that hinder upgrades or introduce contagion risks. - Apply strict access controls, password policies, and logging of all system interactions. ### Typical application architecture components - Payments and Banking - RTGS - Auction and Debt Management platforms - Financial Supervision and Regulation - Economic Research Analysis - Currency (bank note) management - Foreign Reserves Management - External public facing applications and website - Administration - Assess how these applications fit data, technology, and security requirements; consider isolating environments in case of cyber risks. ### Sourcing models, procurement, and hosting - Determine optimal balance between insourcing, outsourcing, and co-sourcing based on cost-benefit analysis, intellectual property protection, service continuity, and long-term sustainability. - Procure major applications using standard procurement processes: Requests for Information, Proposal or Quotation, with RFPs likely most suitable. - RFPs should include well defined business requirements, technological environment specifications, and maintenance strategy. - Select hosting/connectivity model (on-premises, off-premises, cloud, software-as-a-service) guided by security, scalability, cost, and regulatory compliance. - Secure external connectivity with encrypted channels, firewall protections, and intrusion detection systems. - Develop and test disaster recovery and BCPs with defined recovery time and recovery point objectives. ### Operational parameters and project management - Define SLAs and operational targets such as: - 24/7 availability; - 99 percent uptime; - rapid recovery times. - Centrally manage application licensing, maintenance agreements, and upgrade schedules. - Adopt a “configure, don’t customize” approach to reduce complexity and upgrade risks. - Institutionalize structured project management, require systems and user documentation from suppliers, and include help-desk protocols, security procedures, and system maintenance guidelines. ### IT capacity building and standards - Build a core IT team including engineers, interoperability specialists, cybersecurity experts, and project managers. - Support continuous training and certification in standards such as: - ISO 27001 ((ISO 27001—international standard for managing information security), - ITIL (Information Technology Infrastructure Library framework), - TOGAF (The Open Group Architecture Framework), - NIST (National Institute of Standards and Technology cybersecurity framework). - Apply chosen security standard across integrated payment systems and maintain a dedicated operational resilience plan. - Establish partnerships with universities, professional associations, and peer institutions to create talent pipelines via internships, apprenticeships, and secondments. ### Monitoring, analytics, and alignment with core functions - Integrate continuous monitoring, analytics, and feedback loops; use AI-enabled monitoring for real-time anomaly detection. - Provide performance dashboards for senior management with real-time insights into system health, usage, and service delivery metrics. - Ensure IT systems directly support core functions: banking and payments, currency management, economic data analysis, supervision, foreign reserves management, and internal administration. ### K. Governance and External Liaison — functional alignment - Consider aligning Risk Management, Compliance, and Communications & International Relations under Legal Counsel to strengthen independence, streamline oversight, and enhance access to executive decision-making. - Rationale: - MIMA’s organizational size limits number of senior management positions; - grouping preserves autonomy while ensuring efficient workload distribution; - Legal Counsel serves as a central point for impartiality, confidentiality, and regulatory adherence. - This structure aims to reinforce accountability, safeguard against conflicts of interest, and meet international best practice expectations. ### L. Risk Management — structure and framework - Establish a Chief Risk Officer (CRO) reporting administratively to Legal Counsel with functional line to the Governor and regular reporting and access to the AC. - Empowered CRO responsibilities: - challenge operational decisions; - define the institution’s risk appetite; - escalate critical threats without interference. - Develop and adopt a Board-approved RMF that incorporates a standardized risk taxonomy aligned with Internal Audit classifications to enable consistent enterprise-wide reporting. - Embed the RMF into strategic planning, annual work plans, and project design so risk management is proactive and integrated. - Board responsibilities: - agree institutional risk appetite, tolerance, and ranking mechanisms; - procedural components of the RMF can be approved by the Governor. - Management responsibilities: - own the approach for identifying, assessing, and mitigating strategic, financial, operational, legal, and reputational risks. - Link risk management to governance to ensure risk intelligence informs policy, operations, and resource allocation. *IMF | Marshall Islands Technical Assistance Report* ### 154. Implement a central risk register as the operational backbone of the RMF, capturing the ### Implement a central risk register as the operational backbone of the RMF ### Risk Management Framework — design and operationalization - Implement a central risk register capturing the likelihood, impact, and mitigation status of potential risk events. - The register must be a living document that: - assigns risk owners; - outlines mitigation strategies; - sets review timelines. - Maintain regular updates through structured self-assessments so the register reflects the current operating environment. - Accurate, timely data from the register should enable senior management to prioritize resources and address unresolved risks effectively. - The MIMA may decide to follow one of the leading standards: either ISO 31000 or Committee of Sponsoring Organizations of the Treadway Commission (COSO) methodologies. - Integrate Business Continuity Management (BCM) and IT controls into the RMF to safeguard core infrastructure. - Develop and test BCPs, Crisis Management Plans (CMP) and DRPs. - Maintain CRO independence from the development of these plans. - Consider aligning the business continuity management framework with the principles of ISO 22301. - Pair BCM with robust General Computing Controls (GCCs) and a Cybersecurity Strategy, including regular penetration testing. - Ensure high-priority IT risks are reflected in the central risk register. ### Roles, reporting, and escalation - Foster a risk-aware culture: - Position the CRO as a facilitator; operational units retain ownership of risks within their processes. - The risk office should provide tools, training, and guidance, focusing on quality of risk discussions rather than excessive documentation. - Avoid over-templating to encourage genuine engagement and prevent a box-ticking exercise. - Develop a Risk Event Escalation Protocol: - Deploy risk indicators and dashboards linked to defined thresholds that trigger escalation when breached. - Define to whom such events must be communicated and by when. - Use real-time monitoring to enable management and the Board to detect emerging threats early and take corrective action. - Require the CRO to submit a formal Statement of Risk opinion to the AC. - Support the opinion with a risk dashboard tracking performance against Board-approved appetite and tolerance levels. - Highlight “out-of-appetite” risks, assess mitigation adequacy, and provide evidence-based recommendations. - Maintain accountability through bi-annual reporting to the AC. - CRO reports should detail critical risk trends, new or retired risks, and the effectiveness of mitigation measures. - Regular oversight reinforces segregation of duties between risk, compliance, and internal audit, supporting a robust three-lines-of-defense model. ### Monitoring, tools, and governance implications - Use dashboards and indicators for real-time detection and escalation to prevent crises in volatile domestic and global financial environments. - Ensure CRO opinion and register outputs enable prioritized resource allocation by senior management and the Board. --- ### Compliance — framework, functions, and integrity safeguards ### Establishing the compliance function - Consider developing a compliance framework with accountability assigned to the Governance & External Liaison office. - Assign accountability to a senior, qualified officer with a direct and unfiltered reporting line to the Governor and AC. - Operate the compliance function under a clear, written policy defining preventive and corrective roles, enabling challenges to decisions, setting priorities based on risk, and ensuring alignment with the MIMA’s mandate and regulatory obligations. - Ground the Compliance Framework in the BIS definition of compliance risk: risk of legal or regulatory sanctions, financial loss, or reputational damage from non-compliance. - The AC should: - approve the compliance policy; - oversee its effectiveness; - review compliance risk management at least annually. - Management remains accountable for establishing the function and ensuring compliance risk is effectively managed across all operations. ### Operationalization and integration - Identify the full universe of applicable laws, regulations, and standards, clarify internal accountabilities, and conduct a baseline review of compliance versus non-compliance. - Embed corrective actions into operational policies and procedures, with regular monitoring and reporting to the AC. - The compliance function should: - design, communicate, and implement the framework; - assess compliance risks; - monitor adherence; - maintain a clear distinction from the legal function to avoid overlaps or gaps. - Integrate the compliance function with internal audit, risk management, and ethics oversight to create coherent checks and balances. - Conduct periodic internal audits of the compliance function to strengthen accountability and continuous improvement. ### Ethics, whistleblower, and anti-corruption measures - Establish and enforce a comprehensive Code of Ethics and Conflict of Interest Policy: - set clear behavioral standards; - prohibit self-dealing; - require disclosure of financial interests and permissible investments; - implement annual declarations, regular ethics training, and a transparent process for resolving conflicts. - Implement a robust Whistleblower Protection Policy: - provide secure, confidential reporting channels—preferably managed independently; - define clear investigation procedures and visible enforcement; - publicize the commitment to foster accountability and openness. - Embed anti-corruption measures across operations: - public asset declarations; - transparent budgeting; - regular audits; - coordination with national anti-corruption bodies. - Foster a culture of compliance and ethics through regular staff training, integrity checks, and annual declarations aligned with a Financial Disclosure Policy. --- ### Communications and External Liaison — strategy and stakeholder engagement ### Strategy, accountability, and messaging - Establish a comprehensive, integrated communications strategy early to position MIMA as credible, transparent, and responsive. - Assign communications accountability to the Governance & External Liaison office to ensure access to the Governor and consistent messaging. - The communications strategy must define: - objectives; - target audiences; - key messages; - communication channels; - frequency; - a structured messaging approval process. - Assign communications spokesperson roles to senior-level positions (Board Chair / Governor) with alternates; provide media training to spokespeople and heads of departments. ### Transparency, outreach, and channels - Prioritize transparency in legislative decisions, appointments, and institutional objectives. - Communicate purpose, intended outcomes, and progress of MIMA establishment to key stakeholders and the public. - Disclose legislative changes, publish research outputs, announce leadership appointments, and explain planned financial system enhancements (payment systems, electronic transactions, stability measures). - Foster proactive partnerships and stakeholder engagement beyond statutory requirements. - Target audiences include financial sector actors, MOF, government agencies, state owned enterprises, business associations, advocacy groups, international donors, institutional investors, and advisory organizations. - Consider additional engagement beyond minimum reporting requirements to MoF and Parliament, especially during start-up phases. - Implement a multichannel outreach approach combining traditional media, town halls, social media, digital platforms, and direct stakeholder engagement. - Distinguish between content ownership and technical administration in the digital strategy. - Segment communications for retail depositors, institutional investors, government agencies, merchants, advocacy groups, and international partners. - Start by setting up the MIMA website and populating it with key information; then develop targeted channels. ### Monitoring, crisis preparedness, and resourcing - Integrate robust monitoring and feedback mechanisms: - use “understanding metrics” and behavioral indicators beyond website traffic or media coverage; - implement structured feedback loops (surveys, consultations, public comment periods) to show how stakeholder input influences decisions. - Address sensitive stakeholder issues through careful planning and targeted messaging (example: decoupling MOF accounts from financial institutions). - Prioritize communications preparedness for crises: - develop pre-approved rapid response protocols, scenario planning exercises, and media handling procedures for systemic failures, market volatility, political disruptions, or intense media scrutiny. - Ensure adequate institutional capacity and resources: - appoint a dedicated communications specialist; - allocate sufficient budget; - establish clear roles, responsibilities, and timelines; - institutionalize standard communications procedures and predictable publishing schedules. --- ### Recruitment and Capacity Building — priorities and modalities ### Recruitment priorities and timelines - Accelerate recruitment and capacity building to establish core functions during start-up. - Rapidly recruit senior-level staff with specialized expertise; given limited local availability, target candidates from nearby Pacific islands and Southeast Asia, including the Philippines. - Central banking experience preferred but not mandatory; consider candidates from private sector banking and financial institutions. - Support recruitment with clear job descriptions, competitive salary ranges, and efficient hiring processes to avoid delays. - Allocate adequate funding for targeted training, seminars, conferences, and short-term capacity-building exchanges with other central banks. - Specific timeline notes from the roadmaps and progress table: - Recruitment to be initiated in May 2026 for priority positions (Corporate Services Executive Manager, Internal Auditor). - Recruitment and training entries in the Implementation Roadmap indicate activities across 2026–2029 (detailed timelines in appendices). ### Use of external experts and IMF engagement - Engage external technical experts (retainers, direct contracts, or TA) aligned with senior staff appointments to accelerate institutional readiness. - External experts provide flexibility, impartial perspectives, access to global good practices, niche technical skills unavailable locally, and structured knowledge transfer. - Maintain close engagement with the IMF for continuity and depth of TA, contingent on measurable progress against the agreed roadmap, including senior staff appointments. - Establish an agreed TA workplan with clear milestones, responsibilities, and success indicators. - Support can include targeted missions for priority operational and administrative areas and a Board workshop to strengthen oversight capacity. - Subject to funding, consider placement of a long‑term central banking expert to advise on strategy and core operations. - Monitor progress through structured periodic check‑ins supplemented by peripatetic expert visits. --- *IMF | Marshall Islands Technical Assistance Report — Excerpts on RMF, Compliance, Communications, Recruitment and Capacity Building* ### Appendix II(b). Roadmap—Establishing a Robust Governance ### Appendix II(b). Roadmap—Establishing a Robust Governance Structure ### Timeline Overview - Activities scheduled across 2026, 2027, 2028, and 2029 by quarter: 2026 Q2 Q3 Q4; 2027 Q1 Q2 Q3 Q4; 2028 Q1 Q2 Q3 Q4; 2029 Q1 Q2 Q3 Q4. ### Board, Committees, Executive Management - Establish Board Committees & appoint membership. - Adopt Terms of References / Charters for each committee. - Review and amend the Act as necessary. - Develop operational Board Governance Manual. - Develop meeting schedules for each Committee. - Approve functional and administrative Policies. - Receive management & external reports, discuss progress & assess resolution strategies. ### Internal Control Framework - Identify key controls to be implemented / adhered to. - Define and agree a Delegation of Authority. - Document functional and administrative processes; annual updates. ### External Audit - Initiate procurement process to secure External Audit firm. - Secure External Auditor, agree contractual obligations. - Establish Planning Meeting timing and agenda. - Coordinate resources and information in support of audit. - Conduct closing meeting to receive audit results. - Present findings to MoF and Parliament. - Publish Annual Report with financial statements & audit report. ### Internal Audit - Agree sourcing strategy. - Hire Chief Internal Auditor. - Contract IA outsourced / co-sourced Service Provider. - Develop structure for an Internal Audit Manual. - Agree key risk taxonomy (interdependent with Risk Management). - Agree Audit Universe. - Develop and agree 3-year and annual Audit plan. - Conduct audits, document findings, agree corrective action, follow-up. - Report to Audit Committee on audit findings quarterly and opinion of the State of the Control Environment. ### Corporate Services Department (establishment & staffing) - Agree organization structure and staffing levels, amend as demands change. - Hire Executive Manager—Corporate Services Department. ### Accounting and Financial Management - Agree adoption of IFRS and propose amendment to Act. - Agree MOU with the MOF for provision of interim financial and administrative services. - Procure interim accounting software package to meet immediate needs. - Develop an accounting manual including accounting policies. - Implement segregation of duties - initiation, approval, and execution of transactions. - Develop structure for external financial statements based on best practices. - Define scope of internal financial management processes. - Initiate annual work planning and budget process accompanied by a five-year plan. - Segregate resource requirements by expense vs asset, start-up versus recurring. - Establish a budgetary reserve for unforeseen circumstances / hurdles. - Assess resource capacity for insourced vs. outsourced services. ### Human Resources - Appoint Director, Human Capital. - Agree organizational design during the startup phase and steady state. - Develop Human Capital strategy to align with organizational design. - Agree sourcing strategies for core and non-core operations. - Develop competitive, market-aligned compensation and benefits plan. ### Procurement and Facilities Management - Recruit Manager, Procurement. - Establish Procurement Policy. - Implement segregation of duties - requisition process, contract approval, goods / services receipt verification. - Agree strategic vendor relationships, establish sourcing agreements. - Manage vendor relations, contracts, maintenance agreements, inventories. - Continually assess sourcing arrangement for results, price and delivery. ### Information Technology - Recruit and on-board Director, Information Technology. - Establish an IT governance and oversight framework. - Develop a MIMA-wide enterprise architecture. - Assess optimal balance between insourcing, outsourcing, and co-sourcing. - Select an appropriate hosting and connectivity model. - Define operational parameters and service-level agreements. - Implement infrastructure hardware/software (HW/SW), business applications, upgrades, fixes. - Institutionalize project management techniques, documentation requirements, approval stages. - Integrate monitoring, analytics, and feedback loops in IT systems. ### Governance & External Liaison - Agree structure and accountabilities. - Appoint Legal Counsel (employee or contractual arrangement). - Appoint Corporate Secretary. ### Risk Management - Agree reporting relationship. - Hire Director, Risk Management (CRO). - Develop structure for a Risk Management Framework. - Agree on risk appetite, tolerance, and ranking mechanisms. - Agree risk taxonomy (interdependent with Internal Audit). - Develop a Risk Event Escalation Protocol. - Implement a central risk register. - Develop & test Business Continuity plans (BCP, DRP, CMP) with CRO oversight and business ownership. - Report to AC on risk exposures, state of riskiness, mitigations. ### Compliance (internal) - Assign accountability for Compliance to appropriate position. - Draft structure for a Compliance Framework. - Identify all laws and regulations to be complied with. - Implement annual attestation to Code of Ethics, Conflict of Interest, annual declaration of Financial Disclosure. - Implement a Whistleblower Protection Policy. - Draft and implement Anti-Corruption measures. - Report compliance irregularities to AC quarterly. ### Communications and International Relations - Prioritize disclosure in the public domain of legislative decisions, appointments, and institutional objectives. - Assign accountability for Communications and hire a communications specialist. - Identify Spokesperson and alternate, including roles and responsibilities. - Establish a comprehensive communications strategy. - Identify stakeholder engagement approach for each audience. - Address sensitive stakeholder with targeted messaging. - Implement a multichannel outreach approach. - Monitor communication channels and feedback mechanisms. - Prepare messages for potential crisis scenarios, revisit annually. --- ### Appendix III. Job Description: Executive Manager—Corporate Services Department ### Position overview - Job Title: Executive Manager—Corporate Services Department, Marshall Islands Monetary Authority (MIMA). - Location: Majuro, Republic of the Marshall Islands. - Opportunity: Executive Level, Full-Time 3-Year Contract. - Application Deadline: April 30, 2026. - MIMA will operate with a staff complement of approximately 50 positions across specialized central banking, policy, and operational functions. ### Role summary - Lead the Corporate Services Function of a newly established central bank. - Span Accounting, Human Resources, Information Technology, Procurement, and Facilities & Asset Management. - Report directly to the Governor and work closely with the Board. - Design and operationalize the Corporate Services Department and contribute to establishing other core MIMA functions. ### Key Leadership Responsibilities - Strategic Financial Stewardship - Serve as MIMA’s principal financial officer, ensuring integrity, accuracy, and timeliness of all financial statements in compliance with the Monetary Authority Act 2025, IFRS, and applicable standards. - Oversee accounting for monetary policy operations, foreign reserves, and currency management. - Lead selection and implementation of accounting systems, driving digital transformation and automation. - Provide strategic financial advice to the Governor and Board on solvency, capital adequacy, and profit distribution. - Human Capital Leadership - Establish and lead MIMA’s HR function, ensuring policies and practices meet the highest standards of governance, ethics, and compliance. - Drive talent acquisition for specialized central banking roles with transparent, merit-based processes. - Foster performance, accountability, and continuous learning, including leadership development and mentorship programmes. - Implement workforce planning, succession strategies, and competitive total rewards. - Information Technology Leadership - Oversee development and implementation of MIMA’s IT strategy, ensuring robust, secure, and scalable systems. - Ensure IT governance, cybersecurity protocols, and data protection measures meet international best practices. - Lead selection and deployment of core banking systems, payment systems, ERP platforms, and digital tools. - Supervise IT infrastructure, helpdesk services, and application implementation, ensuring business continuity and disaster recovery readiness. - Drive digital innovation to enhance operational efficiency and service delivery. - Procurement & Contract Management - Establish and oversee transparent, efficient, and compliant procurement systems aligned with public sector and central banking standards. - Manage tendering, vendor selection, and contract negotiations to ensure value for money and quality service delivery. - Develop procurement policies and procedures that mitigate risks and ensure accountability. - Monitor supplier performance against agreed KPIs and contractual obligations. - Facilities & Asset Management - Oversee management, maintenance, and security of all MIMA facilities. - Develop and implement facilities management policies, including preventive maintenance schedules and emergency preparedness plans. - Manage acquisition, registration, tracking, and disposal of all physical assets, ensuring accurate asset registers and compliance with audit requirements. - Ensure optimal utilization of office space, equipment, and resources. - Oversee contracts for facilities-related services (e.g., security, cleaning, maintenance). - Organizational Development & Governance - Develop and embed internal controls, compliance systems, and operational policies across corporate services functions. - Ensure alignment of corporate services with MIMA’s strategic objectives and central banking best practices. - Build strong relationships with government ministries, international financial institutions, and external auditors. ### Candidate Profile - Essential Qualifications - Certified Public Accountant (CPA) or equivalent professional accounting designation (mandatory) with experience in the application of IFRS. - Master’s or Bachelor’s degree in Accounting, Finance, or Business Administration (HR qualifications an asset). - Minimum 10 years’ progressive experience in accounting and financial management, including 5–7 years in senior leadership roles. - Proven track record in the financial sector, preferably in central banking or regulatory institutions. - Experience overseeing IT, HR, procurement, and facilities/asset management functions is highly desirable. - Core Competencies - Strategic vision and intellectual leadership with a global perspective. - Strong managerial and coordination skills, able to lead complex, multi-functional teams. - Entrepreneurial mindset with the ability to innovate within a regulated environment. - Exceptional stakeholder engagement, negotiation, and partnership-building skills. - High resilience, integrity, and discretion in handling sensitive matters. - Ability to deliver results under pressure and to the highest standards. ### Terms and Benefits - Competitive international remuneration package. - Housing and vehicle allowance. - Health insurance. - Performance-based bonuses. - Professional development opportunities. ### Application instructions - Submit CV and cover letter outlining suitability for the role to skorean@rmiobc.org, Sultan T. Korean, Governor, Marshall Islands Monetary Authority, before April 30, 2026. - MIMA is committed to diversity, inclusion, and gender equality and encourages applications from qualified candidates worldwide. *Source: Appendix II(b). Roadmap—Establishing a Robust Governance Structure and Appendix III. Job Description: Executive Manager—Corporate Services Department.* --- _Source: https://www.imf.org/-/media/files/publications/tar/2026/english/tarea2026048.pdf_