Instruction No. 003/2017-CSBF on the Global Account of Electronic Money Institutions

CENTRAL BANK OF MADAGASCAR COMMISSION FOR BANKING AND FINANCIAL SUPERVISION

INSTRUCTION NO. 003/2017-CSBF ON THE GLOBAL ACCOUNT OF ELECTRONIC MONEY INSTITUTIONS

The Commission for Banking and Financial Supervision (CSBF),

Having regard to Law No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions, as amended,

Having regard to Law No. 2016-056 of February 2, 2017 on electronic money and electronic money institutions,

Having regard to Law No. 2016-004 of July 29, 2016, supplemented by Law No. 2016-057 of February 2, 2017, establishing the Statutes of the Central Bank of Madagascar,

Having regard to Decree No. 2014-1684 of October 29, 2014 appointing the Governor of the Central Bank of Madagascar,

Having regard to Decree No. 2016-151 of March 8, 2016 partially repealing Decree No. 2013-559 of July 23, 2013 appointing the members of the Commission for Banking and Financial Supervision,

DECIDES

Chapter 1 - General Provisions

Article 1 - Purpose

This instruction aims to define the conditions for opening, operating, and supervising the global account referred to in Article 79 of Law No. 2016-056 of February 2, 2017 on electronic money and electronic money institutions, hereinafter referred to as the "electronic money law".

The global account is an identified demand deposit account of the electronic money institution (EMI) opened with banks authorized by the CSBF, referred to as depositary banks.

Article 2 - Scope of Application

This instruction applies to electronic money institutions and credit institutions exercising an electronic money activity.

Chapter 2 - Provisions Applicable to Electronic Money Institutions

Article 3 - Opening of the Global Account

Electronic money institutions are required to deposit in advance into the global account, defined in Article 1 of this instruction, the counterparty value of the electronic money issued and in circulation.

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Article 4 - Operation of the Global Account

4.1. The global account is managed separately from other accounts of the EMI opened with depositary banks. The account agreement specifies that funds deposited therein are allocated exclusively to the repayment of electronic money.

4.2. The global account may not, under any circumstances, be subject to attachment proceedings by the creditors of the EMI in accordance with Article 80 of the electronic money law.

Article 5 - Authorization Procedures for a Depositary Bank

5.1. The opening of the global account referred to in Article 3 is subject to prior authorization from the President of the CSBF following an analysis of the financial situation of the depositary bank by the General Secretariat of the CSBF.

5.2. To this end, the EMI transmits to the General Secretariat of the CSBF a copy of the draft agreement with the depositary bank, which specifies inter alia the operating terms, the obligations of the parties, and remuneration conditions, as well as any additional information required by the General Secretariat of the CSBF during the file analysis.

5.3. The President of the CSBF notifies the EMI of the relevant decision within one (1) month from receipt of the authorization request.

Article 6 - Diversification of the Global Account

6.1. The balance of an EMI's global account with a depositary bank may not exceed 50% of the electronic money in circulation. The EMI requests prior authorization from the President of the CSBF to open an additional global account with a bank different from that referenced in Article 4, following the procedures set out in Article 5.

6.2. The prior authorization request is accompanied by the scheme envisaged by the EMI for managing and operating the diversified global accounts with depositary banks.

Chapter 3 - Provisions Applicable to Credit Institutions Exercising Electronic Money Activity

Article 7 - Opening of the Global Account

7.1. A credit institution authorized to exercise electronic money activity may retain funds representing the global account within its own premises, in a dedicated and identified demand deposit account, up to 50% of the electronic money in circulation.

7.2. Beyond this limit, the credit institution is required to deposit the excess with one or more banks. In this regard, the provisions of Articles 5 and 6 of this instruction apply to the opening, operation, and diversification of the global account.

7.3. A credit institution authorized to exercise electronic money activity may not hold more than three (3) accounts opened as a global account.

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Chapter 4 - Common Provisions

Article 8 - Balance of the Global Account

In application of Article 79 of the electronic money law, the EMI or credit institution exercising an electronic money activity is required to ensure at all times the balance between the global account and the issued electronic money.

Article 9 - Remuneration of the Global Account

9.1. In case of remuneration of the global account fixed in the agreement between the concerned institution and one or more depositary bank(s), interest is retained in a dedicated, identified demand deposit account managed separately from the global account. In this regard, the depositary bank prepares a separate statement of interest generated by the global account.

9.2. Interest from the global account may not be directly redistributed as electronic money.

9.3. Interest from the global account is allocated to paying fees related to the operation of the global account, to all actions aimed at improving customer services and protecting consumers.

Article 10 - Change of Depositary Bank

10.1. In the event of a change of depositary bank, the EMI or credit institution exercising an electronic money activity is required to request prior authorization from the President of the CSBF within one (1) month before closing the initial global account.

10.2. The prior authorization request is accompanied by the reasons for the change and the draft agreement with the new depositary bank, whose financial situation is assessed by the General Secretariat of the CSBF.

10.3. When justified by the situation of a depositary bank, the President of the CSBF may order its replacement by another bank. The financial situation of the newly designated bank is analyzed by the General Secretariat of the CSBF prior to granting the authorization to open the global account by the President of the CSBF under the same conditions as those set out in Article 5.

Chapter 5: Declarative Obligations

Article 11 - Periodic Declarations

The EMI communicates in advance to the General Secretariat of the CSBF, by any means leaving a written record, any transaction resulting in a modification of the global account balance, indicating:

• the balance of the global account with depositary banks,
• the status of electronic money in circulation.

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Article 12 - End-of-Day Declarations

12.1. The EMI submits to the General Secretariat of the CSBF at the end of each day a statement indicating the volume of electronic money in circulation, daily movements, and the status of the global account at the depositary bank(s), at the time of closing banking operations, in accordance with the model established by circular of the President of the CSBF.

12.2. Concurrently, depositary banks communicate to the General Secretariat of the CSBF at the end of each day a statement indicating daily movements and the status of the global account at their level, at the time of closing banking operations, in accordance with the model established by circular of the President of the CSBF.

Article 13 - Monthly Declarations

13.1. The EMI or credit institution exercising an electronic money activity communicates to the General Secretariat of the CSBF, within the first half of the following month:

• the monthly balance of the global account with depositary banks,
• the status of issued and circulating electronic money.
• the monthly statement of interest generated by the global account and its use.

13.2. The models for monthly declarative statements will be established by circular of the President of the CSBF.

Article 14 - Supervision of the Global Account

14.1. The General Secretariat of the CSBF verifies the maintenance of balance between the global account balance and that of the electronic money in circulation.

14.2. The EMI or credit institution exercising the electronic money activity ensures permanent and real-time access for the General Secretariat of the CSBF to its platform, allowing verification at any time of the balance between the issued electronic money balance and the global account balance.

Chapter 6 - Disciplinary Sanctions

Article 15

In case of infringement of the provisions of this instruction, the CSBF imposes one of the disciplinary sanctions provided for in Articles 108 to 111 of the electronic money law.

Electronic money issuance is suspended until the situation is regularized.

Failure to maintain balance between the global account and electronic money in circulation exposes the EMI to withdrawal of authorization.

Chapter 7 - Final Provisions

Article 16 - Transitional Provisions

Credit institutions exercising electronic money activity prior to the adoption of this instruction have a period of six months from its notification to comply with it.

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Article 17 - Entry into Force

This instruction enters into force upon its publication on the website of the Central Bank of Madagascar.

Done in Antananarivo, on 29 SEPT 2017 For the Commission for Banking and Financial Supervision The President,

(Signature) Alain H. RASOLOFONDRAIBE Governor of the Central Bank of Madagascar