Resolution JPRF-F-2023-088: Reform of the Basic Account Standard for Savings and Credit Cooperatives and Mutual Housing Savings Associations to Strengthen Financial Inclusion

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador | THE FINANCIAL POLICY AND REGULATION BOARD

CONSIDERING:

That Article 3, number 1, of the Constitution of the Republic of Ecuador establishes as primary duties of the State to guarantee without any discrimination the effective enjoyment of the rights established in the Constitution and in international instruments, particularly education, health, food, social security, and water for its inhabitants;

That Article 9 of the Supreme Norm guarantees that foreign persons residing in Ecuadorian territory will have the same rights and duties as Ecuadorians, in accordance with the Constitution;

That Article 11, number 2, of the Fundamental Charter determines that the exercise of rights shall be governed by the principle that all persons are equal and will enjoy the same rights, duties, and opportunities, and that no one may be discriminated against;

That Article 66, number 28, of the Fundamental Charter recognizes and guarantees to persons the right to personal and collective identity, which includes having a name and surname, duly registered and freely chosen;

That Article 308 of the Magna Carta determines that financial activities are a public order service, and may be exercised with prior authorization from the State, in accordance with the law; they will have the fundamental purpose of preserving deposits and meeting financing requirements to achieve the country's development objectives; and that the State will promote access to financial services and the democratization of credit;

That Article 309 ibidem stipulates that the national financial system is composed of the public, private, and popular and solidary sectors, which intermediates public resources; determining that each of these sectors will have specific and differentiated regulatory and control entities, which will be responsible for preserving their security, stability, transparency, and solidity;

That Article 392 of the Constitution of the Republic recognizes that the State will safeguard the rights of persons in human mobility and will exercise the direction of migratory policy through the competent body in coordination with the different levels of government;

That Article 4, numbers 4 and 6, of the Organic Monetary and Financial Code, Book I, enshrines as principles inspiring the provisions of said Code those of inclusion and equity; and the protection of citizen rights;

That Article 13 of the aforementioned Organic Code creates the Financial Policy and Regulation Board as part of the Executive Function, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care service policy and regulation;

That Article 14.1 numbers 10, and 15 letters c. and d., of the aforementioned Code, enshrines the functions of the Financial Policy and Regulation Board, among which are the promotion of financial inclusion processes and the full exercise of the rights of financial users, as well as establishing, within the framework of its competencies, any measure that contributes to the creation of products aimed at promoting and facilitating the financial inclusion of priority attention groups and fostering financial inclusion, promoting the participation of financial entities, securities, insurance, and prepaid comprehensive health care service providers;

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador |

That Article 150 of the aforementioned Code provides that entities of the national financial system will be subject to the regulation issued by the Financial Policy and Regulation Board;

That Article 151 of the aforementioned Organic Code states that regulation must recognize the nature and particular characteristics of each of the sectors of the national financial system and that regulation may be differentiated by sector, segment, activity, among others;

That Article 1 of the Organic Law of Human Mobility establishes as its object the regulation of the exercise of rights, obligations, and mechanisms linked to persons in human mobility, which comprises emigrants, immigrants, persons in transit, returned Ecuadorians, those requiring international protection; and their families;

That Article 3 of the Law of the Popular and Solidary Economy and the Popular and Solidary Financial Sector establishes that its object is to recognize, foster, and strengthen the popular and solidary economy and the popular and solidary financial sector;

That Article 144 of the aforementioned Law determines that the regulation of the Popular and Solidary Financial Sector will be under the charge of the Financial Policy and Regulation Board;

That with Resolutions No. 518-2019-F of June 14, 2019, and No. 613-2020-F of November 26, 2020, issued by the Monetary and Financial Policy Board, Section IX "Standard on the Basic Account for Savings and Credit Cooperatives and Mutual Housing Savings Credit Associations," Chapter XXXVI "Popular and Solidary Financial Sector," Title II "National Financial System," Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions was replaced and reformed, in order;

That the Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2023-0098-M of November 14, 2023, submits to the President of the Board the following reports:

i) Legal Report No. JPRF-CJF-2023-058 dated November 10, 2023, which concludes:
a) The Financial Policy and Regulation Board, as responsible for the formulation of policy and regulation of the financial system, has legal competence to regulate the contracting and opening of Basic Accounts; and to apply the provisions of the Organic Monetary and Financial Code, Book I, in accordance with what is provided in its article 14.1 number 1; b) The Reform Proposal contained in Technical Report No. JPRF-CTIFSP-2023-0013 of November 10, 2023, issued by the Technical Coordination of Financial Inclusion and Prepaid Health Policy, is framed within the current legal framework, so its issuance is legally viable within the framework of the competencies and powers attributed to the Financial Policy and Regulation Board.

ii) Technical Report No. JPRF-CTIFSP-2023-0013 dated November 10, 2023, which concludes that the normative reform proposal aims to strengthen the financial inclusion of natural persons, with a particular focus on priority attention groups, such as recipients of monetary transfers by the Ecuadorian government and migrants settled in national territory. To this end, the advantages offered by basic accounts have been improved through several measures: the elimination of the limit on permitted accounts, the increase in the number of permitted transactions, an increase in deposit, withdrawal, and balance limits to encourage their use, improvements in service channels to reduce the risk of fraud and other vulnerabilities associated with debit cards, greater flexibility in identity documents to facilitate the opening of these accounts for migrant persons, the implementation of a simplified anti-money laundering regime considering the client's net risk, and continuous communication by financial entities to the final beneficiary to promote access and use of this type of account.

That the Financial Policy and Regulation Board, in an ordinary session held via technological means, convened on November 27, 2023, and carried out via video conference on November 29, 2023, reviewed the Memorandum No. JPRF-ST-2023-0098-M of November 14, 2023, issued by the Technical Secretary of the Board; as well as the aforementioned reports from the Technical Coordination of Financial Inclusion and Prepaid Health Policy and Regulation and from the Legal Coordination of Financial Policy and Norms, in addition to the corresponding resolution project;

That the Financial Policy and Regulation Board, in an ordinary session held via technological means, convened on November 27, 2023, and carried out via video conference on November 29, 2023, reviewed and approved the following Resolution; and,

In exercise of its functions,

RESOLVES:

ARTICLE FIRST.- Substitute the text of Article 142 of Subsection II "GLOSSARY OF TERMS," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 142.- Definitions.- For the application of this standard, the following definitions will be considered:
a) Electronic Channels.- Refers to the channels, paths, or forms enabled by entities, through which members, clients, or users can carry out transactions with entities of the national financial system, using electronic or technological elements or devices. Electronic channels are: automated teller machines (ATM), point of sale devices (POS and PIN Pad), interactive voice response systems (IVR), mobile banking, web pages, or other similar ones. b) Basic Account.- The basic account is a demand deposit, instrumented through a contract celebrated by any means permitted by law, between a financial entity and a natural person, who is the holder, through which they can dispose of deposited funds, as well as access other associated services, through the channels enabled by the financial entity and which will be specified in said contract. c) Electronic Device.- Technological access device, data transport media, storage systems, or any other current and future technology, used to consult, enter, transport, protect, process, and/or store client data and their financial transactions. d) Mobile Device.- Portable computing device that generally includes a screen and an input method (either touch or mini-keyboard). Many mobile devices have operating systems that can run applications. Applications make it possible for mobile devices and cell phones to be used as devices for games, multimedia players, calculators, browsers, and more.

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador |

e) Electronic Means.- Elements of technology that have digital, magnetic, wireless, optical, electromagnetic, or other similar characteristics. f) Debit or Payment Card.- That by means of which the acquisition of a good or service is paid, as well as cash is withdrawn, charged to a demand deposit account in the issuing entity."

ARTICLE SECOND.- Substitute the text of Article 144 of Subsection III "CHARACTERISTICS," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 144.- Service Channels.- The financial services and transactions carried out in a basic account may be effected through existing channels, physical or electronic, own or third-party, that the financial entity has enabled.
For their execution, holders may use payment methods permitted by current regulations and available to financial entities.
If cell phones are used, the account holder must register the number with the financial entity under the terms stated in the respective basic account contract.
It is the exclusive responsibility of the account holder to update or modify the registered number.
The financial entity may determine the channels through which transactions and operations can be carried out, which must be stipulated in advance in the basic account opening contract."

ARTICLE THIRD.- Substitute the text of Article 145 of Subsection III "CHARACTERISTICS," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 145.- Interest.- Entities will recognize the payment of interest on the balances maintained by the holder in the basic account."

ARTICLE FOURTH.- Repeal Article 148 "Permitted Accounts" of Subsection III "CHARACTERISTICS," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions.

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador |

ARTICLE FIFTH.- Substitute the text of Article 150 of Subsection III "CHARACTERISTICS," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 150.- Limit.- Entities must control regarding the same basic account holder that:

1. The balance does not exceed the value of four unified basic salaries; and,
2. The accumulated monthly deposits and withdrawals do not exceed six unified basic salaries.
   The financial entity may set amounts lower than those indicated, based on its risk analysis."

ARTICLE SIXTH.- Substitute the text of Article 151 of Subsection III "CHARACTERISTICS," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 151.- Service Charges.- The charges and costs related to the services offered by entities through the basic account are established in Section XIV "Standard on Financial Services of Entities of the Popular and Solidary Financial Sector," Title II "National Financial System," Chapter XXXVI "Popular and Solidary Financial Sector," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions."

ARTICLE SEVENTH.- Substitute the text of Article 153 of Subsection IV "TRANSACTIONS AND SERVICES," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 153.- Transactions.- The basic account allows a natural person to access the following transactions:

1. Deposits, withdrawals, and inquiries;
2. Payment of public and private services;
3. Payment and/or receipt of remuneration or salaries;
4. Payments to the financial entity and to third parties;

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador |

5. Purchases or consumption in affiliated establishments through the debit card or other electronic payment means;
6. Sending and receiving national transfers and remittances from abroad; and,
7. General crediting up to the limits established in Article 150."

ARTICLE EIGHTH.- Substitute the text of Article 156 of Subsection V "REQUIREMENTS FOR OPENING AND BASIC ACCOUNT CONTRACT," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 156.- In-person Modality.- The financial entity must verify the identity of the applicant, which will be done with the presentation of the corresponding document determined in current legislation: citizenship or identity cards and/or passport, as applicable.
In the case of persons in a situation of human mobility, the presentation of any of the documents indicated below will be considered the sole requirement for opening a basic account:

1. Valid identity document or ID card in accordance with the Organic Law on Identity and Civil Data Management;
2. Valid passport issued by the country of origin in accordance with the Organic Law on Identity and Civil Data Management;
3. Any type of visa granted by the Ecuadorian State, as indicated by the Organic Law of Human Mobility; or,
4. In applicable cases, what is established in Executive Decree No. 436 of June 1, 2022, must be taken into account."

ARTICLE NINTH.- Substitute the text of Article 159 of Subsection V "REQUIREMENTS FOR OPENING AND BASIC ACCOUNT CONTRACT," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"Art. 159.- Content of the Contract.- The basic account contract must contain, at least, the following stipulations:

1. Express indication of the full responsibility of the financial entity towards the holder of the basic account, for the services it will provide, amounts deposited, and confidentiality of the applicant's information;
2. The obligations of the contracting parties;

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Government Financial Management Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador |

3. The charges of each of the services that will be provided through the basic account and the method of payment, which may be updated and informed electronically;
4. The determination that the account is remunerated;
5. The physical and/or electronic channels, through which clients can carry out transactions;
6. The determination of maximum and minimum amounts that can be deposited or withdrawn, the quantity of transactions and their frequency, which may be updated and informed through electronic processes;
7. Specification of additional services that may be obtained through this account with their respective charges;
8. Express indication of the full responsibility of the holder towards the financial entity, for the use of the channels through which transactions are carried out; and,
9. The determination of causes and procedure for the closure or cancellation of the basic account."

ARTICLE TENTH.- Substitute the text of General Provision Second of Subsection V "REQUIREMENTS FOR OPENING AND BASIC ACCOUNT CONTRACT," Section IX "STANDARD ON THE BASIC ACCOUNT FOR SAVINGS AND CREDIT COOPERATIVES AND MUTUAL HOUSING SAVINGS CREDIT ASSOCIATIONS," Chapter XXXVI "POPULAR AND SOLIDARY FINANCIAL SECTOR," Title II "NATIONAL FINANCIAL SYSTEM," Book I "MONETARY AND FINANCIAL SYSTEM" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text:

"SECOND.- All operations carried out through basic accounts must have a lawful origin and destination, and holders must comply at all times with the Organic Law on Prevention, Detection, and Eradication of the Crime of Money Laundering and Financing of Crimes and other applicable regulations.
Financial entities, in compliance with their obligations provided for in the current legal framework, will implement and apply simplified anti-money laundering and financing of terrorism prevention controls, in accordance with their policies based on the net risk assigned to the client, which will always be subject to the provisions issued by the Superintendence of Popular and Solidary Economy and other authorities within the scope of their competencies. Financial entities may require holders, and they will have the obligation to deliver, all the information and documentation necessary to explain and justify the operations carried out through basic accounts. In the event of non-compliance with this obligation by the holders, financial entities may proceed to the cancellation of basic accounts and