Procedure for Conducting Inspections of Credit Bureau Activities, Summarizing and Presenting Results

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APPROVED
By Resolution of the Board of Directors of the National Bank of Tajikistan No. 71 of June 28, 2019 PROCEDURE FOR CONDUCTING INSPECTIONS OF CREDIT BUREAU ACTIVITIES, SUMMARIZING AND PRESENTING ITS RESULTS The Procedure for conducting inspections of Credit Bureau activities, summarizing and presenting its results (hereinafter referred to as the Procedure) is developed in accordance with Article 7 of the Law of the Republic of Tajikistan "On Credit Histories" and determines the procedure for inspecting the activities of Credit Bureaus (hereinafter referred to as CBs) for compliance with license requirements and normative legal acts of the Republic of Tajikistan, as well as summarizing and presenting the results.

CHAPTER 1. GENERAL PROVISIONS

1. Inspections of CBs, including inspections of their branches, representative offices, and other structural subdivisions located outside their place of registration (hereinafter referred to as structural subdivisions), are carried out by the National Bank of Tajikistan for the purpose of performing regulatory and supervisory tasks in the following areas:

• compliance with the provisions of the Law of the Republic of Tajikistan "On CBs" and other normative legal documents of the National Bank of Tajikistan;
• assessment of compliance with the rights and obligations of CB service users;
• identification of actions threatening the interests of subjects and sources of credit history formation.

2. This Procedure applies to CBs and their structural subdivisions.
3. The main goal of conducting CB inspections by the National Bank of Tajikistan is to assess the overall financial position or specific areas of its activities, including assessing compliance with the Law of the Republic of Tajikistan "On Credit History" and normative legal acts of the National Bank of Tajikistan, ensuring the accuracy of accounting and reporting, quality of services (correctness and reliability of data), compliance with the rights of participants in the information exchange process, determining the level of risks, obligations, risk management system, and internal control organization, financial position and business strategy, as well as identifying actions and efforts that endanger the interests of participants in the credit history formation system, including credit history subjects, information providers, and users of credit reports.
4. CB inspections conducted by the National Bank of Tajikistan do not perform the function of inspections conducted by audit organizations, nor documentary inspections carried out in accordance with the legislation of the Republic of Tajikistan for the purpose of collecting evidence within criminal and other proceedings.
5. CB inspections are conducted in planned and unplanned (thematic) forms.
6. Planned inspections of CBs and their structural subdivisions are conducted no less than once every two (2) years by authorized representatives (employees) of the National Bank of Tajikistan (hereinafter referred to as authorized representatives).
7. Unplanned inspections of CBs and their structural subdivisions are conducted in cases:

• of information regarding non-compliance with the Law of the Republic of Tajikistan "On Credit History" and normative legal acts of the National Bank of Tajikistan by the CB;
• of written appeals from credit history subjects, data providers, and credit report users, as well as individuals, regarding the accuracy and reliability of stored information;
• of information about newly identified cases of violations of legislation in the activities of the CB, including actions endangering the legitimate interests of credit history subjects, data providers, and credit report users, as well as other persons, during the formation of credit history;
• reorganization or liquidation of the CB, etc.

8. CB inspections cover a specific period of activity that cannot exceed five calendar years preceding the year of the inspection.
9. CB inspections are conducted in accordance with the plan of comprehensive inspections and within established deadlines. The plan of comprehensive inspections is prepared and approved by the relevant structural subdivision for banking supervision of the National Bank of Tajikistan.
10. Unplanned (thematic) inspections of CBs are conducted based on an order from the Chairman of the National Bank of Tajikistan or his deputy, overseeing the structural subdivision for banking supervision.
11. First priority in the inspection plan is given to CBs regarding which information has been received about unstable financial position and deficiencies, or violations of activity rules on their part.
12. Inspections are carried out by a group of authorized representatives of the National Bank of Tajikistan. The group of authorized representatives includes employees of the structural subdivision for banking supervision of the National Bank of Tajikistan and specialists attracted for these purposes.
13. CB inspections are conducted based on a document confirming the authority of authorized representatives to conduct the inspection (hereinafter referred to as the Order).
14. The Order may specify the composition of the group of authorized representatives, including indicating the head and members of the inspection group.
15. The Order is prepared in accordance with Appendix No. 1 to this Procedure in two copies.
16. In case of changes to the composition of the inspection group, an addendum to the Order is prepared, which becomes an integral part of the Order, and is prepared in accordance with Appendix No. 2 to this Procedure in two copies.
17. The following officials of the National Bank of Tajikistan (hereinafter referred to as the official) have the right to sign the Order:

• Chairman of the National Bank of Tajikistan;
• Deputy Chairman of the National Bank of Tajikistan, overseeing the structural subdivision for banking supervision, and persons holding their positions.

18. CB inspections begin from the moment the Order is presented by the head of the inspection group (hereinafter referred to as the inspection start date).
19. CB inspections are completed after the inspection act is transferred for review based on a receipt from the responsible employee of the CB (hereinafter referred to as the inspection completion date).
20. The term of CB inspections, depending on the number of its structural subdivisions, may be set up to 40 calendar days. In justified cases (for example, additional study and investigation of information about credit history, untimely submission of information), the National Bank of Tajikistan may extend the inspection term by an additional 10 calendar days.
21. Inspections conducted at the request of the CB are conducted on various issues during an agreed period and deadlines.
22. The National Bank of Tajikistan has no right to conduct more than one inspection on the same issues during the same period of activity, except in cases where such inspection is conducted:

• for reasons related to the reorganization or liquidation of the CB;
• based on a resolution of the Board of Directors of the National Bank of Tajikistan. Such a decision may be made in the course of controlling the activities of the inspection group of the National Bank of Tajikistan that conducted the CB inspection, or based on a request from the relevant structural subdivision of the National Bank of Tajikistan for the purpose of assessing the financial condition and fulfillment of obligations of the CB. For these purposes, the request of the structural subdivision of the National Bank of Tajikistan must indicate identified signs of unstable financial condition of the CB, if such signs create a real threat to the interests of CB information users.

23. In case of conducting a repeated inspection of the CB, the Order indicates the inspection period and issues to be inspected.
24. The official, based on the report of the head of the inspection group, may decide to suspend or terminate the CB inspection upon the occurrence of the following circumstances:
    a) grounds for suspending the inspection:

• threat to the life and health of the head and members of the inspection group;
• obstruction of the inspection by the CB;
• other circumstances preventing the inspection.
  b) grounds for terminating the inspection:
• withdrawal of the CB's license to conduct activities;
• threats to the legitimate interests of CB information users and the stability of the credit history formation system of the Republic of Tajikistan. In case of a decision to terminate the CB inspection by the official who signed the Order, the results of his inspection are documented in accordance with this Procedure.

25. Notification of suspension of the CB inspection is prepared in accordance with Appendix No. 3 to this Procedure and sent to the head of the CB, and the results of his inspection are documented in accordance with the provisions of Chapter 8 of this Procedure.
26. The official who decided to suspend the inspection takes a decision to resume the CB inspection in case of elimination of circumstances that became the basis for suspending the inspection.
27. In case of resumption of the CB inspection, if necessary, an addendum is made to the Order, which is prepared in accordance with Appendix No. 2 to this Procedure.
28. The results of the CB inspection include information necessary for the National Bank of Tajikistan to perform regulatory and supervisory functions over CB activities, and obtained during the inspection in addition to reports submitted to the National Bank of Tajikistan. Information obtained as a result of the inspection serves as the basis for assessment and conclusions about the overall state or specific areas of CB activities. As well as other supervisory information about facts and circumstances identified in its activities, which can serve as grounds for applying measures provided for by legislation, including:

• unreliable information about the financial condition and property status of the CB due to violation of the established procedure for keeping accounting records and distortion of accounting, statistical, and financial reporting;
• facts (events) of non-compliance with the legislation of the Republic of Tajikistan, normative legal acts, and directives of the National Bank of Tajikistan, non-submission of information, or submission of incomplete or unreliable information by the CB;
• circumstances of CB activities, actions (inaction) of its employees or governing bodies, which do not constitute a violation of the legislation of the Republic of Tajikistan, normative legal acts of the National Bank of Tajikistan, but negatively affect, or may negatively affect the financial condition, accepted risks, or create prerequisites for the emergence of violations and additional risks.

CHAPTER 2. RIGHTS AND OBLIGATIONS OF AUTHORIZED REPRESENTATIVES OF THE NATIONAL BANK OF TAJIKISTAN
29. In the course of their activities, authorized representatives forming the inspection group (hereinafter - head and members of the inspection group) are guided by the Constitution of the Republic of Tajikistan, laws of the Republic of Tajikistan "On the National Bank of Tajikistan", "On Banking Activities", "On Microfinance Organizations", "On Credit History", "On Countering the Legalization (Money Laundering) of Proceeds from Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction", other laws of the RT, this Procedure, and other normative legal acts of the National Bank of Tajikistan.
The inspection group does not include persons who are shareholders (participants) of the CB or their close relatives (father, mother, spouse, husband, children, sisters, and brothers), who are shareholders (participants), members of the governing body, or senior managers of the CB.
30. The head and members of the inspection group ensure the safety and return of property and documents obtained from the CB (except for copies of documents (information) obtained in accordance with the provisions of this Procedure).
31. Responsibilities for organizing the interaction of the inspection group on all inspection issues are assigned to the following persons:

• Head of the inspection group;
• Executive body of the CB (head and his deputies);
• responsible employees of the inspected structural subdivisions of the CB in case of inspection of its structural subdivisions.

32. The head of the inspection group establishes the regime of daily presence of the inspection group in the buildings and other official premises of the CB during the inspection period, taking into account the working regime operating in them, and is responsible for its compliance.
33. If necessary, for members of the inspection group, a stay time different from the working regime operating in the inspected CB may be established, with the agreement of its head.
34. The head and members of the inspection group have the right:
    a) unimpeded access to official premises of the inspected CB, including premises carrying out collection, processing, and storage of information resources, as well as subdivisions carrying out operations with funds and other valuables, if necessary, accompanied by specialized employees of the organization carrying out control over compliance with the access regime or security of the CB on a contractual basis; b) to use technical means, including servers, internet network, telecommunications equipment, computers, software, flash drives, CD, DVD discs, information carriers, other electronic means, calculators, copying equipment, scanners, fax machines, telephones (including, official telephones necessary for conducting the inspection and organizing the activities of the inspection group), to bring organizational and technical means belonging to the National Bank of Tajikistan into the CB building and remove them from it; c) during the inspection period, to request and receive from the head, employees, and shareholders (participants), clients, and correspondents of the CB all documentation (information) necessary for the purpose of conducting the inspection, including:

• constituent documents of the CB;
• organizational and administrative documentation, instructions, regulations, procedures, rules, and other internal documents of the CB;
• accounting documentation on composite and integral information of the CB, including data of automated systems, computer systems, and other computers operating independently, in the form of records;
• financial, statistical, and operational reporting of the CB;
• explanatory notes, certificates, written explanations of the head of the CB and his employees;
• audit opinions on the financial reporting of the CB;
• contracts concluded by the CB;
• correspondence of the CB, including correspondence carried out with the National Bank of Tajikistan, credit history subjects, data providers, users of credit reports, and during the formation of credit history;
• certificates, explanatory notes, written and recorded oral explanations of the head of the CB and his employees;
• documents, acts, and materials confirming the compliance of CB activities with the requirements of the legislation of the Republic of Tajikistan, issued by the National Bank of Tajikistan, law enforcement agencies, state authorities;
• documents on compliance by the CB with the requirements of legislation on countering the legalization (money laundering) of proceeds from crime, financing of terrorism, and financing of proliferation of weapons of mass destruction;
• other documents and information necessary for conducting the inspection.
  d) to make copies of CB documents; e) if necessary, to require the provision of copies of CB documents, which must be bound, certified by the signatures of the head and chief accountant or persons replacing them, and confirmed by the impression of the CB seal; f) access to CB documents stored in automated information systems used by the CB, as well as to written explanations on issues related to their development, implementation, standardization, and use; g) to require the CB to present and familiarize with the work and resources of used automated information systems; h) access to automated information systems of the CB in viewing and selection mode of necessary information, as well as to receive electronic copies of documents and other records (on own information carriers), including accounting registers stored in databases of automated and information systems, automated computer systems, autonomous computers, as well as decryption of these records.

35. CB documents (information) necessary for conducting the inspection are provided to members of the inspection group based on an application for providing documents (information) to members of the inspection group within the stated term.
36. The head and members of the inspection group are obliged:

• not to disclose information classified as state, banking, commercial, and other secrets in accordance with legislation, as well as to ensure the safety and return of documents and files obtained from the CB;
• to return the obtained technical equipment after the end of the inspection;
• to reflect in the act a real assessment of the inspected CB in accordance with the legislation of the Republic of Tajikistan and normative legal acts.

CHAPTER 3. RIGHTS AND OBLIGATIONS OF THE CB WITHIN THE INSPECTION
37. The CB is obliged to assist the head and members of the inspection group in conducting the inspection.
38. The head of the CB subject to inspection, no later than one (1) working day following the inspection start date, is obliged:

• to determine officials and employees of the CB who must interact with the head and members of the inspection group (hereinafter - responsible employees), their competence and responsibility for ensuring access to documents (information) necessary for conducting the inspection, to its automated and information systems, providing documents (information), as well as for ensuring other conditions necessary for conducting the inspection;
• to notify the head of the inspection group in writing about the responsible employees.

39. The head and employees of the inspected CB are obliged:

• to ensure unimpeded access to buildings and other official premises from the inspection start date to the inspection completion date upon presentation by the head and members of the inspection group of an ID card issued by the National Bank of Tajikistan or its territorial department (or other document confirming that the specified persons are employees of the National Bank of Tajikistan), to the head, employees of the inspected CB, or employees of another organization carrying out control over compliance with the access regime or its security based on contracts;
• to create necessary working conditions for the head and members of the inspection group in an official premises, isolated from CB employees and third parties, handed over for security and equipped with necessary furniture, fireproof cabinets for storing documents, computers with software agreed with the head of the inspection group, organizational and technical means;
• to ensure access of the head and members of the inspection group to documents (information) necessary for conducting the inspection, access to automated information systems of the CB in viewing and selection mode of necessary information, as well as obtaining on paper and electronic media copies of documents (information) stored in the CB Registry of Credit Histories and other electronic and paper media, including those stored in automated and information systems, in accordance with the requirements of this Procedure.

40. The CB is responsible for full and timely fulfillment of applications for providing documents (information) to the head and members of the inspection group, necessary for conducting the inspection, within the deadlines established in the application.
41. The presence in documents necessary for conducting the inspection of information containing state, banking, commercial, official, and other secrets cannot serve as a ground for refusal to provide them to the inspection group.
42. Information constituting state secrets is transferred to the inspection group in the manner established by the legislation of the Republic of Tajikistan.
43. At the request of the head and members of the inspection group, copies of provided documents (information) must be bound and certified by the signatures of the head and chief accountant of the CB, persons replacing them, and confirmed by the impression of the CB seal.
44. In case of absence of documents (information) or occurrence of other circumstances preventing their provision within the deadlines established by the application, the head of the CB, the person replacing him, must present to the head of the inspection group a written explanation of the reasons for non-fulfillment of the application before the expiration of the established deadline for providing documents (information).
45. The head and employees of the CB, as well as employees of other organizations carrying out security of the CB based on contracts, are not entitled:

• to check organizational and technical means in the possession of the head and members of the inspection group, seize and inspect other official documents, or deprive them of the opportunity to use them during the inspection;
• to require any oral or written explanations, or commitments from the head and members of the inspection group;
• to present to the head and members of the inspection group other requirements not provided for by the legislation of the Republic of Tajikistan and this Procedure.

46. The CB has the right to provide the inspection act of the inspection group to audit organizations conducting audits at its request, in compliance with requirements established by the legislation of the Republic of Tajikistan and with the consent of the National Bank of Tajikistan or its territorial departments carrying out supervision of its activities.

CHAPTER 4. PREPARATORY WORK FOR CONDUCTING CB INSPECTIONS
47. Preparation for conducting CB inspections is carried out based on information available in the National Bank of Tajikistan to clarify issues to be inspected, the period to be inspected, and to determine the volume of sampling of documents (information) necessary for conducting inspections, taking into account a preliminary assessment of the following circumstances:

• financial condition of the CB;
• accuracy of reporting provided by the CB to the National Bank of Tajikistan;
• elimination of violations and deficiencies identified during previous CB inspections;
• level of compliance with the provisions of the Law of the Republic of Tajikistan "On Credit History" and other normative legal acts of the National Bank of Tajikistan;
• level of compliance with the rights of CB service users;
• actions endangering the interests of subjects and sources of credit history formation;
• compliance by the CB with the requirements of the legislation of the Republic of Tajikistan on countering the legalization (money laundering) of proceeds from crime, financing of terrorism, and financing of proliferation of weapons of mass destruction.

48. CB inspections may be conducted with prior notice and without prior notice.
49. Prior notice of conducting the inspection is sent to the head of the CB.
50. Prior notice of conducting the CB inspection may contain requirements to perform specific actions by the CB for the purpose of ensuring cooperation in conducting the inspection, including:

• preparation of documents (information) on issues to be inspected, or necessary for its conduct;
• conducting organizational measures, including allocating a separate official premises for the inspection group, and equipping this premises with organizational and technical means;
• performing other actions to ensure cooperation in conducting the inspection.