Circular No. 02/OEF/2023: Procedures for the Mozambique Electronic Clearing System

Banco de Moçambique Administration

DEPARTMENT OF BANKING OPERATIONS, ISSUANCE AND SUPERVISION OF PAYMENT SYSTEMS

CIRCULAR NO. 02/OEF/2023

Maputo, 21 November 2023

SUBJECT: PROCEDURES FOR THE MOZAMBIQUE ELECTRONIC CLEARING SYSTEM

Given the need to define the operational procedures for the functioning of the Mozambique Electronic Clearing System (CEL), as well as the duties of participants, the Bank of Mozambique, pursuant to Article 25 of Notice No. 10/GBM/2023, approves:

1. The Procedures for the Mozambique Electronic Clearing System, its respective annexes and complementary instructions, which form an integral part thereof.

2. This Circular enters into force immediately.

Any doubts arising from the interpretation of this Circular must be submitted to the Department of Banking Services and Payment Systems of the Bank of Mozambique.

BANCO DE MOÇAMBIQUE Department of Banking Operations, Issuance and Supervision of Payment Systems [Signature] Maria Esperança Mateus Majimeja (Administrator)

---

Banco de Moçambique Administration

1. GENERAL PRINCIPLES AND OBJECTIVES

This document aims to define the procedures for the functioning of the Mozambique Electronic Clearing System (CEL), in compliance with the National Payment System Law and the Electronic Clearing System Regulations, approved by Notice No. 10/GBM/2023.

The document also defines the operational aspects of the Electronic Clearing System, the duties of all participants, including the Bank of Mozambique in its capacity as operator and manager of the system.

1.1. Objectives

a) The CEL (hereinafter referred to as the "System") is an electronic clearing system operated and managed by the Bank of Mozambique, which allows the exchange, via files, of payment instruments between participants, the calculation of multilateral net balances, and the sending thereof to the Interbank Transfer and Settlement System for settlement (RTGS);

b) These procedures are applicable to all participants of the System;

c) System participants act in their own name and must meet the criteria for operational capacity, financial and legal solidity, according to the details described in this document;

d) For the purposes of this document, the term "procedures" means the set of provisions contained in this document and its Annexes, which constitute an integral part thereof, the User Manuals and other documents related to the system;

e) The terms used in this document are defined in Annex 1 - Glossary.

1.2. Currency

a) The System processes instruments denominated in Metical;

b) The Bank of Mozambique may include other currencies in the System.

1

---

Banco de Moçambique Administration

1.3. Role of the Bank of Mozambique

In its capacity as operator and supervisor, the Bank of Mozambique is responsible for:

a) Managing, providing reports and ensuring the security of the system;

b) Coordinating and supervising its functioning;

c) Analyzing and authorizing participation;

d) Maintaining records;

e) Initiating all measures necessary to protect the computer system, prevent it from going out of service and providing a solution in contingency situations;

f) Ensuring the functioning of the system in accordance with the Technical and User Manuals;

g) Protecting the system and ensuring the integrity, availability and confidentiality of data;

h) Ensuring adequate capacity to meet system performance;

i) Resolving any system failure or dysfunction, in close cooperation with hardware and software suppliers and service providers;

j) Providing the Help Desk service.

2

---

Banco de Moçambique Administration

2. PARTICIPATION IN THE SYSTEM

2.1. Criteria and Conditions for Participation

a) Without prejudice to the provisions of Article 5 of the Electronic Clearing System Regulations, participation in the System is open to credit institutions or financial societies licensed by the Bank of Mozambique that observe the following criteria and conditions:

i. Undergo tests to demonstrate their operational capacity before being connected to the production environment;

ii. Ensure "Straight Through Processing" (STP) integration of the System with their core system;

iii. Assume the expenses related to their participation;

iv. Have qualified personnel to perform operations in the System.

b) The request for adherence to the System must be made by filling out and sending to the Bank of Mozambique the form contained in Annex 2.

2.2. Operational Capacity

2.2.1. Materials

a) The materials provided to the participant are the exclusive property of the Bank of Mozambique;

b) The participant must keep the materials confidential and use them responsibly without making any modifications;

c) The procedures do not affect the copyright of any of the materials and the provisions of this paragraph are applicable regardless of whether such materials are protected by copyright.

3

---

Banco de Moçambique Administration

2.2.2. Bank Identifier Code

The participant must possess a SWIFT Bank Identifier Code (BIC), which must be in compliance with the bank identifier codes designated by the Bank of Mozambique.

2.2.3. Communication

a) for the exchange of messages with the System, the participant must communicate via the VPN or SWIFT network;

b) The participant must be connected via a workstation as specified in Annex 4;

c) The documents describing the standards, communication protocols and other functional requirements are made available to the participant by the Bank of Mozambique, as described in Annex 5;

d) The participant must comply with the standards, protocols and other functional requirements, and its connection to the System must function in accordance with them.

2.2.4. Equipment

a) The participant must acquire its own equipment for the operation of the System;

b) The participant must possess alternative computer equipment for treasury management, accounting and access to the System;

c) The participant must install and configure the components to support the System software, according to the manuals provided by the Bank of Mozambique;

d) The Bank of Mozambique provides each participant with the necessary components for the security of the System, including the initial set of E-tokens;

e) The participant has no ownership rights over the System software;

f)

4

---

Banco de Moçambique Administration

g) Any support components provided by the Bank of Mozambique must be returned in the event of exclusion from participation or when requested.

2.2.5. Minimum Workstation Configuration Requirements for Participants

The participant's workstations related to the System must meet the minimum configuration requirements according to Annex 4.

2.2.6. Location of Computer Facilities

a) The primary and secondary operations center linked to the System must be installed in a location considered adequate by the Bank of Mozambique;

b) No change in the location of the operations center constitutes grounds for requesting changes to the System's operating hours;

c) The participant wishing to change the location or characteristics of its primary or secondary operations center must obtain the approval of the Bank of Mozambique, and for this purpose must describe the reasons for the change and present a plan;

d) The Bank of Mozambique may require the participant to change the plan if this represents a risk to the operational integrity of the System.

2.2.7. Primary and Secondary Operations Center

a) The participant must possess a primary and secondary operations center;

b) The Primary Operations Center must be staffed with qualified personnel authorized to take appropriate measures on behalf of the participant;

c) The computer equipment of the primary and secondary operations centers must be operated by qualified and authorized personnel to act on behalf of the participant;

d) The change of location of the primary operations center requires approval from the Bank of Mozambique.

5

---

Banco de Moçambique Administration

2.2.8. Certification of Participants

a) In order to ensure the proper functioning of the System, the Bank of Mozambique may condition the maintenance of participation on the success of tests that demonstrate that the participant possesses the necessary technical and operational capacity, namely, with regard to its computer systems and communications;

b) The Bank of Mozambique informs the participant of the dates of the tests, the content and the technical and operational conditions.

2.2.9. Contingency Solution – ACH Payment Originator (ACH PO)

a) The ACH Payment Originator (ACH PO) is a contingency solution that can be used by the participant to send and receive Payment Instructions, in the following situations:

i. When it is unable to send and receive via the Gateway; or

ii. As a temporary solution until the participant implements the integration of the Gateway with its core system.

b) The participant must not use the ACH PO simultaneously with the Gateway, as its use is mutually exclusive.

2.2.10. Minimum Workstation Configuration Requirements for Participants

The participant's workstations related to the System must meet the minimum configuration requirements, according to Annex 4.

2.3. Implementation of Straight Through Processing (STP)

a) The participant must implement straight through processing (STP) for transactions processed in the System;

b) STP must be implemented for processing and sending transactions from the participant's core system to the System and allow for the availability of funds to the final beneficiary within the established deadlines.

6

---

Banco de Moçambique Administration

2.4. Suspension of Participation

a) The Bank of Mozambique determines the suspension of any participant of the System whenever the conditions indicated in the respective Regulations are met;

b) In the case of suspension at the initiative of the participant, the request for suspension must be duly justified and the Bank of Mozambique may request additional information from the participant, as well as carry out the necessary investigations;

c) The suspended participant is not exempt from complying with its obligations, except when expressly provided for in this document;

d) From the moment the suspension becomes effective, any payment instruction from the respective participant is not accepted by the system.

e) The Bank of Mozambique may, whenever the conditions are met, readmit a suspended participant.

f) The Bank of Mozambique immediately communicates to all participants any decision to suspend or readmit a participant and the respective date of effect.

2.5. Cessation of Participation

a) The participant ceases its participation in the System under the circumstances provided for in the respective Regulations;

b) For cases of cessation at the initiative of the participant, the request for cessation of participation, duly justified, must be submitted with a minimum advance notice of 10 business days;

c) The Bank of Mozambique may request additional information from participants, as well as carry out the necessary investigations.

7

---

Banco de Moçambique Administration

2.6. Communication and Effects of Suspension and Exclusion

a) The Bank of Mozambique communicates the suspension and exclusion of the participant from the System to the other participants;

b) By suspending the participant, the Bank of Mozambique blocks or deactivates their access to the System;

c) The suspended participant cannot participate in the System, but may access their data, upon request and authorization from the Bank of Mozambique;

d) The participant with suspended access must continue to comply with its obligations arising from operations in the System;

e) The participant whose access to the system is prohibited has no right to reimbursement of any commission, fee or any other expense incurred in the context of their participation in the system;

f) The participant with revoked access remains bound by these procedures regarding the following:

i. Any act or matter preceding the date of effect of the exclusion or as a result thereof;

ii. Fees, costs, charges and expenses that may be charged or reimbursed, regarding periods preceding the date of effect of the exclusion.

g) The participant with prohibited access immediately loses the right to carry out transactions in the system;

h) The participant with revoked access has no right to reimbursement of any commission, fee, charge or any other expense incurred in the context of their participation in the system.

2.7. Readmission of the Participant

a) The participant may request readmission to the System by presenting proof of the cessation of the cause that determined their suspension or exclusion.

8

---

Banco de Moçambique Administration

b) The Bank of Mozambique may readmit the participant, once the problems that determined the suspension or exclusion have been resolved.

c) The Bank of Mozambique immediately communicates to all participants the date of resumption of the suspended participant.

2.8. Forms of Participation

The participant wishing to represent indirect participation in the System must submit to the Bank of Mozambique the contracts, as well as the terms and conditions, for authorization purposes.

3. USER MANAGEMENT

a) Each participant must indicate the users of the System;

b) For the purposes of creating users, the participant must fill out and send to the Bank of Mozambique the Profile Request Form, containing information on the user designated by them, at least 10 business days before the effective date, as per Annex 3;

c) After approval of the request, the Bank of Mozambique registers the users and assigns the respective login credentials to allow them to access the System according to their profile.

d) The user designated by the participant must change their default password upon first accessing the System and keep their credential and other access methods confidential.

e) The participant wishing to suspend or exclude one or more of their users must request the Bank of Mozambique in writing.

f) The Bank of Mozambique creates, maintains, assigns and changes profiles, suspends and deletes System users.

4. OBLIGATIONS AND RESPONSIBILITIES OF THE BANK OF MOZAMBIQUE AND PARTICIPANTS

9

---

Banco de Moçambique Administration

4.1. General Principles

a) The participant must issue payment instructions to the System in accordance with the procedures defined in this document;

b) In the event of transmission problems, the participant must contact the Bank of Mozambique, according to the contacts specified in Annex 6;

c) The participant must monitor their transactions and communicate any irregularities detected;

d) The participant is responsible for the following:

i. Compliance with their obligations;

ii. Quality of the data sent to the System;

iii. Conformity of data with technical protocols and message formats;

iv. Ensuring access to their System workstation, according to the security procedure provided;

v. Controlling the processing of their payment instructions until they have the status of "technically accepted";

vi. Strictly complying with the procedures;

vii. Ensuring that only authorized users have access to the System.

e) The participant is responsible for monitoring, among others, throughout the day:

i. The clearing and settlement of payments sent;

ii. The volume and value of payments to be sent;

iii. Any instructions in the queue;

iv. The settlement account balance;

v. Intraday credit;

vi. The level of their reserves.

f) The participant must ensure the settlement of the results determined in the clearing.

g)

h)

10

---

Banco de Moçambique Administration

i) The participant must not charge costs or expenses resulting from the lack of monitoring and reconciliation of their payment flows to the Bank of Mozambique or to other participants.

4.2. Access to the System

a) The participant must strictly comply with the access procedures to the System;

b) Only authorized users may access the system;

c) The participant is responsible for any damage resulting from non-compliance with the procedures.

4.3. Obligations for Transactions Carried Out by Users

d) The participant is responsible for any loss resulting from non-compliance or incorrect observance of the procedures by the users and for all transactions carried out by them;

e) The participant must ensure that their systems and procedures ensure adequate protection against fraudulent activities in the System;

f) All fraudulent or suspicious activities must be immediately reported to the Bank of Mozambique, regardless of whether such fraud or suspicion of fraud was perpetrated by the participant's team or a client or any person;

g) Communication must be made first by telephone, followed by written confirmation by email or letter;

h) The participant must provide as much information and assistance as possible, as requested by the Bank of Mozambique, to investigate and identify the origin of any fraud or suspicious transaction.

11

---

Banco de Moçambique Administration

4.4. Obligations in Case of Restrictive Events

The participant involved in a restrictive event must report the fact immediately to the Bank of Mozambique, and must:

a) Identify the irregularity;

b) Resolve the problem, within their responsibilities;

c) Communicate to the Bank of Mozambique about the resolution of the problem and the resumption of normal system functioning;

d) Collaborate with the Bank of Mozambique to resolve any problem that affects the System.

4.5. Correction of Undue Payment Instruction and Indemnities

a) If the recipient participant receives a payment unduly, they must inform, immediately, the Sender Participant and effect the return, with a new instruction, using an identifier for reconciliation purposes;

b) The sender participant may take the initiative to request in writing from the recipient participant to make the appropriate correction;

c) If the sender participant reports the error before the pre-closing and the recipient participant who was unduly credited does not effect the refund on the same day, compensatory interest is charged for the period during which the funds were unduly held by the latter;

d) For the purposes of the previous number, interest is calculated based on the Permanent Deposit Facility (PDF) rate;

4.6. Correction of a Payment Instruction Resulting from Participant Error

a) Any loss incurred due to a fraudulent transfer originated by a participant, must be borne by this participant;

b)

12

---

Banco de Moçambique Administration

c) If the sender participant requests that the recipient participant return the value of a payment instruction erroneously carried out by the former, such as, duplicated message, payments misdirected, incorrect value, among others, the recipient participant must return the value of the payment instruction to the sender participant.

4.7. Conservation, Integrity and Archiving of Documents

a) The conservation and archiving of clearing documents must be carried out in accordance with applicable legislation;

b) Participants must proceed to safely store received checks for deposit, in physical format for a minimum period of one year.

4.8. Responsibilities of the Sender Participant

a) Verify the physical check presented at the counter, in the following elements:

i. Validity date;

ii. Presence of signature(s);

iii. Beneficiary name;

iv. Correspondence of value in figures and in words;

v. Presence of endorsement;

vi. Confirm that the MICR code line of the check has not been tampered with;

vii. Ensure that the beneficiary account is the one intended by the drawer of the check;

viii. Ensure that all deposited checks are stamped and signed on the back;

ix. Archive and safely conserve the physical checks received from their clients, for the period legally established and present them to the competent authorities whenever required in accordance with legislation relating to the prevention and combating of money laundering and financing of terrorism;

x. Ensure that the images are faithful copies of the original check;

xi. Verify the inconsistencies of the checks received and proceed to return them to the client, if necessary;

13

---

Banco de Moçambique Administration

xii. Verify the regularity of the filling out of the checks presented, as well as the retention and storage of those that prove to be inconsistent.

b) Ensure that all Payment Instructions relating to Interbank Electronic Transfer (TEI) are correctly filled out;

c) Regarding Direct Debits (DD), the sender participant must proceed in accordance with the provisions of the Direct Debit Regulations;

d) Other actions provided for in the applicable normative instruments.

4.9. Responsibilities of the Recipient Participant

a) Verify the images and all aspects relating to the good payment of the check, maintaining good communication with the sender participant, so that all negotiable documents are treated, within the established deadlines, including validation of:

i. Date;

ii. Credit institution stamp;

iii. Signature;

iv. Beneficiary name;

v. Value in words and figures.

b) In case of return, the sender participant must communicate to the recipient participant the reasons that determined it, as per Annex 9;

c) Indicate the reason for the return to the sender participant within the stipulated period;

d) Store the images according to the legally established period;

e) Verify if the payment instructions relating to TEIs are properly filled out;

f) Regarding DDs, the recipient participant must proceed in accordance with the Direct Debit Regulations;

g) Other actions provided for in the applicable regulations.

14

---

Banco de Moçambique Administration

5. SECURITY

5.1. Integrity, Availability and Confidentiality of Data

5.1.1. Operator and System Manager

a) The Bank of Mozambique ensures that the system has security, with the objective of maintaining the integrity, availability and confidentiality of all System data;

b) The Bank of Mozambique maintains the confidentiality of all information provided by participants and processed by the System;

c) The participant authorizes the transfer of any information relating to them to the Bank of Mozambique, and between the Bank of Mozambique and third parties selected by the Bank of Mozambique, for confidential use in the context of the provision of services to participants.

5.1.2. Participants

a) The participant must develop and maintain adequate internal security procedures, and comply with all security procedures recommended by the Bank of Mozambique, to prevent unauthorized use of the System;

b) The participant must comply with the applicable procedures, and ensure that payment flows