Circular No. 2015-02 - Information Obligations Regarding the Credit Registry

Circular No. 2015-02 – Information Obligations Regarding the Credit Registry – Update XII Page 1 of 106

Circular No. 2015-02 INFORMATION OBLIGATIONS REGARDING THE CREDIT REGISTRY

INDEX

1. PURPOSES AND DISCIPLINE OF THE CREDIT REGISTRY....................................................... 4 1.1. Definitions....................................................................................................................................................... 4 1.2. Legal Sources.............................................................................................................................................. 7 1.3. Purposes of the Credit Registry ................................................................................................................... 7 1.4. Confidential Nature of Data ................................................................................................................................ 8 1.5. Participating Intermediaries............................................................................................................................... 9 1.6. Liability of Reporting Intermediaries ............................................................................................10 1.7. Inspection Verifications..................................................................................................................................12 1.8. Sanctions..........................................................................................................................................................12

2. ORGANIZATION AND OPERATION OF THE SERVICE...................................................13 2.1. Initial Compliance....................................................................................................................................13 2.2. Corresponding Entities......................................................................................................................................13 2.3. Encoding of Registered Subjects ........................................................................................................................13 2.4. Monthly Risk Detection.....................................................................................................................13 2.5. Detection of Client Status. .............................................................................................................................14 2.6. Forms of Co-obligation and Other Links Between Registered Subjects.........................................................15 2.7. Correction of Amounts................................................................................................................................16 2.8. Customized Return Flow ......................................................................................................................16 2.9. Statistical Return Flow ..........................................................................................................................17 2.10. Information upon Request: Access Conditions.....................................................................................18 2.10.1. First Information Service ............................................................................................................18 2.11. Media Usable for Information Exchange ...............................................................................................19 2.12. Methods of Protecting Exchanged Information ..........................................................................19 2.13. Terms for Document Retention......................................................................................19 2.14. Distribution of the Norms Governing the Service ........................................................................19 2.15. Criteria for Quantification and Allocation of Costs for the Credit Registry .......................................20

3. GENERAL PRINCIPLES ON RISK CLASSIFICATION...............................................22 3.1. Nature of Detected Risks...............................................................................................................................22 3.2. Reporting Intermediary.............................................................................................................................22 3.3. Title of Risk Positions...............................................................................................................................22 3.4. Methods of Representing Risks ....................................................................................................................24 3.5. Detection Limits....................................................................................................................................25 3.6. Multiple Credits....................................................................................................................................................25 3.7. Mixed Credits...............................................................................................................................................26

4. CATEGORIES OF RISK DETECTION...................................................................................27 4.1. Cash Credits............................................................................................................................................27 4.1.1. Self-liquidating Risks .................................................................................................................................27 4.1.2. Maturity Risks.......................................................................................................................................27 4.1.3. Revocable Risks...........................................................................................................................................28 4.1.4. Financing under Concursal Procedure................................................................................................28 4.1.5. Non-performing Loans...................................................................................................................................................28 4.2. Signature Credits..............................................................................................................................................29

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4.3. Received Guarantees..........................................................................................................................................30 4.4. Information Section.....................................................................................................................................31 4.4.1. Credits acquired from clients other than intermediaries – assigned debtors .............................................31 4.4.2. Self-liquidating risks – overdue credits....................................................................................................31 4.4.3. Non-performing loans - credits written off ......................................................................................................32 4.4.4. Credits assigned to third parties..................................................................................................................................32

5. CLASSIFICATION VARIABLES IN DETECTION CATEGORIES .....................34 5.1. Concept .........................................................................................................................................................34 5.2. Location...............................................................................................................................................34 5.3. Original Duration...........................................................................................................................................34 5.4. Remaining Duration...............................................................................................................................................34 5.5. Currency .............................................................................................................................................................35 5.6. Import-export...............................................................................................................................................35 5.7. Activity Type ...................................................................................................................................................35 5.8. Linked Registered Subject ..........................................................................................................................................36 5.9. Status of the Relationship.........................................................................................................................................36 5.10. Guarantee Type ..............................................................................................................................................37 5.11. Correlated Phenomenon ..................................................................................................................................38 5.12. Credit Quality......................................................................................................................................38

6. DATA CLASSES...........................................................................................................................................39 6.1. Approved and Operationally Approved...............................................................................................................39 6.2. Utilized........................................................................................................................................................40 6.3. Average Balance...................................................................................................................................................40 6.4. Guarantee Value and Guaranteed Amount..........................................................................................................40 6.5. Other Amounts ..................................................................................................................................................41 6.6. Prohibition of Set-off ..................................................................................................................................42

7. REPORTING OF PARTICULAR OPERATIONS.....................................................................43 7.1. Factoring........................................................................................................................................................43 7.2. S.b.f., invoice advances, bills of exchange and other commercial documents ............................................................43 7.3. Portfolio Discount...................................................................................................................................44 7.4. Financing against assignment of credits from clients other than intermediaries.............................44 7.5. Credit assignment operations from intermediaries ..................................................................................45 7.6. Leasing Operations..................................................................................................................................45 7.7. Mortgage Prefinancing........................................................................................................................46 7.8. Mortgages and other installment repayment operations .............................................................................................46 7.9. Assumption Operations...................................................................................................................................46 7.10. Credit Cards...........................................................................................................................................47 7.11. Repos and Active Repos ......................................................................................................47 7.12. Letters of Patronage...................................................................................................................................47 7.13. Guarantees issued on behalf of other intermediaries..................................................................................47

8. PROCEDURES FOR INFORMATION EXCHANGE................................................................49 8.1. Premise ........................................................................................................................................................49 8.2. Methods of Exchanging Reports.....................................................................................................................49 8.3. Controls.........................................................................................................................................................50 8.4. Investigations ..........................................................................................................................................................50

9. MANAGEMENT OF DEMOGRAPHIC DATA..................................................................................................51 9.1. Premise ........................................................................................................................................................51 9.2. Types of Subjects, Sources of Detection and Update.............................................................51 9.3. Demographic Elements of Registered Subjects.....................................................................................................52 9.3.1. Identification Demographic Data ............................................................................................................53 9.4. Request for Registered Code........................................................................................................................54 9.5. Changes to Demographic Data.........................................................................................................................55 9.6. Mergers ...........................................................................................................................................................56 9.7. Request for First Information......................................................................................................................56

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9.8. Verification of Double Encodings ............................................................................................................57

10. MANAGEMENT OF AMOUNTS...............................................................................................................59 10.1. Reporting of Risk Positions....................................................................................................................59 10.2. Reporting of Client Status..................................................................................................................59 10.3. Correction of Amounts..............................................................................................................................59 10.4. Investigations on Amounts ................................................................................................................................60

11. FINAL AND TRANSITIONAL NORMS .....................................................................................................61 11.1. Launch of Return Flows.........................................................................................................................61 11.2. First Information Service......................................................................................................................61 11.3. Non-performing Loans....................................................................................................................................61 11.4. Management of Demographic Data and Status Changes........................................................................................61 11.5. Credits Assigned to Third Parties or Written Off..................................................................................................61

ANNEX A – [ABROGATED]...................................................................................................................62 ANNEX B – RISK DETECTION MODEL.........................................................63 ANNEX C – TYPE OF SUBJECTS........................................................................................69 ANNEX D – CONTENT OF FIRST INFORMATION .............................................72 ANNEX E – CONTENT OF CUSTOMIZED RETURN FLOW................75 ANNEX F – LETTER OF CERTIFICATION.................................................................................78 ANNEX G – CLIENT CLASSIFICATION CRITERIA...................................79 G1. GENERAL CRITERIA..............................................................................................................................79 G1.1. Introduction..............................................................................................................................................79 G1.2. Institutional Unit.....................................................................................................................................80 G1.3. Uniqueness of Classification ................................................................................................................80 G1.4. Definition of “Quasi-corporation”................................................................................................................80 G1.5. Definition of Public Enterprises..........................................................................................................81 G1.6. Consortium Enterprises: Determination of the Dominant Enterprise..........................................................81 G1.7. Criteria for Classifying Joint Accounts..................................................................................81 G1.8. Classification by Institutional Sectors ..................................................................................................81 G1.9. Classification of Economic Activity ..................................................................................................82 G2. SECTORS OF ECONOMIC ACTIVITY...........................................................................................83 G2.1. Introduction..............................................................................................................................................83 G2.2. Sector: PUBLIC ADMINISTRATIONS (code 001) ...............................................................83 G2.3. Sector: FINANCIAL COMPANIES (code 023).................................................................................85 G2.4. Sector: NON-FINANCIAL COMPANIES (code 004).....................................................................92 G2.5. Sector: HOUSEHOLDS (code 006)..............................................................................................................94 G2.6. Sector: NON-PROFIT INSTITUTIONS SERVING HOUSEHOLDS (code 008) ..............................................................................................................................................................95 G2.7. Sector: REST OF THE WORLD (code 007)........................................................................................97 G2.8. Sector: UNCLASSIFIABLE AND UNCLASSIFIED UNITS (code 099)....................100 G3. CLASSIFICATION SCHEME BY SECTORS.......................................................................101

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1. PURPOSES AND DISCIPLINE OF THE CREDIT REGISTRY 1.1. Definitions
2. For the purposes of this Circular, the expressions used shall be understood with the following meaning:

• “Assumption”: a contract under which a subject (assumer) assumes the obligation that the debtor (assumed party) has towards the creditor (assumptee). The assumption can be liberatory or cumulative depending on whether the original debtor is released from the obligation or remains jointly liable with the assumer;
• “Set-off Agreements”: contracts under which two or more parties agree on the execution of a single net payment, at a predetermined time, to offset a series of debts and credits maturing on the same date and currency. The party that has entered into a set-off agreement with the counterparty is a creditor/debtor towards the latter if the amount (relative to the net contract) obtained from the difference between the sum of credit positions and the sum of debit positions relating to each contract, is positive/negative;
• “Definitive Credit Purchases”: credit purchase operations with payment of the price on a definitive basis; for the purposes of the Credit Registry, these operations are considered as “factoring”;
• “Credit Activity”: activity defined in Letter B) of Annex 1 to Law 17 November 2005 n.165;
• “Bank / Banks”: subject(s) authorized to exercise the activity referred to in letter A of Annex 1 to LISF in an entrepreneurial form, in the Republic of San Marino;
• “BCSM / Central Bank”: Central Bank of the Republic of San Marino;
• “CAB”: banking routing code;
• “Securitization”: assignment of credits or other non-negotiable financial assets to a qualified company whose exclusive object is the realization of such operations and which provides for the conversion of such credits or assets into negotiable securities on a secondary market;
• “Detection Categories”: Groupings of homogeneous risk positions identified based on the characteristics of the detected operations;
• “Credit Registry / CR”: the service for centralizing information on credit risks;
• “Circular”: this Circular;
• “Data Classes”: types of amounts provided for different operations subject to detection;
• “Clients other than intermediaries”: includes subjects other than banks, financial companies and credit funds;
• “Authorized Subject Code”: identification code of the reporting intermediary;
• “CR Code”: identification code assigned by the Credit Registry to subjects registered in the database;
• “ISO Country Code”: ISO 3166-1 alpha-2 coding (International Standard for Country Codes);
• “Joint Account”: a relationship of joint liability between two or more subjects having autonomous relevance only with reference to the existence of a credit relationship of which they appear as joint titleholders;
• “Autonomous Guarantee Contract”: a promise by a subject to pay a sum of money to a third party, upon its simple request and with waiver of any contestation and exception related