Resolution No. JB-2015-3508 of the Banking Board of Ecuador

Banking Board of Ecuador

RESOLUTION No. JB-2015-3508

THE BANKING BOARD

CONSIDERING:

THAT this appeal is resolved in accordance with the First Transitional Provision of the Organic Monetary and Financial Code, 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 the Banking Board, and the norms issued by the control bodies, will remain in effect in all that does not oppose what is provided in the Organic Monetary and Financial Code, 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 empowers the Banking Board to continue acting until it resolves all claims, appeals, and other administrative procedures it was handling on the date of the 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;

THAT by Resolution No. 054-2015-F of March 5, 2015, published in the Official Register No. 467 of March 27, 2015, the aforementioned period has been extended by an additional one hundred and eighty days;

THAT by Resolution No. JB-2015-3340 of April 8, 2015, the Banking Board, upon hearing the review appeal filed by the Deputy President of Banco Pichincha C.A., against the administrative act contained in letter No. DNAE-SAU-2014-04198 of July 8, 2014, resolved the following:

"SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by Mr. Antonio Acosta Espinosa, in his capacity as Deputy President of Banco Pichincha C.A.; and, consequently, CONFIRM the administrative act contained in letter No. DNAE-SAU-2014-04198, of July 8, 2014, with which the National Directorate of Attention and Education to the User denied the reconsideration appeal and ratified letter No. DNAE-SAU-2014-02624, of April 28, 2014, by which it was ordered that within 72 hours Banco Pichincha C.A. must return the USD $5,400.00 claimed by Mrs. Zoila Matilde Mullo Minta.";

THAT by a document received at the Superintendence of Banks on May 8, 2015, Dr. Jaime Flor Rubianes, Legal Representative, with legal representation of Banco Pichincha C.A., filed a reconsideration appeal against the administrative act contained in Resolution No. JB-2015-3340 of April 8, 2015, arguing the following:

• That within the attributions of the Superintendence of Banks referred to in the Organic Monetary and Financial Code, there is none that relates to the power to order the return of values;

• That the withdrawals of US$ 4,400.00 and 1,000.00 from savings accounts Nos. 2200837243 and 2200153256, respectively, were carried out complying with the due procedure provided for savings withdrawals with authorization to third parties;

• That to letter No. BP-ACEC-2014-0166 of February 27, 2014, the video of the Punto Pago Carondelet agency was attached where the withdrawal of US$

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Banking Board of Ecuador

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4,400.00 from account No. 2200837243 was made, where it can clearly be observed that the teller of Banco Pichincha C.A. does the following: a) Receives the withdrawal slip together with the identity document, b) Verifies the signature stamped on the slip with that of the identity document, c) Compares the signature of the account holder with the record constant in the bank's system, d) Requests supervisor approval, e) Verifies the fingerprint of the person making the withdrawal, f) The supervisor, in strict compliance with the procedure, makes the confirmation call to the number constant in the bank's record (3150797), provided by the account holder; and, g) That the signatures constant on both slips do not show notable disagreement at first glance with the signature registered in the financial institution;

THAT through letter No. JB-2015-848 of May 11, 2015, the Secretary of the Banking Board admitted the reconsideration appeal to processing and through letter JB-2015-849 of May 11 of the same month and year, notified Mrs. Zoila Matilde Mullo Minta with the content of the same;

THAT articles 1 and 180, letters b) and o), of the General Law of Institutions of the Financial System, in force on the date of the claim, determined that the Superintendence of Banks and Insurance is the competent authority to ensure the stability, solidity, and correct functioning of institutions subject to its control; to supervise that they comply with the norms governing their functioning; and to require that said institutions present and adopt corrective measures when necessary; attributions that are currently contemplated in article 60 of the Organic Monetary and Financial Code with the purpose that these activities be subject to the legal order and attend to the general interest; in harmony with numerals 9 and 16 of article 62 ibidem, which determine, among others, the functions of the Superintendence, in that order: "9. Require that controlled entities present and adopt corrective and remedial measures"; "16. Protect the rights of financial clients and users and resolve administrative disputes that arise with entities under its control for which it may request or conduct ex officio, as appropriate, the necessary control actions for their clarification";

THAT the first paragraph of article 3, section I "On Reconsideration" chapter II, title XVI, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, establishes:

ARTICLE 3.- "The reconsideration appeal must be based solely on the existence of elements of fact or law not known to the Superintendence of Banks and Insurance or the Banking Board at the time of issuing the resolution, whose record, if it had existed, could have decisively influenced the sense of the resolution.";

THAT with respect to the appellant's argument that according to the new legal framework in force the Superintendence of Banks does not have the power to order the restitution of values, it is necessary to indicate that on the date the claim of Mrs. Zoila Matilde Mullo Minta was filed, the General Law of Institutions of the Financial System was in force; therefore, the resolution of the appeal filed must be resolved in accordance with what is provided by the aforementioned law, which in the pertinent part established:

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Banking Board of Ecuador

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First paragraph of article 1 and letters b) and o) of article 180 of the General Law of Institutions of the Financial System, and article 5 of chapter IV "Procedure for the attention of claims against institutions of the Financial System"; title XX "On the Superintendence of Banks and Insurance"; Book I "General norms for institutions of the financial system" of the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, state:

Article 1.- "This law regulates the creation, organization, activities, functioning, and extinction of private financial system institutions, as well as the organization and functions of the Superintendence of Banks, the entity in charge of the supervision and control of the financial system, in all of which the protection of the public's interests is taken into account (...)." Article 180.- "The Superintendent of Banks has the following functions and attributions:

b) Ensure the stability, solidity, and correct functioning of institutions subject to its control and, in general, that they comply with the norms governing their functioning, through permanent extra situ supervision and in situ inspection visits, according to best international practices, without any restriction and that allow determining the economic and financial situation of the entity, the management of its business, evaluate the quality and control of risk management, and verify the veracity of the information it generates;

(...)

o) Require that controlled institutions present and adopt corrective and remedial measures in cases that so require;

Article 5.- "If the result of the analysis carried out by the Superintendence determines the need for the controlled institution to introduce corrections that regularize the situation that motivated the claim, the Superintendent of Banks and Insurance or the official who has the delegation of said authority, will issue the corresponding order.

If the situation that motivated the claim referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which caused harm to the claimant, the Superintendence of Banks and Insurance may order the return of the claimed values, in exercise of the functions and attributions contemplated in letters b) and o) of article 180 of the General Law of Institutions of the Financial System, granting the legal representative of the entity a period that may not exceed fifteen (15) days from the notification to send, under the legal warnings, the record of compliance with the order issued.

(...) ";

THAT from the cited provisions it is determined that the Superintendence of Banks is the entity in charge of the supervision and control of the national financial system, in all of which the protection of the public's interests is taken into account; supervising that they comply with the norms governing them; as well as requiring that said institutions present and adopt corrective measures when necessary. In this line, the control body can order the return of values when the

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claim originates from an incorrect procedure that causes economic harm to the claimant. In merit of what has been exposed, the appellant's argument lacks legal basis;

THAT regarding the appellant's argument that the challenged withdrawals were processed complying with the procedure provided by the bank, it must be indicated that based on the contract signed with its clients, Banco Pichincha C.A. is obligated to safeguard the money delivered to its custody, in order to return it to the depositor at the moment it is required; hence the bank's responsibility consists of complying with the policies and controls prior to carrying out a transaction. As determined by the "Savings Withdrawal Instruction" with which Banco Pichincha C.A. operates, employees or officials in charge of cash work, prior to processing a withdrawal, must carry out all corresponding verifications, in order to comply with the procedures and controls established for money withdrawals, in the different types of accounts existing in the bank;

THAT the personnel working in cash is obligated, among other things, to receive the withdrawal slip together with the financial user's identity document, if a third party makes the withdrawal request, they must present the original identity document, the signatures and conditions in the debit account must be verified; it must be observed that there are available funds; validate the fingerprint of the account holder(s) for withdrawals when the amount is greater than US$ 500.00; that the original identification document of the account holder(s) is presented, according to the signature condition when it is a withdrawal authorized to a third party, verify that the signatures of the identification document are on the back of the withdrawal slip and compare it with the one registered in the system; if the withdrawal is authorized, the teller must validate that the slip contains the stamp and rubric of the operational supervisor from US$ 10,000.00 for withdrawals of account holders; and, if the withdrawal slip is already previously signed by the client, the teller must request that the holder or third party sign the back of the slip again in their presence;

THAT from the analysis of the defenses presented by the bank, and especially the video that was sent regarding the withdrawal made at the Punto Pago Carondelet agency for US$ 4,400.00, it is observed that the transaction starts with one teller and ends with another, without it being appreciated that the financial user delivers two IDs, but only one; nor is it noticed that the teller asks the user to sign the back of the slip in their presence, as established by the "Savings Withdrawal Instruction" of Banco Pichincha C.A., which implies that the financial institution failed to follow the deposit withdrawal procedure that determines:

4. POLICIES

(...)

b. If a third party makes the withdrawal request, they must present their original identification document, which cannot be expired, perforated, or altered.

f. Presentation of the original identification document of the account holder(s) according to the signature condition (citizenship ID and/or passport) when it is a withdrawal authorized to a third party.

(...)

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i. If the withdrawal slip is already previously signed by the client, the teller must request that the holder or third party (who performs the transaction) sign again on the back of the slip in their presence.

(...) ";

THAT regarding the appellant's argument that the supervisor made the confirmation call to the number constant in the bank's record, it must be indicated that as established by the "Savings Withdrawal Instruction", which is transcribed below, the Zonal Chief / Operational Supervisor is responsible for confirming with the client the veracity of the transaction; that is, by calling the number registered in the bank, and is obligated to register on the withdrawal slip the name of the person who confirmed the transaction.

"It is the responsibility of the Zonal Chief / Operational Supervisor to authorize in the Web Teller system withdrawals exceeding the teller's limit, prior to authorization in the system they must verify:

(...)

d. Register on the slip the person owning the account with whom the transaction was confirmed, as well as the phones to which contact was made.

(...) ";

THAT from the review of the file, it is not observed that there is documented evidence from which it can be verified that the telephone number indicated to confirm transactions is 3150797. Likewise, it is observed that on the withdrawal slips the name of the person who confirmed and authorized the payment at the counter was not recorded, as established by letter d) of the Policies and Responsibilities of the Zonal Chief / Operational Supervisor. (-page 5 of the "Savings Withdrawal Instruction"). Therefore, given the supervisor's failure to verify the withdrawals, the appellant's argument is deemed inappropriate;

THAT regarding the fact that the signatures constant on the slips do not show notable disagreement with the one registered in the bank's system, it must be noted that the control body, when resolving the claim presented by Mrs. Zoila Matilde Mullo Minta, did not pronounce itself nor question the similarity or disagreement of the signatures, as erroneously stated by the appellant, but rather on the bank's failure to comply with payment procedures. In such virtue, what is alleged by the appellant is not appropriate;

THAT from the analysis carried out on the file, it is deduced that Banco Pichincha C.A. incurred in an incorrect procedure, namely, the non-observance of the "Savings Withdrawal Instruction", which originated economic harm from the payment of US$ 4,400.00 and US$ 1,000.00, from savings accounts Nos. 2200837243 and 2200153256, respectively, which belong to the spouses Mr. Rodrigo Salvador Mullo Minta and Mrs. María Josefina Andrango Males; therefore, the financial institution is subject to what is established 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;

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Banking Board of Ecuador

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THAT the National Legal Intendancy, through memorandum No. INJ-DNJ-SAL-2015-0479 of June 25, 2015, recommended to the Banking Board to reject the claim contained in the reconsideration appeal filed by Dr. Jaime Flor Rubianes, Legal Representative of Banco Pichincha C.A., and,

IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the reconsideration appeal filed by Dr. Jaime Flor Rubianes, Legal Representative of Banco Pichincha C.A.; and, consequently, CONFIRM the content of Resolution No. JB-2015-3340 of April 8, 2015, by which the Banking Board resolved to reject the claim contained in the review appeal filed by the bank; and ratify letter No. DNAE-SAU-2014-04198 of July 8, 2014.

NOTIFY.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on July 1, 2015.

[Signature] Econ. Rodrigo Landeta Parra GENERAL INTENDANT (S) PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, on July 1, 2015.

[Signature] Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD