Law No. 183-02 Approving the Monetary and Financial Law

YEAR CXLVI 10187

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OFFICIAL GAZETTE Founded on June 2, 1851 Administrative Director: Dr. Guido Gómez Mazara Legal Advisor to the Executive Power Santo Domingo de Guzmán, D.N., Dominican Republic December 3, 2002

INDEX ACTS OF THE LEGISLATIVE POWER Law No. 183-02 approving the Monetary and Financial Law.

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-3- Law No. 183-02 approving the Monetary and Financial Law.

THE NATIONAL CONGRESS In the Name of the Republic

Law No. 183-02

TITLE I REGULATORY AND INSTITUTIONAL FRAMEWORK

SECTION I PRINCIPLES OF THE REGULATION OF THE MONETARY AND FINANCIAL SYSTEM

Article 1. Object of the Law and Legal Regime of the Monetary and Financial System. a) Object of the Law. This Law aims to establish the regulatory regime of the monetary and financial system of the Dominican Republic. b) Scope of Regulation. The regulation of the monetary and financial system throughout the territory of the Dominican Republic is carried out exclusively by the Monetary and Financial Administration. The regulation of the system comprises the establishment of policies, regulation, execution, supervision, and application of sanctions, under the terms established in this Law and in the Regulations issued for its development. c) Legal Regime. The regulation of the monetary and financial system shall be governed exclusively by the Constitution of the Republic and this Law. The Regulations issued by the Monetary Board for its development, and the Instructions, which are hierarchically subordinate to the Regulations issued by the Monetary Board, issued by the Central Bank and the Superintendence of Banks within their respective areas of competence, shall apply. In matters not specifically provided for in the aforementioned norms, the general provisions of Administrative Law shall apply subsidiarily, and in their absence, those of Common Law. d) Coordination of Competences. The monetary and financial system, the securities market, and the insurance and pension systems shall be governed by their own Laws. The Monetary and Financial Administration and the regulatory and supervisory bodies of the securities market, insurance, and pensions shall maintain the necessary coordination in the exercise of their respective regulatory competences, in order to allow for adequate execution of their functions, efficient supervision based on consolidation, and fluid exchange of the information necessary to carry out their tasks, in accordance with what is provided in this Law. The Monetary Board shall regulate, after consulting the aforementioned Bodies, the procedure for the resolution of discrepancies and conflicts of competences that may arise from the fulfillment of this obligation of coordination.

Article 2. Object of Regulation. a) Regulation of the Monetary System. The regulation of the monetary system shall aim to maintain price stability, which is an indispensable basis for national economic development. b) Regulation of the Financial System. The regulation of the financial system shall aim to ensure compliance with the conditions of liquidity, solvency, and management that financial intermediation entities must meet at all times in accordance with what is established in this Law, to promote the normal functioning of the system in an environment of competitiveness, efficiency, and free market.

Article 3. Regime of Prior Administrative Authorization. a) Authorization Model. Financial intermediation is subject to the regime of prior administrative authorization and continuous supervision, under the terms established in this Law. Financial intermediation may only be carried out by the financial intermediation entities referred to in this Law. b) Concept of Financial Intermediation. For the purposes of this Law, financial intermediation is understood as the habitual collection of funds from the public with the aim of lending them to third parties, regardless of the type or denomination of the collection or lending instrument used. The circumstances of habitual collection that, due to their charitable nature, do not constitute financial intermediation shall be determined by regulation. c) Effects. The granting of authorization and the exercise of supervision activities shall not, in any case, imply the assumption by the Monetary and Financial Administration of any responsibility for the results derived from the exercise of financial intermediation activities, which shall always be at the expense of the authorized financial intermediation entity. d) Instruments. The Monetary and Financial Administration shall guarantee the adequate functioning of the monetary and financial system through the implementation of monetary policy instruments, regulation, supervision, and control of the operations of financial intermediation entities, in accordance with this Law, international norms, and practices on the matter.

Article 4. Legal Regime of Regulatory Acts and Remedies. a) Presumption of Legality. Acts issued by the Monetary and Financial Administration in the exercise of its competences and in conformity with procedurally established procedures enjoy a presumption of legality, unless proven otherwise, and shall be immediately enforceable. Non-compliance entails the corresponding sanction under the terms established in this Law. For the forced execution of administrative acts, the Monetary and Financial Administration shall have, if necessary, the assistance of the public force of the Public Ministry, which cannot be denied under any circumstances. The occupation referred to in Article 63, letter b) of this Law shall not require any judicial assistance from the Public Ministry, provided that it is carried out in the premises of the financial intermediation entity in the presence of a duly accredited official by the Monetary Board who will draw up a record of the actions taken. b) Appealability. Acts issued by the Monetary and Financial Administration that terminate an administrative procedure shall only be appealable through administrative remedies of reconsideration before the entity that issued the act and the hierarchical remedy before the Monetary Board in accordance with the provisions of this Law. Acts initiating a procedure and procedural acts shall not be appealable independently of the act that terminates the administrative procedure. Against acts of the Monetary Board that terminate administrative remedies, a contentious-administrative remedy regarding monetary and financial matters may be filed within a maximum period of one (1) month, before the judicial body and in accordance with the procedure determined in Article 77 of this Law. c) Non-Suspensive Effects. Remedies and resolutions terminating them must be based exclusively on violations of the regulations referred to in Article 1 of this Law or on violations of procedural rules issued under the provisions of this Article. The filing of an administrative or contentious-administrative remedy regarding monetary and financial matters shall not have suspensive effects on the execution of the appealed act. Suspension of the appealed act may only be requested when such act terminates a sanctioning procedure and provided that the execution of said act could objectively produce an irremediable effect in case the act is subsequently revoked in the judicial arena. The mere payment of sums of money shall not be considered an irremediable effect. Acts defining the annual objective of monetary programming, those executing monetary policy, and those approving or modifying the annual inspection and financial supervision plan shall not be subject to administrative or contentious-administrative remedies regarding monetary and financial matters. d) Challenge of Regulatory Provisions. The challenge of the Regulations of the Monetary Board and the Instructions of the Central Bank and the Superintendence of Banks may only be made on the occasion of filing a remedy against an act issued in execution of them. The Regulations and Instructions shall always have a general scope, and what is provided in them shall not be subject to singular alteration by acts issued by the same body that issued the regulatory provision or by another distinct body. e) Procedural Principles. The Monetary Board shall regulate the general norms applicable to the administrative procedures of the Monetary and Financial Administration in accordance with the provisions of this Article and in accordance with the general principles of Administrative Law and especially those of legality, legal certainty, prohibition of arbitrariness, motivation of acts that restrict the legal sphere of interested parties, normative hierarchy, efficacy, reasonableness, economy, transparency, speed, preclusion of deadlines, publicity, and due process. f) Terminology. The regulatory provisions of the Monetary Board shall be called Monetary Regulations and Financial Regulations. The regulatory provisions of the Central Bank and the Superintendence of Banks shall be called Instructions. The Internal Regulations of the Monetary Board, the Central Bank, and the Superintendence of Banks shall be called Internal Regulations. The acts of the Monetary Board shall be called Resolutions of the Monetary Board. The acts of the Central Bank and the Superintendence of Banks shall be called Circulars. g) Elaboration of Regulations. During the elaboration of the Monetary and Financial Regulations, the Monetary Board must call for public consultation to receive written opinions from interested sectors, in a period that shall not be less than thirty (30) days counted from the date of publication in at least one newspaper of national circulation of the full text of the draft Regulation. The period established in this letter may be reduced by the Monetary Board in cases where the entry into force of the Regulation is of extreme urgency. The Regulations shall enter into force within a period of seventy-two (72) hours of their publication in at least one newspaper of national circulation. h) Publicity. The Monetary and Financial Regulations as well as the Instructions of the Central Bank and the Superintendence of Banks shall be published in the Information Bulletins referred to in Articles 22, letter f) and 23, letter c) of this Law, as applicable, and in at least one newspaper of national circulation. The Internal Regulations shall be known to the personnel of the Monetary and Financial Administration in the part that concerns them. Administrative acts of the Monetary and Financial Administration must be notified as a condition of validity at the domicile of the individuals affected by them or, if it concerns a legal entity, in the hands of their legal representatives and at the social domicile of the entity, and, in their absence and due to proven impossibility, in the publications referred to in Articles 22 and 23 of this Law, as applicable.

SECTION II ORGANIZATION OF THE MONETARY AND FINANCIAL ADMINISTRATION

Article 5. Structure. a) Organization. The Monetary and Financial Administration is composed of the Monetary Board, the Central Bank, and the Superintendence of Banks, with the Monetary Board being the supreme body of both entities. The Monetary and Financial Administration enjoys functional, organizational, and budgetary autonomy for the fulfillment of the functions entrusted to it by this Law. b) Relations. The relations between the Central Bank and the Superintendence of Banks shall be governed by the principles of economy, cooperation, coordination of functions, and competences. The Monetary Board shall ensure compliance with this provision. c) Exercise of Competences. The attributions entrusted to the Monetary and Financial Administration by this Law are inalienable and may only be exercised by it in accordance with the provisions of this Law. The Monetary and Financial Administration shall only have the capacity to do what this Law entrusts to it. d) Obligation to Provide Information. Natural and legal persons, whether public or private, are obliged to facilitate to the Monetary and Financial Administration the information that it requires for the fulfillment of its functions in the manner determined by this Law and as established by regulation. The failure to provide information may be made public by the Monetary and Financial Administration in a newspaper of national circulation and communicated to the National Congress, regardless of the sanctions to which the persons are subject according to the provisions of this Law.

Article 6. Statutory Regime of Personnel. a) Categories. The personnel of the Monetary and Financial Administration is composed of authorities, officials, and employees. Authorities are the members of the Monetary Board, as well as the Vice Governor of the Central Bank and the Superintendent of the Superintendence of Banks. Officials are positions equal to or higher than the category of subdirector in accordance with the provisions of the Internal Regulations of the Central Bank and the Superintendence of Banks. The rest of the personnel shall have the status of employees. The labor relationship of officials and employees serving the Monetary and Financial Administration shall be governed by the provisions of this Article, the corresponding Internal Regulations, and the provisions of the Labor Code and the Social Security Law. For their consideration within the compensation and retirement regime of the personnel of the Monetary and Financial Administration, the Governor and Vice Governor of the Central Bank, as well as the Superintendent and Superintendent of Banks, shall be equated to the category of official, without prejudice to their status as authorities. b) Duties. Personnel serving the Monetary and Financial Administration shall exercise their functions with absolute impartiality and in accordance with the norms and procedures established. A Code of Conduct regulating the obtaining of financing by personnel of the Monetary and Financial Administration from financial intermediation entities shall be established by regulation. Personnel shall be subject to a regime of personal administrative responsibility, without prejudice to civil or criminal liability as applicable, which shall be enforceable through the corresponding disciplinary procedure. Within this disciplinary regime, very serious offenses, punishable by removal from office, shall be considered the violation of obligations imposed by the Code of Conduct and the violation of the duty of confidentiality. c) Rights. Officials and employees of the Monetary and Financial Administration shall have a selection and career system based on the principles of merit and capacity, which shall guarantee their impartiality and independence, and prohibit removal from office for reasons of mere opportunity. The selection of officials and employees for technical-professional work shall be subject to the holding of competitions in accordance with the Internal Regulations of the Central Bank and the Superintendence of Banks. Officials and employees shall have a transparent and market-based remuneration system that includes pension and retirement funds for the Central Bank and the Superintendence of Banks, in accordance with the provisions issued by the Monetary Board and based on the precepts of the Social Security Law. The Internal Regulations shall also establish the respective regimes for officials and employees of the Central Bank and the Superintendence of Banks, as well as the catalog of incompatibilities considering the responsibilities of the position held and the disciplinary regime. Acts issued in personnel matters shall follow the regime of administrative and contentious-administrative remedies regarding monetary and financial matters established in Article 77 of this Law. d) Economic Responsibility. Authorities and officials serving the Monetary and Financial Administration who authorize, allow, or in any way tolerate the granting of financing by the Central Bank to public or private entities, in violation of the precepts of this Law, shall be personally and jointly responsible with their own assets for the immediate repayment of the amounts disbursed, without prejudice to the criminal and civil liability that may apply. The judicial action to demand repayment, with corresponding interest, is public and prescribes after five (5) years counted from the date on which such person ceased to provide their service to the Monetary and Financial Administration. In the event that the decision to grant financing was adopted by the Monetary Board, this responsibility cannot be demanded from those who saved their vote in a timely manner, which must be recorded in the corresponding minutes.

Article 7. Exigibility of Responsibility by Third Parties. No personal, civil, or criminal action may be brought against personnel serving the Monetary and Financial Administration for acts performed during the exercise of their functions in accordance with what is provided in this Law, without a prior definitive and irrevocable judicial resolution declaring the nullity of the corresponding administrative act in the realization of which such person participated. In the event that the nullity of said act is declared and the cause of nullity is the particular conduct of the person who issued or executed the act, the path to exercise the corresponding disciplinary action shall remain open, without prejudice to other actions that may proceed in Law. For the purposes of this Article, the Monetary and Financial Administration shall assume the defense costs of the sued personnel, even if they have ceased to provide services to it. The Monetary and Financial Administration shall have the right to recover such costs against said persons in the event that they are found personally responsible for the illegality. This obligation to assume defense costs by the Monetary and Financial Administration shall exist for the benefit of those officials separated from their positions or sanctioned for their refusal to execute actions that violate the financing prohibitions to public and private entities established by this Law, when these officials have challenged the act by which they are separated or sanctioned before the competent instances.

Article 8. Special Obligation of Confidentiality. Personnel serving the Monetary and Financial Administration who, by virtue of their functions, have access to confidential and privileged information, shall have the obligation to observe total discretion. Failure to comply with this obligation shall be grounds for immediate dismissal, without prejudice to other responsibilities that may apply. When, for purposes provided in tax legislation or for the processing of criminal cases, the Tax Administration or competent judges require the transmission of confidential information, it shall be transmitted in writing through the competent authorities of the Monetary and Financial Administration. What is provided in this Article is understood without prejudice to what special norms may provide for the prevention of money laundering.

SECTION III OF THE MONETARY BOARD

Article 9. Attributions. It corresponds to the Monetary Board: a) Determine the monetary, exchange, and financial policies of the Nation in accordance with what is provided in this Law and in accordance with the regulatory objectives of Article 2 of this Law. b) Approve the Monetary Program in accordance with the objective established in Article 2 of this Law, as well as the knowledge and regular oversight of its degree of execution. c) Issue Monetary and Financial Regulations for the development of this Law. d) Approve the Internal Regulations of the Central Bank and the Superintendence of Banks, as well as the organizational structure of said entities upon proposal by them. e) Approve the budgets of the Central Bank and the Superintendence of Banks. f) Grant and revoke authorization to operate as a financial intermediation entity, as well as authorize mergers, absorptions, spin-offs, and analogous figures among financial intermediation entities upon proposal of the Superintendence of Banks. g) Grant and revoke authorization to operate as a currency intermediation entity, as well as authorize mergers, absorptions, spin-offs, and analogous figures among currency intermediation entities upon proposal of the Superintendence of Banks. h) Hear and rule on hierarchical remedies filed against acts issued by the Central Bank and the Superintendence of Banks in matters of their respective competences. i) Approve and remit to the Executive Power the proposals for modification of the monetary and financial legislation in accordance with what is provided in the Constitution of the Republic, as well as inform it about legislative initiatives or of any other kind that affect the monetary and financial system. j) Appoint, suspend, or remove officials of the Central Bank and the Superintendence of Banks upon proposal of the Governor and the Superintendent of Banks, as applicable. k) Appoint the Comptroller of the Central Bank and of the Superintendence of Banks. l) Perform other functions entrusted to the Monetary and Financial Administration by this Law that have not been expressly attributed to the Central Bank and the Superintendence of Banks. The functions referred to in this letter may be delegated by the Monetary Board to the Central Bank or to the Superintendence of Banks.

Article 10. Composition of the Monetary Board. The Monetary Board is composed of three (3) ex officio members and six (6) members appointed for a fixed term. They are members e