SUMMARY

NOTICE

The matter to be published in the «Boletim da República» must be submitted as a duly authenticated copy, one for each subject matter, containing the following endorsement, signed and authenticated: For publication in the «Boletim da República».

NATIONAL PRESS OF MOZAMBIQUE, E.P.

Bank of Mozambique: Notice No. 3/GBM/2015: Concerning the Regime for Access and Exercise of Banking Agent Activities. Monday, 4 May 2015 I SERIES — Number 35

BANK OF MOZAMBIQUE

Notice No. 3/GBM/2015 of 4 May

Showing the need to establish rules regarding the provision of financial services through banking agents, with the objective of ensuring greater coverage of financial services for the population, particularly in rural areas, the Bank of Mozambique, using the competence conferred upon it by paragraph 4 of Article 10 of the Regulation of the Law on Credit Institutions and Financial Companies, approved by Decree No. 56/2004 of 10 December, with amendments introduced by Decree No. 30/2014 of 5 June, determines:

CHAPTER I

General Provisions

ARTICLE 1

Object

This Notice establishes the terms and conditions under which banks and microbanks may extend their activities through the contracting of banking agents.

ARTICLE 2

Scope of Application

This Notice applies to banks and microbanks that intend to extend their activities through the contracting of banking agents within the National territory.

ARTICLE 3

Definitions

For the purposes of this Notice, the following are understood: a) Banking agent: an entity that, alongside its main activity, exercises one or more activities referred to in Article 6 of this Notice, in the name and on behalf of banks and/or microbanks; b) Bank: a credit institution whose object is the exercise of banking activities provided for in letters a) to m) of paragraph 1 of Article 4 of Law No. 15/99 of 1 November, with amendments introduced by Law No. 9/2004 of 21 July – Law on Credit Institutions and Financial Companies; c) Credit cooperative: a species of credit institution constituted as a cooperative society, whose activity is developed exclusively for its members, within the meaning given by letter f) of paragraph 2 of Article 2 of Law No. 15/99 of 1 November, with amendments introduced by Law No. 9/2004 of 21 July – Law on Credit Institutions and Financial Companies; d) Type 4 credit: credit granted by a credit institution that has been overdue for more than 3 months; e) Type 5 credit: credit granted by a credit institution that has been written off to the assets of the lending institution; f) Commercial entrepreneurs: natural or legal persons who, in their own name, by themselves or through third parties, exercise a commercial business, as well as commercial companies, within the meaning given by Article 2 of Decree-Law No. 2/2005 of 27 February – Commercial Code; g) Contracting institution: a credit institution of the bank or microbank species that contracts a banking agent; h) Electronic money institution: a species of credit institution whose main object is the issuance of payment instruments in the form of electronic money, under applicable legislation, within the meaning given by letter i) of paragraph 2 of Article 2 of Law No. 15/99 of 1 November, with amendments introduced by Law No. 9/2004 of 21 July – Law on Credit Institutions and Financial Companies; and i) Microbank: a credit institution whose object is the exercise of restricted banking activity, operating notably in microfinance, under terms defined in applicable legislation, within the meaning given by letter j) of paragraph 2 of Article 2 of Law No. 15/99 of 1 November, with amendments introduced by Law No. 9/2004 of 21 July – Law on Credit Institutions and Financial Companies.

CHAPTER II

Access and General Conditions of Banking Agent Activities

ARTICLE 4

Liability

1. The banking agent acts on behalf of and under the guidance of the contracting institution, which is responsible for all its acts within the scope of the activities for which it was contracted.
2. The contracting institution must guarantee, notably, the integrity, reliability, security and confidentiality of transactions carried out, as well as compliance with applicable regulations governing the activity performed through the banking agent.

ARTICLE 5

Eligible Entities

1. The contracting institution may contract natural or legal persons, public or private, duly authorized to exercise their main activity, if applicable, notably: a) Commercial entrepreneurs; b) Registration or notary services; c) Public educational institutions; d) Public companies; e) Fixed and mobile telecommunications operators; f) Postal sector operators; or g) Credit cooperatives; h) Electronic money institutions; i) Other entities that the Bank of Mozambique may periodically authorize.
2. Contracting institutions are exempt from requiring credit cooperatives and electronic money institutions to comply with the conditions established in Article 9 of this Notice, except for those set out in letter b) of paragraph 1 as well as letters e) and g) of paragraph 3 of the same article.
3. The following are not eligible as banking agents: a) Entities that develop illegal or prohibited activities, as well as activities related to games of chance; b) Entities whose administrative body or equivalent includes members covered by the provisions of paragraph 2 of Article 9 of this Notice; c) Entities whose exclusive or main object is the provision of banking agent services, or whose corporate control is exercised by the contracting institution, or that are in a control relationship with another entity; and d) Entities whose corporate control, directly or indirectly, is exercised by an administrator of any companies that are in a group relationship with the contracting institution.

ARTICLE 6

Activities of Banking Agents

1. Banking agents may only perform the following activities: a) Deposit and withdrawal of cash, within limits established by the contracting institution; b) Bank transfers; c) Disbursement and receipt of repayments for credits approved by the contracting institution; d) Payments for services provided by third parties; e) Provision of bank account balance; f) Provision of mini-statement; g) Reception and forwarding of requests for opening, blocking and closing deposit accounts at contracting institutions; h) Reception and forwarding of proposals regarding credit operations of the contracting institution; i) Receipt and forwarding of requests for issuance and replacement of debit, credit and prepaid cards; and j) Others that the Bank of Mozambique may authorize on a case-by-case basis.
2. The limits referred to in letter a) of the preceding paragraph must be established taking into account the risk profile associated with transaction volumes and the security conditions of the banking agent.
3. The entities indicated in letters b), c) and d) of paragraph 1 of Article 5 may only perform the activities set out in letters e), f), g), h), i) and j) of paragraph 1 of this article.

ARTICLE 7

Technology Used, Support and Monitoring of Banking Agent Activities

1. The contracting institution must ensure that transactions carried out by banking agents occur in real time and are conducted within the banking agent's premises.
2. Without prejudice to the use of other technologies and/or payment channels, the contracting institution must provide the banking agent with an automatic payment terminal (POS), where applicable, to perform the activities indicated in Article 6.
3. The contracting institution may provide an automatic teller machine (ATM) to the banking agent, provided that the following conditions are cumulatively met: a) Specific contract between the parties; b) ATM security and protection conditions, ensuring its adequate operation and use by customers; and c) Capacity for the banking agent to provide support services to the terminal.
4. The contracting institution must designate the nearest support and monitoring bank branch for the banking agent's activities.

CHAPTER III

Contracting of Banking Agents

ARTICLE 8

Standards Regarding the Use of Banking Agents

The contracting institution must ensure that financial activities carried out through banking agents comply with internal regulations and policies approved by the administrative body or equivalent of the contracting institution, containing at minimum procedures regarding: a) Duties of identification and verification of banking agents; b) Provision of services through banking agents, as well as the description of technologies to be used; and c) Training courses to be provided before the commencement of banking agent activities, comprising notably subjects on: (i) Identification and verification of customers by banking agents, under applicable legislation; (ii) Operations inherent to the activities referred to in Article 6; (iii) Bank secrecy; (iv) Fraud detection mechanisms, including the identification of counterfeit and false banknotes and coins, as well as procedures for the prevention and combating of money laundering and terrorist financing; (v) Execution of operations, diagnosis and resolution of processing failures; and (vi) Handling of complaints.

ARTICLE 9

Criteria for Evaluating Banking Agents

1. The contracting institution must, prior to contracting, evaluate the entity to be contracted as a banking agent, to ensure compliance with at minimum the following conditions: a) Being engaged in an economic activity and possessing a stable establishment; b) Not having, within the last six months, type 4 or 5 credit, nor being listed in the register of issuers of checks without provision; c) Possessing adequate physical facilities and human resources capable of ensuring secure and efficient service provision; and d) Integrity of owners, managers, partners and members of the governing bodies of entities eligible as banking agents.
2. Among other relevant circumstances and for the purposes of letter d) of the preceding paragraph, a lack of integrity is indicated by the fact that the person has been: a) Declared, by national or foreign judgment, bankrupt or insolvent or responsible for the bankruptcy or insolvency of a company they dominate or have administered, directed or managed; b) Convicted, in the country or abroad, of crimes of fraudulent bankruptcy, negligent bankruptcy, forgery, theft, robbery, fraud by deception, extortion, breach of trust, usury, foreign exchange fraud and issuance of checks without provision, drug trafficking, money laundering and other crimes of an economic nature; c) Administrator, director or manager of a company, in the country or abroad, whose bankruptcy or insolvency has been prevented, suspended or avoided by remedial measures or other preventive or suspensive means, provided that the competent authorities recognize their responsibility for this situation; d) Convicted, in the country or abroad, for infringements of legal or regulatory rules governing the activity of credit institutions and financial companies, insurance activity and the securities market, when the severity or recurrence of these infringements justifies it.
3. The entity intending to be contracted as a banking agent must provide the contracting institution with at minimum the following information: a) Name or firm; b) Certificate of legal registration or other equivalent document; c) Permit, valid activity license or equivalent document issued by a competent entity; d) Audited financial statements of the previous economic year, as applicable; e) Clearance certificate issued by the respective Area Directorate or tax department; f) Criminal record certificate of the persons indicated in letter d) of paragraph 1 of this article; g) Address and contact details; and h) Proof of possession of financial resources or funds to ensure banking agent activities, notably cash deposits and withdrawals, as applicable.
4. Public administration bodies and institutions, notably registration or notary services, public educational institutions and public companies are exempt from complying with the criteria established in letters a), b) and d) of paragraph 1 and letters d), f) and h) of paragraph 3 of this article.

ARTICLE 10

Minimum Contract Clauses

1. The performance by banking agents of the activities provided for in Article 6 of this Notice must be through the conclusion of a written contract with the contracting institution.
2. The contract referred to in the preceding paragraph must contain at minimum clauses on the following aspects: a) The activities to be performed by the banking agent; b) The rights and obligations of the parties; c) The remuneration of the banking agent, including its agreed fixation conditions; d) The bank account number of the banking agent domiciled at the contracting institution used for payment of remuneration for services rendered; e) A statement that the provision of services by banking agents is subject to the regulations of this Notice and other applicable legislation to contracting institutions, as well as a reference that the Bank of Mozambique must be granted full and timely access to internal control systems, documents, reports, archives and banking agent employees, whenever necessary; f) A statement that the owner, manager, administrator, partner or equivalent of the banking agent must not perform management functions, make management decisions, or act or appear to act in a manner equivalent to that of a management member or employee of the contracting institution; g) The obligation for the agent to ensure the protection of records, data, documents or processes relevant to operations carried out, establishing, for this purpose, the duty to transfer them to the contracting institution at regular previously specified intervals; h) A statement that all information and data collected by banking agents regarding services rendered, relating to customers and/or the contracting institution, is property of the contracting institution and that copies of relevant documentation must be provided to it; i) The obligation for the contracting institution to ensure the collection, at the banking agent's premises, of supporting documents for transactions carried out and excess cash, within a reasonable time, taking into account the risk profile and location of the banking agent and transaction volume; j) A specification that banking agents and their employees are bound by the statutory duty of secrecy regarding operations carried out with customers in the name of the contracting institution; k) Appropriate limits on the cash amount to be maintained by banking agents, as well as payment and receipt limits per customer or user; l) The obligation to present, when providing service for financing operations regarding goods and services supplied by the banking agent itself, customers with offers from contracting institutions with which it has concluded a service provision contract; m) Indication of prohibited acts for banking agents, notably: (i) Charging any fees, commissions or charges related to the exercise of activities not provided for in the contracting institution's price list, which must be prepared according to the commissions and other charges regime approved by the Bank of Mozambique; (ii) Carrying out any operation that is not in real time and without providing the respective proof; (iii) Making advances on behalf of the contracting institution; (iv) Carrying out foreign exchange operations; (v) Providing guarantees in credit operations; (vi) Sub-delegating or sub-contracting a banking agent. n) Conditions for altering service provision terms and circumstances of non-compliance; and o) Causes or situations for contract termination, as well as their consequences, under this Notice.
3. Contracting institutions must keep a copy of the contract concluded with each banking agent for verification purposes by the Bank of Mozambique.

ARTICLE 11

Non-Exclusivity of Contract

1. The contract concluded between the contracting institution and the banking agent must not be exclusive.
2. A banking agent may provide services to several contracting institutions provided that the service provision contracts are separate.
3. In case of a banking agent being contracted by several contracting institutions, these must ensure that the agent demonstrates capacity to manage transactions from different institutions.

ARTICLE 12

Contract Termination

1. The banking agent contract may be terminated by initiative of the agent or the contracting institution.
2. The banking agent contract must be terminated whenever one of the following causes or situations occurs: a) Systematic non-compliance with obligations by one of the parties, or that compromises the essence or maintenance of the legal relationship between the parties; b) Mutual agreement of the parties; c) Cessation of the main activity of the banking agent; d) Dissolution of the contracting institution or the banking agent; e) Death of the commercial entrepreneur, owner of the institution contracted as a banking agent; f) Conviction of the commercial entrepreneur, natural person, in the country or abroad, for crimes of an economic nature, provided for in letter b) of paragraph 2 of Article 9 of this Notice; g) Change or closure of the establishment without prior written consent of the contracting institution.
3. The Bank of Mozambique may determine contract termination when the banking agent violates laws and regulations governing the activity of credit institutions and financial companies and consumer rights in general, as well as when it fails to observe the determinations of the contracting institution, jeopardizing the interests of depositors and other creditors.
4. Whenever a banking agent contract is terminated, the contracting institution must: a) Ensure immediate removal of the banking agent's identification elements, provided for in Article 14 of this Notice; b) Publish such fact in the country's most widely circulated newspaper, as well as at the location where it performed activities, in a manner that allows public knowledge of the cessation of services as a banking agent; c) Guarantee completion of ongoing transactions requested by customers from the banking agent; and d) Ensure that such fact does not unduly prejudice rights and interests of its customers.

ARTICLE 13

Duty to Inform and Register Banking Agents

1. The contracting institution must provide information to the Bank of Mozambique regarding banking agent activities, as well as violations of applicable laws and regulations, under conditions and periodicity to be defined.
2. A register of banking agents operates at the Bank of Mozambique, whose entries are communicated by contracting institutions, under terms and conditions to be defined.
3. Without prejudice to the register referred to in the preceding paragraph, contracting institutions must possess and maintain a register for recording banking agent entries.

ARTICLE 14

Duty to Inform the Public

1. Contracting institutions must ensure public availability, in all branches, on their Internet pages and at banking agent premises, in a highly visible, directly accessible and easily identifiable location: a) The updated list of their banking agents, including name, address and telephone number or any other communication means; b) Products and services provided by banking agents; and c) Contact details for the contracting institution's free customer service, in a visible location inside the premises, for complaints, public clarification or verification of agent authenticity.
2. The contracting institution must also: a) Have prior knowledge of the change or closure of a banking agent's establishment, with a minimum advance notice of 30 days; and b) Ensure that the banking agent informs the public about the change or closure of its establishment, with a minimum advance notice of 15 days from the date of verification.

ARTICLE 15

Identification of Banking Agents

The contracting institution must ensure that its banking agent publicly discloses, in a visible location, the name or firm followed by the designation "agent of (indicating the name of the contracting institution)", in Portuguese.

CHAPTER IV

Final Provisions

ARTICLE 16

Sanction Regime

Violation of the provisions of this Notice constitutes an offense punishable under the Law on Credit Institutions and Financial Companies.

ARTICLE 17

Clarification of Doubts

Doubts arising from the interpretation and application of this Notice must be submitted to the Regulation and Licensing Department of the Bank of Mozambique.

ARTICLE 18

Entry into Force

This Notice enters into force on the date of its publication.

Maputo, 13 April 2015. — Governor of the Bank of Mozambique, Ernesto Gouveia Gove.