Banking Board of Ecuador

RESOLUTION No. JB-2015-3383

THE BANKING BOARD

CONSIDERING:

THAT by letter No. BP-ACEC-2013-0361-1 dated March 25, 2013, signed by Mr. Diego Andrade Carrera, authorized signatory of Banco Pichincha C.A., the removal of protests for checks No. 325 and 322, drawn against current account No. 3515050104 in the name of Mr. Hugo Daniel Benítez Valarezo, was requested, in order to comply with letter No. IDG-DAYEU-V-2013-0043, dated January 21, 2013, which ordered the removal of said checks;

THAT upon reviewing the documents submitted, it was determined that Banco Pichincha, on June 8, 2012, entered Mr. Hugo Daniel Benítez Valarezo into the list of disqualified individuals for non-payment of a fine for protested check No. 111, when only forty-eight (48) days had passed out of the sixty (60) days required by the last paragraph of Article 57 of the General Regulation to the Checks Law; therefore, the National Directorate of Studies and Information authorized the receipt of the T25 "Checks" structure to correct the inconsistency presented, also supported by letter No. UIOC-2012-0028 of June 18, 2012, inasmuch as, according to this letter, a Core Banking migration process occurred that produced specific inconsistencies that enabled the entry, among others, of Mr. Hugo Daniel Benítez Valarezo into said list;

THAT having determined the existence of an operational error in accordance with Article 134 of the General Law of Financial System Institutions, of organic quality, in concordance with Article 83, Chapter III, Title XXIV, Book I of the Compilation of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, a fine of USD $131.44 was imposed, and the sending of the T25 "Checks" structure was ordered to eliminate the record of check No. 30 through Letter No. DNEI-SES-2013-0482 of July 4, 2013;

THAT through communication received by this control body on July 12, 2013, an appeal for reconsideration was filed against the administrative act contained in letter No. DNEI-SES-2013-0482 of July 4, 2013, in order to have the fine of USD $131.44 (ONE HUNDRED THIRTY-ONE UNITED STATES DOLLARS WITH 44/100) imposed on Mr. Fernando Pozo Crespo, General Manager of Banco Pichincha C.A. through the letter subject of the appeal, declared null;

THAT by letter No. DNEI-SES-2013-0705 of October 2, 2013, the National Director of Studies and Information attended to the appeal for reconsideration filed, concluding that:

"For the considerations stated, and once the arguments with which you appeal have been analyzed, this National Directorate REJECTS the appeal for reconsideration filed and therefore RATIFIES the sanction contained in letter No. DNEI-SES-2013-0482 of July 4, 2013."

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THAT by document received by this Superintendence on October 14, 2013, Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo, filed before the Banking Board an appeal for review against the administrative act contained in letter No. DNEI-SES-2013-0705 of October 2, 2013;

THAT the appeal for review was accepted for processing by Lic. Pablo Cobo Luna, Secretary of the Banking Board, through letter No. JB-2013-2176, dated October 15, 2013;

THAT the appellant, in his appeal writing, argues that:

• "In the present case, there has been no type of error on the part of the Institution in the protest of checks; nor has the Institution failed to comply with provisions of the Checks Law, for which reason, it is not pertinent under any point of view to impose a fine based on the aforementioned Article 83."

• "In the present case, the type detailed for the application of a sanction does not adjust to the fact that occurred. That is to say, there have been no failures on the part of my represented party to laws or regulations. Since there is no sustainable basis, no sanction is appropriate. If a fact or action does not meet the legal premise of the sanctioning norm (type), the imposition of a sanction is not legally appropriate. 'Nullum crimen sine lege'."

• "(...) that it is neither fair nor legally sustainable to impose the fine of one hundred thirty-one United States dollars with 34/100 on the General Manager of the Institution."

THAT it is evident that the operational error on the part of Banco Pichincha C.A. was the cause that triggered the disqualification of Mr. Hugo Daniel Benítez Valarezo, which generated the protest of checks 325 and 322 drawn against current account No. 3515050104; consequently, the provision of Article 83, Chapter III, Title XXIV, Book I of the Compilation of Resolutions of the Superintendence of Banks and Insurance and the Banking Board is applicable, whose text verbatim states:

"ARTICLE 83.- For errors in the protest of checks, as well as for any other contravention to the provisions of the Checks Law and this chapter by banks, or when there is no specific sanction for contraventions to the provisions of this chapter, they shall be sanctioned by the Superintendent of Banks and Insurance with a fine that will not be less than USD $131.44 and will not exceed USD $7,886.82, in accordance with what is provided in Article 134 of the General Law of Financial System Institutions. The gravity of the infraction will be appreciated by the Superintendent or his delegate, considering the circumstances of the fact."

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THAT the imposition indicated in the previous numeral provides for a sanction for errors in the protest of checks and for the case at hand, it is demonstrated that there was an operational error by Banco Pichincha C.A. in entering Mr. Hugo Daniel Benítez Valarezo into the list of disqualified individuals for non-payment of a fine for protested check No. 111, when only 48 days had passed after the protest, out of the 60 days contemplated by the last paragraph of Article 57 of the General Regulation to the Checks Law, which states:

"SECTION X.- OF THE PAYMENT OF FINES FOR PROTESTED CHECKS ARTICLE 57.- The drawee bank is obligated to collect the fine established in Article 31 of the Checks Law, immediately after the protest of a check has occurred, which will be debited from the current account of the sanctioned holder or holders.

(...)

The names of persons who, within sixty (60) days counted from the date the obligation originated, have not covered the fine referred to in this article, will be entered into the database of disqualified persons. The drawee bank will proceed to close the current account, whose holder may only be excluded once he has canceled the value of the fine in its entirety."

THAT the foregoing is reinforced by Article 134 of the General Law of Financial System Institutions, which states:

"ARTICLE 134.- When directors, administrators, officials, or employees of a financial system institution infringe laws or regulations governing their operation and said laws or regulations do not establish a special sanction, or in cases where they contravene instructions issued by the Superintendence, it will impose the sanction according to the gravity of the infraction, which will not be less than 50 UVCs and will not exceed 3,000 UVCs.

Recidivism of the infraction, of contravening instructions issued by the Superintendence, will be the responsibility of the entity.

The same sanction will be imposed on any person or institution that, without having the qualities indicated in the preceding paragraph, commits infractions to this Law, its regulations, or instructions issued by the Superintendence, when such infractions do not have a specific sanction."

THAT Articles 1 and 180 letter b) of the General Law of Financial System Institutions state:

"ARTICLE 1.- This Law regulates the creation, organization, activities, functioning, and extinction of private financial system institutions, as well as the organization and functions of the Superintendence of Banks, the entity in charge of the supervision and control of the financial system,

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financial, in all of which the protection of public interests is taken into account. (...)"

"ARTICLE 180.- The Superintendent of Banks has the following functions and attributions:

(...)

b) To ensure the stability, solidity, and correct functioning of institutions subject to its control and, in general, that they comply with the norms governing their functioning, through permanent off-site supervision and on-site inspection visits, in accordance with international best practices, without any restriction and allowing determination of the economic and financial situation of the entity, the management of its business, evaluation of the quality and control of risk management, and verification of the truthfulness of the information it generates;

(...)

THAT in accordance with the cited norms, this Superintendence must ensure the protection of public interests, and it is also inferred that among the attributions and functions of the Superintendent of Banks is to supervise the correct functioning of financial system institutions, so that they comply with the norms governing their activity, in accordance with international best practices, and allow verification of the truthfulness of the information they generate, among others;

THAT consequently, the imposition of the fine for the amount of USD $131.44 (ONE HUNDRED THIRTY-ONE UNITED STATES DOLLARS WITH 44/100), imposed on Mr. Fernando Pozo Crespo, General Manager of Banco Pichincha C.A., contained in letter No. DNEI-SES-2013-0482 of July 4, 2013, is duly founded;

THAT as indicated, the arguments expressed by the appellant do not disprove the foundations of the issuance of the challenged letter No. DNEI-SES-2013-0705 of October 2, 2013;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2014-0542 of July 23, 2014, recommended to the Banking Board to reject the claim contained in the appeal for review filed; and,

IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the appeal for review filed by Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A.; and, consequently, CONFIRM letter No. DNEI-SES-2013-0705 of October 2, 2013, with which the National Director of Studies and Information denied the appeal for reconsideration and ratified the administrative act contained in letter No. DNEI-SES-2013-0482 of July 4, 2013, by which this control body imposed a fine of USD $131.44

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(ONE HUNDRED THIRTY-ONE UNITED STATES DOLLARS WITH 44/100) on the General Manager of Banco Pichincha C.A.

COMMUNICATE.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on the thirtieth day of April of two thousand fifteen.

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Econ. Rodrigo Candeta Parra
GENERAL INTENDENT, S
PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on the thirtieth day of April of two thousand fifteen.

Lic. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD