CENTRAL BANK OF THE COMOROS

REGULATORY DECISION NO. 19-2021/BCC/DSBR

Regarding the distribution agents of electronic money institutions and payment institutions

Having regard to the Framework Law No. 80-08 of May 3, 1980, relating to currency and the role of the Central Bank of the Comoros in the control of Banks and Financial Institutions;

Having regard to the Statutes of the Central Bank of the Comoros;

Having regard to the Banking Law No. 13-003/AU of June 12, 2013, in its Articles 26 and 29;

Having regard to Law No. 20-005/AU of June 23, 2020, on payment services and payment service providers, and notably its Articles 83 to 88;

Having regard to Law No. 12-008/AU of June 28, 2012, combating money laundering and the financing of terrorism;

Having regard to Decree No. 15-026/PR of March 3, 2015, relating to payment systems, means, and incidents;

Having regard to Decree No. 87-005/PR, regulating financial relations between the Federal Islamic Republic of the Comoros and abroad;

THE GOVERNOR OF THE CENTRAL BANK OF THE COMOROS:

DECIDES

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Article 1: Object and Scope

This regulation establishes the rules and procedures to be observed by electronic money issuers, payment institutions, and the distribution agents of these establishments governed by Law No. 20-005/AU.

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Article 2: Definitions

Distribution Agent: Any natural or legal person acting on behalf of and in the name of one or more electronic money issuers or payment institutions.

Agency Contract: A mandate contract by which an electronic money issuer or a payment institution entrusts a distribution agent with the task of providing, on a habitual basis, in their name and on their behalf, management services.

Subject Institution: Electronic money issuer or payment institution as defined in Article 6 of Law No. 20-005/AU.

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Article 3: Conditions for exercising the activity of a distribution agent

No natural or legal person may be:

a) a distribution agent of an electronic money institution or a payment institution;

b) an administrator, manager, or director of a distribution agency;

c) hold shares in the capital of a distribution agency,

If:

• They are subject to collective proceedings for the clearance of liabilities;
• They are prohibited from issuing checks;
• They have violated the provisions of this regulation;
• They have been convicted of counterfeiting, forgery and use of forgery, money laundering, financing of terrorism, and trafficking in arms or products intended for the proliferation of weapons of mass destruction, theft, breach of trust, counterfeiting or falsification of public or commercial instruments, forgery and use of forgery in public, private, commercial, or banking documents, misappropriation of public funds, breach of trust, fraud or handling of stolen goods, corruption of a public official or extortion, tax fraud, offenses against the regulation of external financial relations and exchange control.

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Article 4: Distribution Agent Contract

In accordance with Article 83 of Law No. 20-005/AU, the establishment that engages a distribution agent must submit a standard mandate contract to the Central Bank of the Comoros for approval before signing.

The standard agency contract may only enter into force after approval by the Central Bank of the Comoros, which has a period of one (01) month from the day the electronic money issuer or payment institution has made the requested modifications. In the absence of formal approval by the end of the one (01) month period, approval is deemed tacitly granted.

The standard agency contract provides that:

• The distribution agent retains records, for at least five (05) years on a secure backup medium, of all operations performed on behalf of the establishment that appointed them, and in particular the identity of the persons who carried out the operations, the date and nature of the operations performed, and the payment method used;

• The distribution agent communicates to the electronic money issuer or payment institution that appointed them any information regarding the payment services they provide on their behalf. It specifies the frequency of this communication;

• The electronic money issuer or payment institution is informed by the agent they appointed of any incident affecting their activity as an agent as well as any complaint filed by a client.

In addition to the mentions referred to in the previous paragraphs, the distribution agent contract must contain at a minimum the following provisions:

i. a description of the parties to the contract;

ii. the rights and obligations of the parties;

iii. the nature and conditions of the operations that the agent is authorized to perform;

iv. the agent's obligations regarding accounting, archiving of operations, and traceability of complaints filed by users;

v. operational procedures to carry out the operations;

vi. measures aimed at limiting risks related to the activity of a distribution agent, including maximum amounts of operations that may be performed by clients, conditions under which cash is managed, and measures taken to ensure the security of funds, operations, and premises;

vii. measures that the distribution agent must take to comply with provisions relating to the fight against money laundering and the financing of terrorism;

viii. provisions specifying the methods of informing the subject institution about operations carried out by the distribution agent as well as a description of measures taken by the distribution agent to ensure their own training or the training of their staff;

ix. the obligations of the distribution agent regarding justification of operations performed;

x. provisions taken by the distribution agent to report on operations performed and retain information related to said operations;

xi. the prohibition of charging fees of any nature in addition to the fees charged by the subject institution;

xii. measures taken to ensure the confidentiality of operations performed or to be performed;

xiii. measures taken to respect rules regarding consumer protection, including dispute resolution;

xiv. conditions for modification and termination of the contract.

The standard contract, once approved, is the only legal instrument that the electronic money issuer or payment institution may use to establish a relationship with a distribution agent.

The contract may not contain an exclusivity clause.

Subject institutions transmit to the Central Bank of the Comoros a copy of the contracts linking them to their distribution agents.

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Article 5: Authorized Payment Services

Distribution agents are authorized to provide, as agents of subject institutions, the following payment services:

• Services allowing the deposit of cash into a payment account or an electronic money account and all operations required for the management of such an account;

• Services allowing the withdrawal of cash from a payment account or an electronic money account and all operations required for the management of such an account;

• Execution of payment operations, including fund transfers to a payment account or an electronic money account, execution of direct debits, execution of payment operations using a payment card or an electronic device; execution of transfers, including standing orders;

• Payment initiation services and account information services.

• Loading electronic money onto the electronic medium,

• Withdrawal of money from the electronic money medium,

• Transfer of electronic money,

• Storage of electronic money.

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Article 6: Activities and Operations Not Authorized for Distribution Agents

Distribution agents are not authorized to:

• Collect fees or commissions of any nature in addition to the fees and commissions collected on behalf of the subject institution for which they are agents;

• Act as guarantor in favor of a subject institution or a client;

• Offer payment services or banking services for their own account;

• Offer a check collection service;

• Issue electronic money as defined in Article 40 of Law No. 20-005/AU;

• Outsource operations for which they have been appointed.

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Article 7: Notification to the Central Bank of the Comoros

The electronic money issuer or payment institution notifies the Central Bank of the Comoros of the names, corporate names, and addresses of each agent with whom they have concluded an agency contract, the nature of the payment services for which they appointed them, as well as other activities engaged in by the appointed agent.

The Central Bank of the Comoros acknowledges receipt of the notification. It may refuse to acknowledge receipt when it considers that the agent does not meet the necessary competence or honorability conditions to perform the mandate entrusted to them.

The agent may not begin to provide payment services until the acknowledgment of receipt of the notification has been addressed to the electronic money issuer or payment institution appointing them.

The electronic money issuer or payment institution informs the Central Bank of the Comoros of any modification of the payment services for which they have appointed an agent at least one (01) month before the entry into force of the modification. Within the same period, they inform the Central Bank of the Comoros of the termination of an agency contract. Termination of the agency contract prohibits the agent from continuing to provide payment services.

Subject institutions accompany the aforementioned notification with the following documents:

i. A copy of the contract concluded between the subject institution and its agent referred to in Article 4;

ii. for distribution agents that are legal persons, an extract from the registration in the commercial and movable credit register as well as the identity of the natural persons who have the power to manage or administer the legal person;

iii. for distribution agents that are natural persons, the name, address, and profession of the agent;

iv. a description of the internal control mechanisms that will be used by distribution agents to comply with legal and regulatory obligations regarding the fight against money laundering and the financing of terrorism.

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Article 8: Register of Distribution Agents

The Central Bank of the Comoros maintains an up-to-date register of distribution agents, indicating the services for which they are appointed. It assigns a registration number to each distribution agent registered in the register.

No natural or legal person may exercise the activity of a distribution agent if they are not registered in the register.

The agent register is accessible on the website of the Central Bank of the Comoros.

The Central Bank of the Comoros may remove the name of an agent from the register if it considers that the agent no longer meets the conditions to be listed or in case of inactivity for a period of at least twelve (12) months. In this case, it informs the concerned agent as well as the electronic money issuer and/or payment institution that appointed them of its decision.

The removal of an agent's name from the register entails the immediate prohibition of continuing to exercise the activity of a distribution agent and the obligation for the electronic money issuer or payment institution that appointed them to terminate their contract.

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Article 9: Retention of Information by the Distribution Agent

The distribution agent maintains a directory in which they record all operations performed as an agent of a subject institution. In the case where the distribution agent operates on behalf of several subject institutions, they maintain a separate directory for each establishment for which they are the agent.

The register of operations performed includes the nature of the operation, the identity of the person who carried it out, as well as the identity of the beneficiary of the operation.

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Article 10: Retention of Information by the Subject Institution

The subject institution maintains, at its registered office, information relating to each distribution agent it has appointed.

These information include in particular:

i. The contract linking the subject institution to each of its agents;

ii. Identification details of the agents, notably, for natural persons, a valid identity card as well as proof of the profession exercised, and for legal persons, its statutes and proof of its registration in the commercial and movable credit register;

iii. Any information attesting that the distribution agent complies with the provisions on incapacities and incompatibilities mentioned in Article 3 of this regulation;

iv. Any element allowing verification that the distribution agent has the personal capacities and technical means to perform the mandate entrusted to them by the subject institution.

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Article 11: Information to be Made Available to the Public

The subject institution ensures that any distribution agent it has appointed makes the following information available to the public, by display in its premises and/or any other appropriate means:

i. The corporate name and, if applicable, the commercial name of the subject institution(s) for which it is the agent;

ii. The registration number in the register of distribution agents;

iii. The list of services offered by the distribution agent, indicating separately for which subject institution(s) these services are offered;

iv. The fees and commissions of all kinds applied to the offered services;

v. The procedure to follow in case of client complaint.

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Article 12: Security of Operations

The subject institution is responsible for the proper execution of operations performed by its distribution agent(s) and for the reimbursement of funds in the event of default by said agent(s).

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Article 13: Modification or Termination of the Agency Contract

Any modification of the agency contract must be reported to the Central Bank of the Comoros. Termination of the agency contract must be notified without delay to the Central Bank of the Comoros and brought to the knowledge of the public by any appropriate means by the appointing institution.

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Article 14: Powers of the Central Bank of the Comoros

The Central Bank of the Comoros may carry out any document and on-site inspections of distribution agents.

Agents must respond to information requests from the Central Bank of the Comoros regarding the payment services they provide and the procedures put in place to comply with the rules to which they are subject.

Obstruction to the exercise of a control by the Central Bank of the Comoros results in removal from the register of distribution agents.

The Central Bank of the Comoros may require the modification of the contract(s) linking a subject institution to its distribution agent(s) when it deems it necessary.

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Article 15: Obligations of the Appointing Institution

The electronic money issuer or payment institution ensures that the agent possesses all the necessary competence and honorability to perform the mandate entrusted to them and that they respect at all times all applicable legal and regulatory provisions regarding the provision of payment services for which they are appointed, particularly provisions relating to the fight against money laundering and the financing of terrorism, provisions relating to consumer protection and personal data protection, and, for an electronic money issuer, provisions relating to limitations that may be imposed on the issuance or use of electronic money.

The electronic money issuer or payment institution ensures that the agent and, if applicable, their staff receive the necessary training to exercise the activity for which they are appointed. To this end, it provides the distribution agent with the necessary educational materials for the training of the agent and, if applicable, their staff.

The electronic money issuer or payment institution establishes internal procedures allowing it to identify and manage all risks related to the use of an agent and to handle client complaints regarding operations carried out through an agent.

It submits to the Central Bank, no later than the end of the first quarter of each year, a report on the activity of the agents it has appointed. This report includes the number, nature, and amount of operations performed by each agent, incidents of any kind that affected the agent's activity, as well as complaints transmitted to the appointing institution and the follow-up given to these complaints.

Without prejudice to the prerogatives of the Central Bank of the Comoros, the electronic money issuer or payment institution is responsible for the periodic control of distribution agents. It represents them before the Central Bank of the Comoros.

It is notably responsible for ensuring the cohesion and proper functioning of the distribution agent network, and for the application of legislative and regulatory provisions.

The appointing institution must annually communicate to the Central Bank of the Comoros the updated list of its distribution agents as well as the measures put in place for risk management.

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Article 16: Entry into Force

This regulation, which enters into force on January 1, 2022, repeals and replaces any prior contrary provisions.

Moroni, December 10, 2021

The Governor,

Dr. Younoussa IMANI

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Place de France. BP 405 MORONI TEL : (269) 773 18 14 - (269) 773 10 02 – FAX : (269) 773 03 49 E-mail : secretariat@banque-comores.km Site : www.banque-comores.km