Circular No. 2012-01: Rules for Periodic Collection of Information on the Use of Payment Instruments - Update III

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Circular No. 2012 – 01 RULES FOR THE PERIODIC COLLECTION OF INFORMATION ON THE USE OF PAYMENT INSTRUMENTS

Definitions For the purposes of this Circular, the expressions used shall be understood with the following meaning:

• bank: entity authorized to carry out banking activities (Law 17 November 2005 No. 165, Annex 1, letter A) in the Republic of San Marino;
• BCSM / Central Bank: Central Bank of the Republic of San Marino;
• client / clientele: entities, other than banks, holding current accounts or savings deposits with the reporting bank, unless expressly indicated otherwise in the text of this Circular;
• COE: Economic Operator Code;
• account: current account or savings deposit held at the branches of the reporting bank;
• reference date: the last day of the period to which the report refers;
• LISF: Law 17 November 2005 No. 165;
• model: electronic version (in Excel format) of the FORM;
• form: tabular schema with the items to be completed for the purposes of this collection;
• report: periodic collection of information on the use of payment instruments;
• section: part of the form relating to homogeneous information by type; the reference, both in the text of the Circular and in the attachments, to sections is intended to facilitate the indication of the reporting attributes to be validated for each payment instrument / area of activity;
• authorized entity: entity authorized to carry out one or more activities reserved under the LISF;
• item: elementary data of the report to be inserted in the FORMS by completing the relevant MODELS.

In the following text, the use of terms subject to definition is highlighted in uppercase.

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Preamble This Circular, together with the attached REPORTING FORMS, is aimed at fulfilling the obligation to forward periodic supervisory reports by banks regarding payment instruments; the Circular represents an advance of the upcoming Regulation on Information Supervision. In order to facilitate the reading of the content of the forms, the instructions for completing and forwarding the reporting flows are provided below. The indications provided below do not constitute principles to be applied in other statistical supervisory reports nor a "corpus" of accounting criteria with external relevance. These rules represent a means to structure the data flow directed to the Central Bank of the Republic of San Marino in a manner consistent with its informational needs. No reflection on the maintenance of internal accounting and the preparation of the financial statements of banks can be derived from these provisions.

Scope of application, structure and periodicity of the REPORT Recipients and structure of the REPORT These provisions must be observed by BANKS operating during the reference period of the REPORT. The REPORT consists of three forms:

• FORM 1 – general data and notes: information relating to the reporting BANK or the entire REPORT;
• FORM 2 – verification of inserted data: verification of the data inserted in FORM 3 reporting schema;
• FORM 3 – reporting schema: schemas for entering the required information on the use of payment instruments. The items in FORM 3 refer to 6 SECTIONS:
  • checks;
  • transfers;
  • account debits;
  • account credits;
  • cash;
  • interbank operations.

For ITEMS pertaining to the first five SECTIONS of FORM 3, both the amount (intended as the euro equivalent) and the number of transactions carried out during the period subject to the report are required (with the exception of ITEMS 5.5, 5.6 and 5.7); in the last section "interbank operations", only the amount of operations carried out during the period is required. Data relating to transaction amounts must be reported in units of euros, disregarding – with reference to individual ITEMS – euro cents less than 50 and rounding up to the next unit cents equal to or greater than 50. Data expressed in currencies other than the euro must be valued at the exchange rates current on the REFERENCE DATE of the REPORT.

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All movements related to corrections, reversals, and adjustments that have a merely procedural nature are excluded from the REPORT.

Reporting Attributes FORM 3 provides for the use of specific reporting attributes based on which to detect – depending on the items considered – the predominant economic activity carried out by the CLIENTELE, the geographic area of the entity requesting the payment services, or the Economic Operator Code (COE) of any AUTHORIZED ENTITIES acting as clients of the reporting BANKS. With reference to the economic activity sector, the data must refer exclusively to the CLIENTELE of the reporting BANK.

• Economic Activity Sector of the CLIENTELE: 1001 – Public Administrations 1002 – Non-banking Financial Enterprises 1003 – Non-financial Enterprises 1004 – Households 1005 – Other

In this regard, for the correct use of the codes reported above, it is specified that, regardless of residence:

• public administrations include central governments and public sector entities;
• non-banking financial enterprises refer to entities that carry out entrepreneurial activities towards the public, included in the list referred to in Annex 1 (point B and subsequent) of the LISF, or activities equivalent to them;
• households include both consumer and producer households as well as non-profit institutions serving households;
• the residual category "Other" is to be used for entities not falling into the previous categories.

Regarding the second attribute, the indication of the country of residence of the CLIENTELE using the payment instruments or the State of the counterparty intervening in a transaction (for example, the State of origin of transfers having as beneficiaries clients of the reporting BANK) is required. In particular, the following codes are required:

• Residence / Counterparty State: 01 – San Marino 02 – Italy 03 – EU Area other than Italy 04 – Rest of the World

If the CLIENT is an AUTHORIZED ENTITY, in some items the indication of the relative COE is required, which can also be found in the Register of AUTHORIZED ENTITIES referred to in Art. 11 of the LISF, at the Internet address www.bcsm.sm/Registri e albi/Registro dei Soggetti autorizzati. For the valuation of reporting attributes, if the current account is held by multiple entities, they must be considered as a single CLIENT, to be classified with reference to the entity that, due to economic importance, can be considered "predominant" with respect to the others.

For the purposes of this Circular, in the case of fiduciary relationships held by the same reporting entity, the latter reports the operations, completing the required attributes with reference to the client, without considering the fiduciary intermediary.

Periodicity of the Report The REPORT has a quarterly periodicity. The REPORT must be forwarded within the month following the REFERENCE DATE of the REPORT. Taking into account the adjustments of corporate information systems required by the fulfillment of the reporting obligations provided for by these provisions, the first REPORT refers to June 30, 2012, to be forwarded by July 31, 2012, with the exception of "SECTION 5: Cash" of FORM 3 for which the reporting obligations commence from May 31, 2012, with forwarding of the relevant REPORTS by June 30, 2012. The REPORTS are transmitted to BCSM electronically, according to the methods established by the related Operational Manual published, together with the reporting models, in the reserved area of the website www.bcsm.sm.

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FORM 1 – General Data and Notes In the "General Data and Notes" FORM, the identification details of the reporting BANK and the REFERENCE DATE of the REPORT must be inserted, to be selected from among the pre-filled ones. In the "Notes to the report" part, BANKS can insert comments or observations relating to the data entered, in order to better clarify their content.

FORM 2 – Verification of Inserted Data The controls present in FORM 2 are intended to be a valid tool to support the compilers of the REPORT, highlighting any inconsistencies of the data inserted in FORM 3, or verifying the deviation between the combinations of ITEMS relating to amounts and those relating to the number of each individual ITEM. The purpose of the attention indicators is merely informative; their presence does not prevent the completion, saving, or forwarding to the Central Bank of the reporting MODEL.

FORM 3 – Reporting Schema SECTION 1: Checks In this SECTION, the distribution of amounts and the number of transactions is provided based on the economic activity sector and the residence of the CLIENTELE. Where the CLIENT is an AUTHORIZED ENTITY, the relative COE must also be indicated, while keeping the completion of the "Economic Activity Sector" and "Residence" attributes.

ITEM 1.1 Checks debited to account for operations other than cash negotiation In this ITEM, checks drawn by the CLIENTELE on accounts held with the reporting BANK are detected.

ITEM 1.2 Checks deposited to account by own CLIENTS In this ITEM, the amounts of checks deposited by the CLIENTELE are reported, regardless of the clearing bank. If, at the time of deposit, there is a request for partial changes in cash, two operations will be registered for reporting purposes: a) deposit of checks for the entire nominal equivalent (in this ITEM) and b) withdrawal of cash at the counter (as per ITEM 5.3).

ITEM 1.3 Circular checks and/or internal checks issued by the reporting BANK Total amount of circular checks or similar issued by the reporting BANK during the quarter, regardless of those in circulation and/or extinguished in the reference quarter.

SECTION 2: Transfers By transfer is meant the order given, by any contractually defined means, by a CLIENT to their BANK to make a given sum available to a third-party beneficiary. The reporting attributes relating to "Economic Activity Sector", "Residence" and "COE" (1) refer to the CLIENTELE of the reporting BANK, while the "Counterparty State" attribute refers to the branch of the bank where the beneficiary/ordering party's account is held, depending on whether the transfer is placed/received by the CLIENTELE of the reporting entity.

ITEM 2.1 Transfers placed by own CLIENTELE The ITEM must also include transfers – i.e., fund transfers between accounts held by the same CLIENT – between accounts opened at different banks; transfers between accounts opened within the same reporting BANK referring to the same CLIENT must be excluded. Regarding multiple orders – i.e., placed by CLIENTS relating to a plurality of transfers (e.g., for salary payments), the executed transfers must be detected, not the orders. The ITEM must include, among others:

• payments placed by public entities, generally against mandates;

1 This last one to be validated only in the case of AUTHORIZED ENTITIES.

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• permanent transfers, i.e., recurring payment orders, usually of fixed amount (e.g., rent payment), which the BANK executes against a standing order given by its own CLIENT (excluding those in the subsequent section 3);
• transfers abroad placed by own CLIENTELE and transmitted to foreign banks directly or through Italian banks.

The following must be excluded:

• fund transfers in favor of commercial operators resulting from the use of debit or credit cards and those in favor of beneficiaries of collections with pre-authorized debit and other third-party account collections;
• transfers sent abroad by the reporting BANK but placed by the CLIENTELE of other San Marino banks ordering.

ITEM 2.2 Transfers received by own CLIENTELE The ITEM must detect transfers made available to clients of the reporting BANK as beneficiaries. For the purposes of the definitions and meaning of the reporting attributes, what is specified above in the paragraph "Reporting Attributes" applies.

SECTION 3: Account Debits For the purposes of this SECTION, the distribution of amounts by "Economic Activity Sector" and by "Residence" is provided, both referring to the CLIENT who opened the debited account.

ITEM 3.1 Debits executed on the accounts of own CLIENTELE against pre-authorized instructions The ITEM will report debits executed on accounts of own CLIENTS against collection instructions given (to the reporting BANK or another bank) by the beneficiary, based on pre-authorization released by the debtor CLIENT. Both pre-authorized debits carried out against collection instructions conforming to standards defined in the interbank context (e.g., Sepa Direct Debit – S.D.D.) and those executed against non-standardized instructions must be detected. Debits originating from instructions from abroad must also be included.

ITEM 3.2 Debits executed on the accounts of own CLIENTELE against non-pre-authorized instructions Debits executed on accounts of own clients for the payment of bills of exchange, drafts, paper bank receipts, collections by notice (Mav), electronic bank receipts (RiBa) and similar receipts.

ITEM 3.3 Total debits executed on the accounts of own CLIENTELE The ITEM must detect all debits registered in the reference period on the current accounts of own CLIENTS.

In the ITEM, operations subject to detection in other items of this REPORT (for example, debits as per previous points 3.1 and 3.2, checks, transfers placed by CLIENTELE, cash withdrawals, etc.) and all other movements involving an account debit must be included, such as those relating to:

• repayment of loans;
• capitalization of interest and other fees due by the CLIENTELE;
• commissions on banking services;
• settlement of financial and currency operations;
• payment of taxes and other fiscal charges connected with financial investments if debited separately on the CLIENTELE's account.

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SECTION 4: Account Credits For the purposes of this SECTION, the distribution by "Economic Activity Sector" and by "Residence" is provided, both referring to the CLIENT who opened the credited account.

ITEM 4.1 Credits against collection instructions presented by the CLIENTELE The ITEM must report credits executed on accounts against collection instructions presented by the CLIENTELE. Both credits carried out based on pre-authorizations released by debtors and credits connected with the collection of bills, other credit instruments and documents assumed (for discount operations, advance operations unless good faith and after collection) from own CLIENTELE are included.

ITEM 4.2 Total credits executed on the accounts of own clientele The ITEM must detect all credits registered in the reference period on the accounts of own clients. In the ITEM, operations subject to detection in other items of this REPORT (for example, credits as per previous point 4.1, transfers received by CLIENTELE, cash and check deposits, etc.) and all other movements involving an account credit must be included, such as those relating to:

• capitalization of bank interest in favor of the CLIENTELE, recovery of account maintenance expenses and similar expenses brought by the company in reduction of interest credit;
• settlement of financial or exchange operations;
• payment of dividends in favor of the beneficiary account holder;
• sums credited to the CLIENT against loans granted.

SECTION 5: Cash In this SECTION, the different modes of cash movement carried out by using payment cards, counter operations or interbank relationships are detected.

For the purposes of this SECTION, virtual cash operations, as defined by the current Instructions issued by the Financial Information Agency, must not be detected.

ITEM 5.1 Cash withdrawals carried out at terminals of the reporting BANK with payment cards issued or placed by the reporting BANK The number and amount of withdrawals and cash advances dispensed at own terminals in favor of holders of cards issued and/or placed by the reporting BANK are reported in this ITEM. A distinction of amounts by "Economic Activity Sector" and "Residence" of the card user is required.

ITEM 5.2 Cash withdrawals carried out at terminals of the reporting BANK with payment cards issued or placed by entities other than the reporting BANK The number and amount of withdrawals and cash advances dispensed at own terminals in favor of holders of payment cards issued and/or placed by entities other than the reporting BANK are detected in this ITEM. For this ITEM, the distribution of the amount and the number of operations based on reporting attributes is not provided.

ITEM 5.3 Cash withdrawals by CLIENTELE at the counter In this ITEM, the amount of all cash supply operations carried out by own CLIENTELE on current accounts and savings deposits at the counter of the reporting BANK must be reported.

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Also in this ITEM, any balances requested by the CLIENTELE upon deposit of credit instruments as well as purchases of foreign banknotes if settled with account debit must be reported. The distribution of the amount and number of withdrawals based on "Economic Activity Sector", "Residence" and "COE" (2) is provided.

ITEM 5.4 Deposit of cash on the accounts of own CLIENTELE (via counter or ATM) In the ITEM, cash deposits on the accounts of own CLIENTELE must be detected, including deposits via ATM. The following operations are subject to detection:

• "mixed" operations, i.e., relating to the simultaneous deposit of cash and credit instruments;
• those carried out via Cassa Continua;
• sale of foreign banknotes with credit to euro accounts;

2 This last one to be validated only in the case of AUTHORIZED ENTITIES.

The distribution of the amount and number of deposits based on "Economic Activity Sector", "Residence" and "COE" is provided.

ITEM 5.5 Cash supply of the reporting entity from other banks In this ITEM, the total equivalent of cash supply operations carried out during the reference period by other banks, San Marino and non-San Marino, including those with the BCSM, is detected. The reporting attribute "Counterparty State" refers to the supplying bank.

ITEM 5.6 Remittance of cash to other banks In this ITEM, the total equivalent of cash remittance operations carried out during the reference period in favor of other banks, San Marino and non-San Marino, including those with the BCSM, is detected. The reporting attribute "Counterparty State" refers to the requesting bank.

ITEM 5.7 Cash balance In this ITEM, the cash balance at the REFERENCE DATE is detected, including cash present in ATM counters. For this ITEM, the distribution of the amount of operations based on reporting attributes is not provided, even in relation to amounts potentially committed regarding cash bookings by the CLIENTELE.

SECTION 6: Interbank Operations The SECTION aims to detect the operations of BANKS with other banking intermediaries, San Marino or foreign, relating to deposit and financing accounts or correspondence accounts ("our" accounts, "their" accounts and reciprocal accounts) held to them. The "Counterparty State" attribute refers to the banking intermediary counterparty.

ITEM 6.1 Total debits on deposit and financing accounts In this ITEM, all debit movements registered on deposit and financing accounts are reported.

ITEM 6.2 Total debits on correspondence current accounts In this ITEM, all debit movements registered on correspondence current accounts are reported.

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ITEM 6.3 Total credits on deposit and financing accounts In this ITEM, all credit movements registered on deposit and financing accounts are reported.

ITEM 6.4 Total credits on correspondence current accounts In this ITEM, all credit movements registered on correspondence accounts are reported.

Final Provisions This Circular replaces and repeals Circular BCSM No. 2009-02 with effect from the monthly REPORTS referring to the date of May 31, 2012.

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ANNEX 1 SUMMARY OF REPORTING ATTRIBUTES TO BE VALIDATED