Agreement No. 6 (2020) Modifying Agreement No. 1-2016 on ACH Clearing and Funds Availability

Republic of Panama Superintendence of Banks AGREEMENT No. 006-2020 (of June 16, 2020)

"Modifying Agreement No. 1-2016 on ACH Clearing and Funds Availability"

THE BOARD OF DIRECTORS

In exercise of its legal powers, and

CONSIDERING:

That following the issuance of Law Decree No. 2 of February 22, 2008, the Executive Branch prepared a systematic compilation in the form of a Single Text of Law Decree No. 9 of February 26, 1998, and all its modifications, which was approved via Executive Decree No. 52 of April 30, 2008, hereinafter referred to as the Banking Law;

That in accordance with numeral 2 of Article 5 of the Banking Law, it is the function of the Superintendence of Banks to strengthen and foster the conditions conducive to the development of Panama as an international financial center;

That in accordance with numeral 5 of Article 11 of the Banking Law, it is the responsibility of the Board of Directors to establish, within the administrative scope, the interpretation and scope of legal or regulatory provisions regarding banking matters;

That through Agreement No. 1-2016 of January 26, 2016, this Superintendence established general parameters regarding ACH clearing and funds availability;

That Articles 2, 3, and 4 of Agreement No. 1-2016 established that before 5:15 p.m., banking entities must ensure that the necessary amount to cover ACH operations for the day is credited to the settlement account, and that no later than 6:00 p.m. on the same day, the National Bank of Panama will proceed to settle the net position of ACH transactions, so that banks proceed to release and make funds available no later than 6:30 p.m. on the same day, according to the cutoff schedule communicated to their clients;

That through Resolution No. 176-2019-JD of October 8, 2019, the Board of Directors of the National Bank of Panama approved the Regulation of the Real-Time Gross Settlement System (RTGS), which establishes the functioning and operation of payment clearing and settlement systems;

That through General Resolution SBP-RG-0191-2019 of October 14, 2019, this Superintendence adopted the measures that banking entities must implement to participate in the Real-Time Gross Settlement System (RTGS), in order to comply with the technical and functional requirements established by the Clearing Chamber of the National Bank of Panama (BNP), within the corresponding terms and deadlines;

That attending to the processes linked to the implementation of the Real-Time Gross Settlement System (RTGS), the Clearing Chamber of the National Bank of Panama (BNP) through Circular 20(21000-03)12 of May 28, 2020, communicated to member banks the adoption of a new process of cutoff, clearing, and settlement by scheduled daily sessions that would be implemented for the ACH service;

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That in working sessions of this Board of Directors, the need and convenience of modifying Agreement No. 1-2016 has been highlighted, so that the periods for clearing, settlement, and release of funds for ACH transactions are adjusted to the new processes implemented by the Clearing Chamber of the National Bank of Panama (BNP).

AGREES:

ARTICLE 1. Article 2 of Agreement No. 1-2016 is hereby amended as follows:

ARTICLE 2. PERIOD FOR REMITTING FUNDS TO THE ACCOUNTS OF THE NATIONAL BANK OF PANAMA FOR ACH CLEARING. Banks must ensure they monitor the position of ACH transactions carried out during the day, in order to have the required funds to comply with the settlement process of daily ACH transactions.

To comply with the foregoing, banking entities must remit, as soon as possible, any shortfall they have in their position to the settlement account they maintain with the National Bank of Panama, if the balance of this account does not cover the ACH shortfall. For these purposes, they must employ adequate and effective procedures that allow crediting the necessary amount to said account to cover the day's operations. The account must receive funds before 10:15 a.m., 1:00 p.m., and 5:00 p.m. local time, according to each scheduled session.

In the case of correspondent banks that receive clearing services, they must ensure that they remit funds to their correspondent bank's account.

ARTICLE 2. Article 3 of Agreement No. 1-2016 is hereby amended as follows:

ARTICLE 3. SETTLEMENT PERIOD. The National Bank of Panama will proceed to settle the net position of ACH transactions, using the settlement accounts that banks maintain for such purposes at this entity. This settlement will be carried out no later than 11:00 a.m., 1:45 p.m., and 5:45 p.m. on the same day, according to each scheduled session.

It will be the responsibility of the Clearing Chamber of the National Bank of Panama to notify, through the necessary mechanisms, the settlement of the corresponding funds.

In the event that a banking entity does not have the necessary funds to settle its ACH position for the day, the Clearing Chamber will proceed to notify the banks before the release time, so that they take the corresponding measures.

ARTICLE 3. Article 4 of Agreement No. 1-2016 is hereby amended as follows:

ARTICLE 4. AVAILABILITY AND RELEASE OF FUNDS FOR ACH TRANSACTIONS. In the case of general license banks, the availability of ACH transactions, both debit and credit, will be immediate once settlement is completed at the Clearing Chamber of the National Bank of Panama. Consequently, the release and availability of funds corresponding to ACH transactions must be carried out no later than 11:00 a.m., 1:45 p.m., and 5:45 p.m. on the same day, according to each scheduled session.

Regarding international license banks or general license banks that receive clearing services through other banks, the availability of ACH transactions, both debit and credit, will be immediate once the bank providing the clearing services confirms this availability.

It will be the responsibility of each bank to inform clients of the last cutoff time for their ACH transactions to be effective and available in each session of the same day.

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ARTICLE 4. VALIDITY. This Agreement will enter into force starting June 22, two thousand twenty (2020).

Given in the city of Panama, on the sixteenth (16) day of the month of June of two thousand twenty (2020).

NOTIFY, PUBLISH, AND COMPLY.

THE PRESIDENT, THE SECRETARY, Joseph Fidanque III Nicolás Ardito Barletta