Board Resolution No. 051/2020: Approval of Modifications to the Payment Services, Electronic Payment Instruments, Compensation and Settlement Regulation

BOARD RESOLUTION NO. 051/2020 SUBJECT: FINANCIAL ENTITIES MANAGEMENT – APPROVES MODIFICATION OF THE PAYMENT SERVICES, ELECTRONIC PAYMENT INSTRUMENTS, COMPENSATION AND SETTLEMENT REGULATION

SEEN: The Political Constitution of the State of February 7, 2009. Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB). Law No. 393 of August 5, 2013, on Financial Services. The BCB Statute, approved by Board Resolution No. 128/2005 of October 21, 2005, and its modifications. The Payment Services, Electronic Payment Instruments, Compensation and Settlement Regulation approved by Board Resolution No. 137/2019 of October 8, 2019. The Report from the Financial Entities Management BCB-GEF-SSPSF-DVSP-INF-2020-17 of April 14, 2020. The Report from the Legal Affairs Management BCB-GAL-SANO-DLBCI-INF-2020-36 of April 24, 2020.

CONSIDERING: That the Political Constitution of the State establishes in its article 327 that the BCB is a public law institution, with legal personality and its own assets. Within the framework of the State's economic policy, it is the function of the BCB to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.

That in its article 328 it establishes that it is an attribute of the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by Law, to regulate the payment system.

That articles 3 and 30 of Law No. 1670 provide that the BCB will formulate policies of general application in monetary, exchange, and payment system matters for the fulfillment of its object, with all financial intermediation and financial services entities being subject to its regulatory competence, whose operation is authorized by the Superintendence of Banks and Financial Entities, currently the Financial System Supervision Authority (ASFI).

That in its article 44 it establishes that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized general application regulations, and internal rules; as well as for establishing administrative, operational, and financial strategies of the BCB, approving their respective short and medium-term programs.

That in letters a), b), and o) of its article 54, it provides that the BCB Board of Directors has the authority to issue regulations and adopt general decisions that may be necessary for the BCB to fulfill its functions, competencies, and powers assigned by Law; to regulate the administration of payment systems among authorized financial entities; and to approve, modify, and interpret the Statute and Regulations of the BCB by two-thirds of the votes of all its members, without the need for any additional administrative act.

That paragraph III of article 8 of Law No. 393 on Financial Services establishes that the Financial System Supervision Authority will issue specific regulation and supervise its compliance within the framework of the regulations issued by the BCB, in the scope of the payment system.

That paragraphs I and IV of its article 124 provide that operations carried out within the framework of the services provided by financial entities may be carried out through electronic means, which necessarily must comply with security measures that guarantee integrity, confidentiality, authentication, and non-repudiation; and that the ASFI and the BCB, according to their competencies, will issue regulation establishing the procedure and security regulations for operations, as well as the minimum requirements that entities must meet to carry out activities of electronic banking, telephone banking, and through mobile devices, regulatory compliance mandatory by financial entities providing the service.

That item 13 of article 11 of the BCB Statute establishes as an attribute of the Board of Directors of the Issuing Entity to approve the regulations for the functioning of the payment system.

That the Payment Services, Electronic Payment Instruments, Compensation and Settlement Regulation aims to regulate in the scope of the national payment system, the services and electronic payment instruments and the compensation and settlement derived from these instruments, establish the general framework for the creation, constitution, and functioning of Compensation and Settlement Chambers and Payment Service Companies; and regulate the surveillance and supervision activities of the national payment system.

That its article 3 states that Investment Fund Management Companies may be issuers of EPIs and complementarily includes in the definition of redemption of open investment fund shares.

That the Financial Entities Management in its Report BCB-EF-SSPSF-DVSP-INF-2020-17, states that it is feasible to modify the Payment Services, Electronic Payment Instruments, Compensation and Settlement Regulation, introducing, clarifying, and expanding the scope of concepts to include the operations of Investment Fund Management Companies with the purpose of facilitating the modification of the ASFI regulatory framework that will promote greater use of electronic operations by these entities and improve the services they provide to their clients, allowing them access to electronic payment instruments to carry out purchase and redemption operations of participation quotas in open investment funds.

That the Report BCB-GAL-SANO-DLBCI-INF-2020-36 from the Legal Affairs Management establishes that the approval of the modification of the Payment Services, Electronic Payment Instruments, Compensation and Settlement Regulation does not contravene the current legal order, therefore it is legally procedent, being the competence of the BCB Board of Directors to consider its approval in accordance with what is established in letter o) of article 54 of Law No. 1670 and item 13 of article 11 of the Statute of the Issuing Entity.

THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Modify the wording of letters f), r), aaa), nnn), and www) of Article 3 (Definitions) of the Payment Services, Electronic Payment Instruments, Compensation and Settlement Regulation approved by Board Resolution No. 137/2019 as follows:

SAYS: Article 3 (Definitions). For the purposes of this Regulation, the following definitions are established: f) Automated Teller Machines (ATMs): Electronic devices that allow, in an illustrative and non-limiting manner, to withdraw and deposit cash, electronic fund transfers, redeem shares of open investment funds, load Electronic Payment Instruments – EPI, check balances, change passwords, and others. Automated teller machines are also known by their English acronym ATM (Automated Teller Machine). r) Account associated with an Electronic Payment Instrument – EPI: Account used to originate a Payment Order – PO, which may be a checking account, savings account, mobile wallet account, and those that allow the use of credit and prepaid cards; these accounts may be linked to a cell phone number or email address for the processing of Payment Orders – PO. aaa) Payment Order-PO: Instruction or message by which the originator requests the assignment and/or transfer of funds through the use of Payment Instruments-PI, in favor of a beneficiary, which in an illustrative and non-limiting manner, considers:

i) Electronic fund transfers between natural and/or legal persons, which includes payments in case of being benefited by the provision of a service, purchase-sale of goods, and payment for the fulfillment of obligations (debts, taxes, and others); ii) Deposit or withdrawal of cash, loading and cashing of electronic money, and the cashing of Payment Instruments-PI in businesses (the cash comes from the business's own activities).

nnn) Share Redemption: Operation through which the participant makes liquid or converts into cash the shares of an Open Investment Fund through the redemption of shares executed by the Investment Fund Management Company – SAFI.

www) Electronic Fund Transfer: Money movements instructed electronically by the originator in favor of a beneficiary through the use of Electronic Payment Instruments – EPI, which in an illustrative and non-limiting manner include electronic money movements between accounts belonging to the same natural and/or legal persons or to third-party accounts, drafts or remittances, automatic account debits, payments in case of being benefited by the provision of a service, purchase-sale of goods and foreign currency, payment for the fulfillment of obligations such as debts, rents, taxes, and others.

SHOULD SAY: “Article 3 (Definitions). For the purposes of this Regulation, the following definitions are established: f) Automated Teller Machines (ATMs): Electronic devices that allow, in an illustrative and non-limiting manner, to withdraw and deposit cash, carry out electronic fund transfers, buy and redeem shares of open investment funds, load Electronic Payment Instruments – EPI, check balances, change passwords, and others. Automated teller machines are also known by their English acronym ATM (Automated Teller Machine). r) Account associated with an Electronic Payment Instrument – EPI: Account used to originate a Payment Order – PO, which may be a checking account, savings account, mobile wallet account, participation account of an open investment fund, and those that allow the use of credit and prepaid cards; these accounts may be linked to a cell phone number or email address for the processing of Payment Orders – PO. aaa) Payment Order-PO: Instruction or message by which the originator requests the assignment and/or transfer of funds through the use of Payment Instruments-PI, in favor of a beneficiary, which in an illustrative and non-limiting manner, considers: i) Electronic fund transfers between natural and/or legal persons, which include payments in case of being benefited by the provision of a service, purchase-sale of goods, purchase and redemption of shares of Open Investment Funds, as well as payment for the fulfillment of obligations (debts, taxes, and others). ii) Deposit or withdrawal of cash, loading and cashing of electronic money, and the cashing of Payment Instruments-PI in businesses (the cash comes from the business's own activities).

nnn) Share Redemption: Operation through which the participant makes liquid or converts into money the shares of an Open Investment Fund through the redemption of shares executed by the Management Company.

www) Electronic Fund Transfer: Money movements instructed electronically by the originator in favor of a beneficiary through the use of Electronic Payment Instruments – EPI, which in an illustrative and non-limiting manner include electronic money movements between accounts belonging to the same natural and/or legal persons or to third-party accounts, drafts or remittances, automatic account debits, payments in case of being benefited by the provision of a service, purchase-sale of goods and foreign currency, purchase and redemption of shares of Open Investment Funds, as well as, payment for the fulfillment of obligations such as debts, rents, taxes, and others.”

Article 2.- Include two definitions in Article 3 of Board Resolution No. 137/2019 which approves the Payment Services, Electronic Payment Instruments, Compensation and Settlement Regulation in the following terms: “Article 3 (Definitions). For the purposes of this Regulation, the following definitions are established: p) Share Purchase: Operation in which the participant of an Investment Fund, through monetary contributions, acquires participation shares of the same, either through the Management Company in the case of Open Investment Funds or through authorized intermediaries in the primary or secondary market in the case of Closed Investment Funds. aa) Participation Account: Account in which the balances of participation shares owned by the participant of an Open Investment Fund and the movements of purchase and sale of shares, as well as positive and negative returns registered by the increase or decrease in the value of the share, are recorded.”

Article 3.- The Presidency and the General Management are entrusted with the execution and compliance of this Resolution.

La Paz, April 28, 2020

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Guillermo Aponte Reyes Ortiz

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Armando Pinell Siles Alejandro Banegas Rivero

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José Gabriel Espinoza Yañez Walter Morales Carrasco