National Payment System Act

Law Number: 8/2021

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Office of the President Bodu Tharufaanu Magu Malé, Maldives Phone: 3336211 Mobile: 7242885 Website: www.mv.gov.gazette Volume: 50 Number: 165 Date: 6 Shawaal 1442 – 18 April 2021 Tuesday National Payment System Act

On Tuesday, 27 April 2021, Bill Number 6/2021 "National Payment System Bill" was passed in the 35th sitting of the first session of the year 2021 of the People's Majlis. In accordance with Article 92 of the Constitution, on Tuesday, 18 April 2021 (6 Shawaal 1442), the President approved this bill, making it an Act. This Act was published in the Gazette of the Maldives Government today.

Volume: 50 Number: 165 Gazette of the Government of Maldives 3 Law Number: 8/2021

National Payment System Act

Table of Contents

First Chapter Beginning

1. Introduction and Name 7
2. Purpose 7

Second Chapter List of Definitions 3. Basis of Definitions 8 4. National Payment System 8 5. System 9 6. Payment System 9 7. Settlement System 9 8. Clearing System 9 9. Clearing House 10 10. Payment Service 10 11. Payment Instrument 11 12. Netting 11 13. Electronic Money 11

Third Chapter Implementation of the Act 14. Responsibilities and Powers of the Authority 11 15. Participation of the Authority in Operating Systems 14 16. National Payment System Council 15

Fourth Chapter Licensing and Permits 17. Matters Related to Licenses and Permits 15 18. Exemption from Obtaining a License or Permit 16 19. Application for License or Permit 18 20. Conditions of License and Permit 23 21. Procedures for Issuing Licenses 26 22. Amendment of License or Permit 27 23. Maintenance or Cancellation of License and Permit 28 24. Non-transferability of License, Permit, or Right 30

Fifth Chapter System Rules 25. System Rules 30

Sixth Chapter Appointment of Agents and Outsourcing 26. Outsourcing 32 27. Appointment of Agents 34 28. Responsibility for Outsourcing and Appointment of Agents 34 29. Protection of Service Recipients 35

Seventh Chapter Settlement, Netting, and Payment Finality 30. Settlement Account 35 31. Netting Arrangements 36 32. Finality 36 33. Collateral for Payment and Settlement 37

Eighth Chapter Procedures in Case of Insolvency 34. Procedures in Case of Insolvency 37 35. Circumstances Where an Operator is Prohibited from Operating a System or a Participant is Prohibited from Participating in a System 39 36. Change from Finality 39 37. Liquidator's Application to Netting Arrangements and System Netting Rules 39 38. Enforcement of Rights 40 39. Law Applicable to Participants 40

Ninth Chapter Audit 40. Audit 40 41. Special Audit 45 42. Term of Office of Auditor 46 43. Removal of Auditor 46 44. Confidentiality by Auditor and Auditor's Staff 47

Tenth Chapter Oversight 45. Inspection 47 46. Submission of Information 48 47. Disclosure of Information and Confidentiality by the Authority 48 48. Maintenance of Information and Records 49 49. Implementation of Anti-Money Laundering Measures 49

Eleventh Chapter Enforcement Measures 50. Establishment and Operation of System Without License or Permit 49 51. Misleading Information, Failure to Provide Information, or Providing Incorrect Information 50 52. Administrative Measures 51 53. Matters Not Specified with Penalties 55 54. No Barrier to Criminal Prosecution 56

Twelfth Chapter Other Matters 55. Confidentiality 56 56. Evidence 58 57. Assistance from Other Parties 58 58. Power to Order Licensed or Permitted Offices or Entities to Participate 59 59. Granting Exemptions 59 60. Clearing of Cheques 59 61. Continuing Matters and Transitional Provisions 60 62. Fees and Other Charges 61 63. Priority of This Act 61 64. Making and Implementation of Rules 61 65. Commencement of Implementation of This Act 61 66. Interpretation 62

Volume: 50 Number: 165 Gazette of the Government of Maldives 6 Volume: 50 Number: 165 Gazette of the Government of Maldives 7 Law Number: 8/2021

National Payment System Act

First Chapter Beginning

Introduction and Name

1. (a) This is the Act that promotes, regulates, and oversees the National Payment System of the Maldives, and specifies all matters related thereto. (b) This Act shall be known as the "National Payment System Act".

Purpose 2. The main purpose of this Act is to achieve the following: (a) Maintain the stability of the National Payment System and promote the development of the National Payment System in a safe and appropriate manner; (b) Regulate and oversee the National Payment System; (c) Specify matters related to the regulation and oversight of payment systems, clearing systems, settlement systems, and payment services; (d) Establish interoperability among payment systems, clearing systems, settlement systems, and service providers; (e) Increase accessibility to payment systems, clearing systems, and settlement systems; (f) Establish a system to appropriately protect service recipients; (g) Establish a competitive system among payment service providers; (h) Increase financial inclusion.

Second Chapter List of Definitions

Basis of Definitions 3. The words and expressions specified from Article 4 to Article 13 of this Act are the main concepts upon which this Act is based. The concepts specified in this Act are explained in this chapter to preserve the original meaning of this Act and to facilitate the achievement of the widest possible scope of the purpose of this Act. Every article of this Act shall be read or interpreted in a manner that does not contradict these concepts.

National Payment System 4. "National Payment System" refers to all matters related to the sending, receiving, and processing of payment instructions and money transfers, whether in Maldivian Rufiyaa or foreign currency. This includes: (a) Issuance and management of payment instruments; (b) Operation of payment systems, clearing systems, and settlement systems, and related administration and procedures; this includes systems processing securities and other financial instruments; (c) Provision of payment services and related matters; (d) Payment service providers, operators, participants, and third parties working on behalf of these parties under agreements to act as agents or outsource work; this includes parties operating or partially operating within the Maldives.

System 5. "System" refers to a payment system, clearing system, or settlement system.

Payment System 6. "Payment System" refers to any system or administration used for transferring, processing, clearing, or settling money. This includes instruments and procedures related to that system.

Settlement System 7. "Settlement System" refers to a system established and operated for fulfilling payment obligations or securities settlement obligations.

Clearing System 8. "Clearing System" refers to formal procedures established to achieve the following: (a) Participants submit and exchange information regarding the transfer of money or securities through a central system or at a specific location; (b) Facilitating the settlement of obligations to be fulfilled between two or more participants by calculating gross or net positions of participants.

Clearing House 9. "Clearing House" refers to an office providing clearing or settlement services for transactions conducted through payment instruments included in a system.

Payment Service 10. "Payment Service" refers to services for depositing and withdrawing notes and currency books, executing payment transactions, issuing payment instruments, arranging payment transactions, remittance services, electronic fund transfer services, payment initiation services, providing account information services, and other services related to money transfers or payment accounts, as well as other payment-related services determined by the Authority. This includes the issuance of electronic money.

Payment Instrument 11. "Payment Instrument" refers to any tool or procedure used to initiate or process payment instructions. Payment instruments include cheques, tools used for fund transfers, and payment cards, among others, without limiting these tools.

Netting 12. "Netting" refers to determining the net value of settlement obligations to be fulfilled between two or more participants of a system.

Electronic Money 13. "Electronic Money" refers to a monetary value that is issued and can be claimed against the issuer, provided that: (a) It is stored electronically or on other magnetic or physical devices; (b) The monetary value is issued upon receipt of funds equivalent to the issued monetary amount; and (c) The monetary value is accepted by parties other than the issuer as a means of payment.

Third Chapter Implementation of the Act

Responsibilities and Powers of the Authority 14. (a) The Authority shall regulate and oversee matters of the National Payment System to ensure its safe and appropriate operation. (b) The Authority has the power to do all necessary acts to implement and enforce this Act and fulfill the responsibilities specified in (a) of this article. (c) The Authority has the power to do the following in enforcing this Act: (1) Formulate and implement policies regarding the National Payment System of the Maldives; (2) Issue licenses and permits to payment service providers and licenses to operators in accordance with this Act; (3) Determine "Systemically Important Payment Systems" of the Maldives and specify matters for their regulation and oversight; (4) Order payment service providers and systems to establish interoperability among systems, among payment service providers, and between systems and service providers, including systems and providers exempted from licensing under Article 18; (5) Establish rules, procedures, guidelines, circulars, standards, conditions, and procedures for offices licensed or permitted under this Act and their activities, and monitor compliance; (6) Specify actions payment service providers must take to protect service recipients; (7) Prohibit the provision of payment services or use of payment instruments in the Maldives; (8) Actively participate in forums for consulting on National Payment System policies; (9) Other work related to systems operated by the Authority and issuance of payment instruments; (10) Establish rules, guidelines, procedures, circulars, and procedures necessary for operating and regulating the National Payment System; (11) Exchange information, seek assistance, and provide assistance with relevant domestic or foreign parties to achieve the purposes of this Act; (12) Perform other necessary work to achieve the purposes of this Act or carry out specified matters. (d) For the purpose of (c)(3) of this article, "Systemically Important Payment System" refers to a system where problems arising from it could pose difficulties to the entire financial system due to the type or volume of individual payments processed or the total value of payments processed. (e) The Authority may determine different capital amounts for different types of payment services or systems when determining the minimum paid-up capital specified in Article 20(a)(1) and (r)(1). The Authority also has the discretion to specify capital requirements for specific services or systems based on the number and volume of payments expected to be processed.

Participation of the Authority in Operating Systems 15. The Authority may do the following: (a) Become the owner of systems, establish systems, operate systems, or participate in the ownership and operation of systems; (b) Open and maintain accounts for operators and participants to clear and settle transfers made to a system; (c) Maintain collateral for operators and participants; (d) Provide intraday liquidity to participants after taking appropriate collateral.

National Payment System Council 16. To achieve the purposes of this Act, the Authority may establish a council named "National Payment System Council" to advise the Authority. The purposes of the council, its composition, and its responsibilities shall be specified in rules made under this Act.

Fourth Chapter Licensing and Permits

Matters Related to Licenses and Permits 17. (a) Payment services in the Maldives shall only be provided by parties holding a license or permit issued by the Authority under this Act. Systems specified in this Act shall only be operated in the Maldives by parties holding a license issued by the Authority under this Act. (b) Licenses or permits under this Act shall be issued to: (1) Companies registered under the Companies Act of the Maldives; and (2) In cases where the Authority is satisfied that the license or permit will not affect the financial stability of the Maldives and will benefit the public. (c) If the Authority finds grounds to believe that any party is providing payment services or operating a system in violation of (a) of this article, the Authority has the power to visit the business premises of such party or bring systems, books, writings, and accounts from such places for inspection.

Exemption from Obtaining a License or Permit 18. (a) Notwithstanding Article 17, the following systems are exempted from operating...