Banking Board of Ecuador

RESOLUTION No. JB-2015-3389

THE BANKING BOARD

CONSIDERING:

THAT this appeal is resolved in accordance with the First Transitional Provision of the Organic Code of Monetary and Financial Affairs, published in the Official Register Second Supplement No. 332, of September 12, 2014, whose text states that resolutions contained in the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, and norms issued by control bodies, will remain in force in all that does not oppose what is provided in the Organic Code of Monetary and Financial Affairs, until the Monetary and Financial Policy and Regulation Board resolves what corresponds, according to the case; and, with the second paragraph of the Third Transitional Provision, which states that the Banking Board will continue to act until it resolves all complaints, appeals, and other administrative procedures it was hearing on the date of entry into force of the same, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board, which grants the control body competence to hear and resolve this review appeal;

THAT through a communication entered in the Superintendence of Banks on March 13, 2014, Mrs. Ingri Cristina Giler Pinargote stated that: "(...), I address you to bring to your knowledge that $3,300.00 (three thousand three hundred United States dollars) (sic) have been stolen from me, from Savings Account No. 4002835441 which I hold open at the National Bank of Development, apparently through the cloning of my debit card, the money was withdrawn via automated teller machines (ATMs) of the Development Bank located in Quito, Otavalo, and San Gabriel offices from February 5 to February 24, 2014, according to the report obtained through the Electronic Banking system provided as a service by said Bank, these withdrawals have not been made or authorized by me, it is meritorious to emphasize that I have not visited these places as my workplace is located in Manabí, Ángel Pedro Giler Parish, Tosagua Canton, therefore I request that this fact be investigated, as I have been harmed by the theft of my savings which I obtained based on my work, it is unheard of that one deposits trust in a banking entity and it does not provide the due security", therefore she requested "(...) the necessary inquiries be made and the stolen money be returned to me";

THAT through letter No. IRP-SAC-2014-200, of March 19, 2014, the Regional Intendancy of Portoviejo, requested the aforementioned financial institution the information and defenses regarding the complaint presented. Through letter No. 04186, of March 31, 2014, Mr. Marco Ruales Valverde, Director of the Customer Service Unit of the National Bank of Development, attached the "Customer Service Report" in which he indicated the following:

"(...)"

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Reviewing the transactions of the withdrawals made through ATMs on February 05-06-08-09-13-15-18-19-21-22-23-24, 2014, dates on which the debits subject of the complaint were made, were carried out normally and it was not possible to determine irregularities. It should be noted that prior to the claimed transactions, the client used ATMs of other financial institutions, which could have been exposed to third-party manipulation.

(...);

THAT through letter No. IRP-SAC-2014-327, of May 12, 2014, the Regional Intendancy of Portoviejo, after the corresponding analysis, concluded and resolved the following:

"(...)"

D) CONCLUSIONS

✓ The responsibility to manage the risks inherent to the ATM channel is the exclusive competence of the financial entity, which has made this service available to the user, therefore it should have had the necessary safeguards to minimize inconveniences for its clients when using ATMs of other financial entities; such as the provision of online messaging via mobile phone, email, or other mechanism to minimize these risks.

✓ Considering the "know your customer" and due diligence policies, in the present case, timely monitoring of the savings account operations of engineer Ingri Cristina Giler Pinargote was not applied, which would have allowed the bank to define unusual behavior parameters of its client.

✓ The videos show that the person making the withdrawals at the ATMs is a man and not the client subject of the complaint; furthermore, this person is identified in the withdrawals made to three clients of the National Bank of Development who filed complaints, namely the cases of Mrs. Katty Leonor Bravo Vera, Mrs. Angélica Marisol Zambrano García, Mrs. Josefa Arnabilia Murillo González, and Mrs. Mayra Juliana García Murillo.

E) RESOLUTION

Therefore, based on what is provided in letters b) and o) of Article 180 of the General Law of Institutions of the Financial System and in exercise of the delegation of attributes conferred through resolutions No. ADM-2013-11454 of April 2, 2013, and ADM-2013-11485 of April 15, 2013, and ADM-2013-11927 of November 12, 2013 in concordance with Article 5 section I, chapter IV, title XX, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, it is resolved:

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✓ That the National Bank of Development, within a period of seventy-two hours, proceed to reimburse US$ 3,300.00, claimed by engineer Ingri Cristina Giler Pinargote.

(...);

THAT through a document entered in the control body on May 26, 2014, economist Carlos Manuel Lucas Falcones, Commercial Manager of the National Bank of Development, Portoviejo Branch, filed an appeal for reconsideration against the administrative act contained in letter No. IRP-SAC-2014-327, of May 12, 2014;

THAT through letter No. IRP-SAC-2014-379, of June 4, 2014, the Regional Intendancy of Portoviejo, communicated to the appellant the following:

"(...)

The National Bank of Development received letter IRP-SAC-2014-327 of May 12, 2014 on May 13 of the current year and the appeal for reconsideration was entered into this Control Body on May 26, 2014, having elapsed nine working days, as stated in the document, which I attach for your knowledge, therefore the filed appeal is out of time, (...).

(...);

THAT through a document entered in the Superintendence of Banks and Insurance on June 17, 2014, economist Carlos Manuel Lucas Falcones, Commercial Manager of the National Bank of Development, Portoviejo Branch, with the professional sponsorship of lawyers Jacinto Giler Intriago and Fabián Gómez Vizuete, filed a review appeal against the administrative act contained in letter No. IRP-SAC-2014-379, of June 4, 2014;

THAT the appellant bases the filed appeal on the following arguments:

That "On June 5 of the current year, the National Bank of Development, Portoviejo Branch was notified with Letter No. IRP-SAC-2014-379 of June 4, 2014 signed by Lawyer Teresa Roca E., Regional Intendant of Portoviejo of the Superintendence of Banks and Insurance, through which it states that the appeal for reconsideration cannot be accepted according to the norm of Art. 02, section I.- Of Reconsideration Chapter II.- Norms for the application of Appeals for Reconsideration and Review, (sic) regarding this matter, Madam Intendant, I allow myself to indicate the following:

In accordance with what is prescribed in article 4 of the Organic Law (sic) of the National Bank of Development, it provides that this banking entity has its main domicile in the city of Quito and therefore its General Manager and Legal Representative has domicile in this city, therefore it is understood that the Resolution adopted by the Regional Intendant should have been notified at

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the domicile of the Bank in the city of Quito, therefore the term (sic) to file the Appeal for Reconsideration runs from the date it was received in the General Secretariat of the BNF in Quito, that is, May 15, 2014, as stated in the records, and the Appeal for Reconsideration was presented on May 26, 2014, that is, within the term (sic) established in Art. 2, section 1.- Of Reconsideration, Chapter II, Norms for the application of Appeals for Reconsideration and Review in matters related to the financial system, (sic) circumstances that have been overlooked by the Regional Intendant of Banks Portoviejo.

(...)

With these antecedents of strict legal order, I request you, Mr. Superintendent of Banks and Insurance, President of the Banking Board, to kindly revoke the resolution appealed and contained in letter (sic) IRP-SAC-2014-379 of June 4, 2014 (sic), notified at this branch on June 5, 2014, and order that the Appeal for Reconsideration presented by the claimant on May 26, 2014 be accepted for processing and resolution (sic).";

THAT through letter No. JB-2014-1616, of June 26, 2014, Mr. Pablo Cobo Luna, Secretary of the Banking Board, accepted the review appeal for processing and through letter No. JB-2014-1617, of June 26 of the same month and year, it was communicated to engineer Ingri Cristina Giler Pinargote, with the content of the same.

THAT Article 1 and letters b) and o) of Article 180 of the General Law of Institutions of the Financial System determine that the Superintendence of Banks and Insurance has the function and attribute to ensure the stability, solidity, and correct functioning of institutions subject to its control; to supervise that they comply with the norms that govern them; and, to require that said institutions present and adopt the corresponding corrective measures when necessary, likewise, if the Superintendence of Banks and Insurance determines incorrect procedures on the part of the controlled financial institutions, which would have caused harm to a claimant, it must act as ordered for those effects;

THAT through letter No. IRP-SAC-2014-327, of May 12, 2014, the Regional Intendancy of Portoviejo, after the analysis carried out, resolved to order the National Bank of Development to reimburse the values claimed by Mrs. Ingri Cristina Giler Pinargote, by determining that the bank is in violation of what is provided in Article 5 of Chapter IV, Title XX, Book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board;

THAT from the certification of receipt of documents contained on folio 220 of the file, it was verified that the administrative act contained in letter No. IRP-SAC-2014-327, of May 12, 2014, was notified to the National Bank of Development, Portoviejo Branch on May 13, 2014 and that the financial institution through a document entered in the control body on May 26, 2014, filed an appeal for reconsideration against the aforementioned administrative act; therefore, at the date of its presentation, 9 days had elapsed, the term;

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THAT Article 137 of the General Law of Institutions of the Financial System, as well as Article 2 of Chapter II "Norms for the application of appeals for reconsideration and review in matters related to the financial system and the social security system"; and, of appeal in matters of private insurance, regarding administrative acts of the Superintendence of Banks and Insurance"; of Title XVI "Of sanctions and of appeals in the administrative sphere"; Book I of the Codification of Resolutions of the Superintendence of Banks and of the Banking Board, in force at the date, established that from administrative acts adopted by the Superintendent of Banks and Insurance or by their delegates, the appeal for reconsideration may be filed before the same officials who issued the respective administrative act, within a term of eight days from notification; in this reason, the appeal for reconsideration filed by the National Bank of Development was rejected as untimely, consequently the administrative act contained in letter No. IRP-SAC-2014-327, of May 12, 2014, is final;

THAT regarding the argument concerning the place where the content of an administrative act should be notified, it is important to note that the "Omeba Legal Encyclopedia" establishes notification as "the legal act by which a judicial or administrative resolution of an authority is authentically communicated to a specific person or group of persons, with all the formalities prescribed by Law.";

THAT for its part, the second paragraph of Article 73 and Article 74 of the Civil Procedure Code designate notification as the act by which the parties, or other persons or officials, as the case may be, are made aware of judgments, orders, and other judicial provisions, or it is made known to whom an order must be fulfilled or an appointment accepted, issued by the judge, from the notification, the clerk will record the corresponding reason, in which the name of the notified person and the date and time of the diligence will be recorded;

THAT for an administrative act to be valid, it must have legal existence and produce effects, it must previously have been duly notified. This means that an administrative act has existence from its notification, and before it, it not only produces no legal effect, but it has no validity nor efficacy; being in this way a guarantee that the State grants to those administered to ensure their right of defense against the activity of the Public Administration;

THAT through Letter Power No. 00025, of January 6, 2014, economist José Andrade López, General Manager of the National Bank of Development, delegated to economist Carlos Manuel Lucas Falcones the functions and attributes of Commercial Manager of the National Bank of Development, Portoviejo Branch; among these attributes, is that of appearing as plaintiff, intervening third party, excluding third party, harmed third party, complainant, or claimant before any administrative and judicial authority of the Republic, in defense of the Bank's interests, which converts the Manager of the Portoviejo Branch, into competent to receive notifications in procedures initiated against the controlled entity; so much so, that it was the Commercial Manager of the National Bank of Development, Portoviejo Branch who filed the appeals for reconsideration and of

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review within the complaint presented by Mrs. Ingri Cristina Giler Pinargote; therefore, the argument regarding that the notification should have been carried out in the city of Quito because it is the main domicile of the Bank, has no legal basis;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0136 of February 9, 2015, recommended to the Banking Board to reject the claim contained in the review appeal filed;

AND, IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by economist Carlos Lucas Falcones, Commercial Manager of the National Bank of Development, Portoviejo Branch; and, consequently CONFIRM, letter No. IRP-SAC-014-379, of June 4, 2014, which ratified letter No. IRP-SAC-2014-327, of May 12, 2014, the same which is final and which ordered the financial institution to reimburse the sum of USD$3,300.00 claimed by Mrs. Ingri Cristina Giler Pinargote.

NOTIFY.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on April 30, two thousand fifteen.

Econ. Rodrigo Lándeta Parra
GENERAL INTENDANT, S
PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on April 30, two thousand fifteen.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD