Regulation No. 1/2022 of April 14, 2022 Governing Participation in the Burundi Integrated Payment and Settlement System (SIPREBU)

---

[Logo: BRB] BANK OF THE REPUBLIC OF BURUNDI

REGULATION No. 1/2022 OF 14/04/2022 GOVERNING PARTICIPATION IN THE BURUNDI INTEGRATED PAYMENT AND SETTLEMENT SYSTEM (SIPREBU)

APRIL 2022

---

TABLE OF CONTENTS

PRESENTATION NOTE ................................................................................................................. 3 LEGAL BASIS ..................................................................................................................................................... 4 CHAPTER I: GENERAL PROVISIONS ................................................................................... 5 ARTICLE 1 - OBJECT AND SCOPE ................................................................................. 5 ARTICLE 2 - PARTICIPANTS ................................................................................................................... 5 ARTICLE 3 - PARTICIPATION ................................................................................................................. 5 ARTICLE 4: CONDITIONS FOR ACCESS TO THE SYSTEM ............................................................................. 6 ARTICLE 5: SETTLEMENT ACCOUNTS .............................................................................................. 6 CHAPTER II: OPERATIONS ACCEPTED IN THE SYSTEM ................................................. 7 ARTICLE 6 - CATEGORIES OF OPERATIONS .......................................................................................... 7 ARTICLE 7: NEW CATEGORIES OF OPERATIONS ................................................................... 7 ARTICLE 8 - PRIORITY OF PAYMENT ORDERS .......................................................................... 8 ARTICLE 9: THE TRADING DAY .............................................................................................. 8 ARTICLE 10: IRREVOCABILITY OF PAYMENT ORDERS AND MANAGEMENT OF ERRONEOUSLY EXECUTED ORDERS ....... 9 ARTICLE 11: QUEUE MANAGEMENT ................................................................................... 9 ARTICLE 12: OPTIMIZATION OF EXCHANGE FLOW ..................................................... 9 ARTICLE 13: INTRA-DAY FACILITIES .............................................................................. 10 ARTICLE 14: SYSTEM MANAGEMENT ................................................................................................... 10 ARTICLE 15: SECURITY, MONITORING AND GOVERNANCE OF THE SYSTEM ............................... 11 ARTICLE 16: ROLE OF SYSTEM PARTICIPANT .......................................................................... 11 ARTICLE 17: COMPLIANCE WITH OPERATIONAL AND SECURITY RULES ............................ 11 ARTICLE 18: LIABILITY ............................................................................................................ 12 ARTICLE 19: RECIPROCITY OF EXCHANGES ...................................................................................... 12 ARTICLE 20: PARTICIPANTS' OBLIGATIONS TOWARDS CLIENTS ....................................... 12 ARTICLE 21: ALLOCATION OF FEES ............................................................................................... 13 ARTICLE 22: CHARGING OF FEES ................................................................................................. 13 ARTICLE 23: MONETARY PENALTIES ............................................................................................. 13 ARTICLE 24: SUSPENSION OF A PARTICIPANT ................................................................................ 13 ARTICLE 25: EXCLUSION OF A PARTICIPANT .................................................................................. 14 ARTICLE 26: REVISION OF THIS REGULATION AND/OR ITS ANNEXES ............................... 14 ARTICLE 27: ASSIGNMENT OF RIGHTS ...................................................................................................... 15 ARTICLE 28: EXEMPTION FROM LIABILITY ........................................................................... 15 ARTICLE 29: CLAIMS AND DISPUTES ......................................................................................... 16 ARTICLE 30: REPEAL PROVISIONS .................................................................................... 16 ARTICLE 31: ENTRY INTO FORCE ...................................................................................................... 16 ANNEXES TO THE REGULATION ON PARTICIPATION IN THE PAYMENT AND SETTLEMENT SYSTEM (SIPREBU) ............................................................................................................... 17

Page 2 of 52

---

Presentation Note

In accordance with Law No. 1/34 of December 2, 2008 establishing its Statutes, the Bank of the Republic of Burundi (BRB) is a national public institution endowed with legal personality and administrative and financial autonomy.

To achieve its main objectives of ensuring price stability and the proper functioning of the financial system, the BRB carries out several missions, including promoting a reliable, efficient, and robust national payment system.

To this end, it has decided to establish a payment and settlement system, named the "Burundi Integrated Payment and Settlement System (SIPREBU)", through which all payment and settlement operations between participants in this system must be mandatorily conducted.

This Regulation and its annexes aim to establish the conditions for access to this system, its operational rules, as well as the rights and obligations of the various stakeholders.

Page 3 of 52

---

LEGAL BASIS

The Bank of the Republic of Burundi;

Having regard to Law No. 1/02 of February 4, 2008 on combating money laundering and terrorist financing;

Having regard to Law No. 1/34 of December 2, 2008 establishing the Statutes of the Bank of the Republic of Burundi;

Having regard to Law No. 1/17 of August 22, 2017 governing banking activities;

Having regard to Law No. 1/07 of May 11, 2018 establishing the National Payment System;

Having regard to Law No. 1/05 of February 27, 2019 governing the Burundi capital market;

Having regard to Law No. 1/08 of October 29, 2020 governing the Burundi Capital Market Regulatory Authority;

Having regard to the Decree of December 10, 1951, establishing a uniform law on cheques, made enforceable in Burundi by O.R.U. No. 41/98 of July 30, 1952;

Having regard to Decree No. 100/49 of March 14, 1979 establishing the deposit of the Republic of Burundi's archives;

Having regard to Regulation No. 001/2017 of July 14, 2017 on payment services and payment institution activities;

Having regard to Regulation No. 002/2017 of July 14, 2017 on commercial agents in banking and payment services operations;

Having regard to Regulation No. 01 of January 3, 2019 on the protection of consumers of financial products and services;

Having regard to Regulation No. 001 of February 28, 2020 on the dematerialization and automated processing of cheques;

Hereby enacts this Regulation:

Page 4 of 52

---

CHAPTER I: GENERAL PROVISIONS

ARTICLE 1 - OBJECT AND SCOPE

This Regulation aims to organize the operation and implementation of the payment and settlement system, named the Burundi Integrated Payment and Settlement System (SIPREBU). It applies to the ATS system – Automated Transfer System, whose components are the automated clearing system (ACH - Automated Clearing House), including for the automated processing of dematerialized cheques, and the real-time gross settlement (RTGS) payment and settlement system for large or urgent amounts. It also applies to payment instruments other than cheques.

ARTICLE 2 - PARTICIPANTS

The participants in the system are:

1. The Bank of the Republic of Burundi;
2. Credit institutions authorized by the Central Bank of Burundi;
3. The National Post Office;
4. The national electronic payment switch;
5. Any other financial institution meeting the participation conditions for the system.

Loss of the above status entails, without condition or notice, loss of Participant status in SIPREBU, as well as the closure of the accounts referred to in this Regulation, specifically in Article 5, followed by the liquidation of their balances.

ARTICLE 3 - PARTICIPATION

The participants cited above are obliged to be present or represented in the SIPREBU system, under one of the following forms of participation:

1. Direct Participation for any institution that holds a currency settlement account in the system. It is directly connected to it from a platform and manages itself the issuance of its orders in the system and the monitoring of its position. It must possess reliable telecommunication means allowing access to the system. It provides the BRB with the participation request form shown in Annex 1;
2. Indirect Participation for any institution that holds a currency settlement account in the SIPREBU system, but accesses it technically via a Direct Participant or the office platform installed on the premises of the Central Bank. It provides the Central Bank with the participation request form shown in Annex 2.

Page 5 of 52

---

The Direct Participant, possessing a platform, and the hosted Indirect Participant are individually responsible for their operations and settlements;

3. Sub-Participation for an entity not eligible for the SIPREBU system and not holding an account in it. It is represented by a Direct Participant who assumes the technical and financial responsibility for its orders in the system. It provides the Central Bank with the participation request form shown in Annex 1 and the representation agreement form shown in Annex 2.

ARTICLE 4: CONDITIONS FOR ACCESS TO THE SYSTEM

The conditions for participants' access to the system are as follows:

1. Compliance with the provisions of this Regulation, specifically those relating to access conditions set out in Annex 5;
2. Payment of the system participation fees fixed by the Central Bank;
3. For direct participants, technical certification by the Central Bank of the installations enabling connection to the system is a prerequisite.

ARTICLE 5: SETTLEMENT ACCOUNTS

The settlement accounts, referred to in Article 2 of this Regulation, are opened by participants in the books of the Central Bank for the management of all their liquidity.

The settlement account consists of cash specifically allocated in the form of central bank money and intended for the execution and guarantee of operations processed in the SIPREBU system. The position of this account reflects that of the ordinary current account already opened in the accounting books of the Central Bank for any participant.

Operations admitted in the system are recorded irrevocably and unconditionally on the settlement accounts after provision control. These accounts, managed automatically, are the only ones that can access the particular services of the system described in this Regulation.

The Central Bank is authorized to debit the settlement accounts of participants with all operations admitted in the system and presented by them that comply with technical standards, as well as all amounts due to the Central Bank, in accordance with current legal and regulatory texts.

Page 6 of 52

---

CHAPTER II: OPERATIONS ACCEPTED IN THE SYSTEM

ARTICLE 6 - CATEGORIES OF OPERATIONS

The system is configured to execute the following categories of payments:

1. Cash payments, for the account of the ordering institution itself or for its clients, for which this institution desires real-time settlement. These payments include payments exceeding the ceiling amount from which an order cannot be part of small-value payments, as well as payment operations of an urgent nature;
2. Small-value operations less than or equal to the ceiling, grouped in a dedicated payment order for this category, which are settled as net balances. These operations are: a) payment operations via dematerialized cheques accompanied by their images; b) transfer orders; c) direct debit orders;
3. Settlement of the net balances of the national electronic payment switch;
4. Settlement/delivery of securities exchanges managed in the Central Securities Depository (CSD) at the Central Bank, either for the banks' own account or for their clients' account;
5. Orders from SIPREBU system participants destined for ineligible third parties, which are debited in the system and received by the BRB Participant, from where they are transmitted to the current account management system for charging;
6. Operations processed with the Central Bank that pass through the BRB Participant for settlement in the SIPREBU system;
7. Cash withdrawals and deposits at all Central Bank branches, following the centralization of liquidity at the national level;
8. Settlement of the clearing balances for the payment categories mentioned in point 3 above, and settlement of the clearing balances for bank card operations, mobile phone payment operations, and all other authorized electronic payment transactions.

The Central Bank is the only Participant authorized to issue debit orders on the accounts of other participants in the SIPREBU system.

ARTICLE 7: NEW CATEGORIES OF OPERATIONS

As operator and ensuring technological monitoring of the systems, the Central Bank may create new categories of operations admitted in the system and define their priority level. It will consult the banking sector and other partners, where applicable, prior to implementing them according to an agreed roadmap. Similarly, participants may submit proposals that may be subject to discussion/validation before implementation.

Page 7 of 52

---

ARTICLE 8: PRIORITY OF PAYMENT ORDERS

Each payment order transmitted to the real-time gross settlement module is accompanied by a priority determined by the issuing Participant within the priority range allocated to its category.

The priority range for payment orders originating from the system and the Central Bank is higher than that allocated to other participants.

Small-value payments to be cleared are not assigned high priority.

CHAPTER III: PROCESSING OF PAYMENT ORDERS

ARTICLE 9: THE TRADING DAY

A trading day in the system consists of several periods with specific start and end times, dedicated to processing various types of operations, starting with an initialization period and ending with a closing period, during which the system prepares and executes operations. These schedules are valid for the system's business days.

The Central Bank registers several day profiles in the system, designated by a name. The reference standard profile is detailed in Annex 7 of this Regulation. During the initialization period, a message is broadcast to all participants to inform them of the profile selected for the current day.

The Central Bank may, in exceptional situations, modify the start or end times of one or more periods during a trading day. All participants are then notified via a message transmitted by the system or by any other written means, which they must take into account immediately.

Page 8 of 52

---

ARTICLE 10: IRREVOCABILITY OF PAYMENT ORDERS AND MANAGEMENT OF ERRONEOUSLY EXECUTED ORDERS

Orders accepted and settled by the system are irrevocable and cannot be corrected or cancelled by a participant. Nevertheless, a direct participant is authorized to cancel a pending order and thus not yet settled.

In the case of an RTGS operation sent by error and already settled in the system, the issuance of an MT999 or MT101 message, on the same day as the operation's settlement, by the issuing direct participant, obliges the receiving direct participant to process a return of these erroneously sent funds. The receiving participant must comply as long as the balance of the beneficiary client's account allows it. In case of insufficient provision in the final client's account, the receiving participant remains obliged to cooperate in recovering funds improperly received by its client.

All participants are responsible for payment operations processed in the system. They must put in place control, recovery, and sanction mechanisms against final beneficiaries who use funds improperly credited to their accounts, under penalty of sanctions that may be imposed by the Central Bank on the defaulting Participant.

The Central Bank may decide, on its own initiative, to cancel orders held in queue in case of an error causing a systemic blockage. Orders that remain in queue until the end of the trading day are rejected by the system. The concerned participants may reissue them later.

ARTICLE 11: QUEUE MANAGEMENT

The system ensures the processing of received payments in accordance with the "first in first out" rule and gives ordering participants the opportunity to assign a priority level upon issuance within the priority range reserved for them. This priority is respected before the arrival order of payments in the system is observed.

A payment order is executed upon its arrival in the system if the settlement account position allows it and if there is no payment of equal or higher priority already waiting for settlement. Otherwise, it is queued.

ARTICLE 12: OPTIMIZATION OF EXCHANGE FLOW

In case of payment blockages in participants' queues, the Central Bank may launch a systemic unblocking process which, depending on the case, modifies the priorities or order of pending payments, or cancels some of them, while informing all participants.

Page 9 of 52

---

ARTICLE 13: INTRA-DAY FACILITIES

Generally, to promote exchange fluidity, the Central Bank acts as a lender of last resort, exclusively in local currency. Nevertheless, it may grant intra-day refinancing based on a participant's liquidity needs during a trading day. It sets the conditions applicable to these operations.

A participant may repay facilities at any time during the trading day, as soon as its liquidity situation allows, in which case these facilities do not bear interest. In case of non-receipt of the repayment order, the system will generate it automatically.

If the intra-day facility is not repaid by the end of the day, it is automatically converted into an overnight loan on which interest is applied at rates fixed by the Central Bank. The latter reserves the right to limit the number of overnight loan renewals.

A participant's inability to repay its intra-day facilities, after the renewal limit set by the Central Bank, results in the definitive transfer, in favor of the latter, of the ownership of securities pledged as collateral up to the amount due.

CHAPTER IV: ROLE OF THE CENTRAL BANK

ARTICLE 14: SYSTEM MANAGEMENT

The Central Bank ensures system management, notably through:

1. Monitoring the overall proper functioning of the system, essentially in terms of exchange fluidity;
2. Monitoring compliance with the system regulation by participants;
3. Organizing the trading day;
4. Managing sensitive phases of this day and taking all preventive and corrective measures it deems necessary;
5. Monitoring systemic blockage cases and triggering blockage resolution processes;
6. General monitoring of system operation and triggering backup procedures if necessary;
7. Continuously adapting the system to the new needs of the financial market.

Page 10 of 52

---

ARTICLE 15: SECURITY, MONITORING AND GOVERNANCE OF THE SYSTEM

In the system's design, the Central Bank has implemented advanced access security techniques, thereby preventing fraudulent access, regardless of the type of telecommunication network used for exchanges.

It ensures permanent monitoring of system access, its performance, exchange fluidity, and liquidity in the system, taking necessary measures in case of blockage.

It monitors in particular operations that could cause systemic risk, such as very large amount transfers and the settlement of clearing balances.

It ensures system governance by monitoring compliance with its rules by itself and by all participants.

ARTICLE 16: ROLE OF SYSTEM PARTICIPANT

The Central Bank is a Participant in the system. In this capacity, it ensures:

1. Management of monetary policy operations;
2. Management of public debt operations, the settlements of which on the primary market are carried out in the system;
3. Custody of public credit securities, the settlement/delivery of which for secondary market operations is carried out in the system;
4. Maintenance of current accounts for the Public Treasury and public institutions. It ensures their representation as the lead agent in the system;
5. Representation of all holders of demand accounts opened in its books, ineligible for the system, pursuant to Article 2 regarding participants.

CHAPTER V: PARTICIPANT OBLIGATIONS

ARTICLE 17: COMPLIANCE WITH OPERATIONAL AND SECURITY RULES

The Participant undertakes to comply with security rules and standards, as well as the system's operational technical rules, as provided for in the annexes to this Regulation.

Page 11 of 52

---

ARTICLE 18: LIABILITY

Participants are held responsible for the total or partial non-performance of their obligations arising from their orders, except in cases of force majeure or act of a superior authority.

ARTICLE 19: RECIPROCITY OF EXCHANGES

The Participant in the system assumes responsibility for the reciprocity of exchanges in the system. To this end:

1. It verifies, in real time and continuously, the position of its settlement account during the trading period. It must take adequate measures to build the necessary provisions for settling its pending orders, particularly during: a) the establishment of reserves necessary for the settlement/delivery of securities; b) the establishment of reserves necessary for the settlement of net clearing balances; c) the settlement of Bank operations