Norm Reforming Articles 1 and 42 of the Standard for Credit Card Operations

Resolution No. CD-SIBOIF-1140-1-NOV21-2019
Dated November 21, 2019
STANDARD REFORMING ARTICLES 1 AND 42 OF THE STANDARD FOR CREDIT CARD OPERATIONS

The Board of Directors of the Superintendence of Banks and Other Financial Institutions.

CONSIDERING

I
That by Resolution No. CD-SIBOIF-629-4-MAY26-2010, dated May 26, 2010, the "Standard for Credit Card Operations" was approved, published in La Gaceta, Official Gazette No. 150 and 151, on August 9 and 10, 2010, respectively, which in its article 4 establishes that "Banks and other credit card issuing entities within the framework of the General Banking Law shall be subject to the control and supervision of the Superintendence. Nevertheless, other commercial entities not included in the aforementioned law shall be subject to the regulations established in Law No. 515 and this Standard."

II
That Law No. 977, "Law Against Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction," published in La Gaceta, Official Gazette No. 138, on July 20, 2018, contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters," published in La Gaceta, Official Gazette No. 164, on August 27, 2018, and its reforms; in its article 9, numeral 3), letter a), subsection i), establishes that the following are obligated subjects under the regulation, supervision, and sanction of the Financial Analysis Unit in matters of prevention of money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction (AML/CFT/FP), "...a. Companies that, when carrying out the following activities, do not maintain ownership, administration, corporate image use, or control links with banks or other non-bank financial institutions regulated: i. Issuance and administration of payment instruments...", such are the non-bank issuers of credit cards.

III
That based on the legal provisions indicated in the previous considerations, it is necessary to reform articles 1 and 42 of the Standard for Credit Card Operations, in order to adapt it to what is established in the aforementioned article 9, numeral 3), letter a), subsection i) of the aforementioned Law No. 977.

In exercise of its powers,
RESOLVES
To issue the following standard,
Resolution No. CD-SIBOIF-1140-1-NOV21-2019
STANDARD REFORMING ARTICLES 1 AND 42 OF THE STANDARD FOR CREDIT CARD OPERATIONS

FIRST: Add a letter e)-bis to article 1 of the Standard for Credit Card Operations, contained in Resolution No. CD-SIBOIF-629-4-MAY26-2010, published in La Gaceta, Official Gazette No. 150 and 151, on August 9 and 10, 2010, respectively, and its reforms, which shall read as follows:

"e)-bis Non-bank issuer: A legal person with domicile in Nicaragua, constituted as a joint-stock company, that wishes to subscribe to credit opening contracts in current accounts and issuance and use of credit cards with its clients, whose constitution does not require authorization by the Superintendence of Banks and Other Financial Institutions and whose liquidation process is governed by the Commercial Code, being subject to the supervision of the Superintendence under the terms of Law No. 515 and this standard."

SECOND: Reform article 42 of the Standard for Credit Card Operations referred to in the first subsection of this resolution, which shall read as follows:

"Article 42. Registration and Sanctions.- The registration, enrollment procedure, and sanctions applicable to non-bank credit card issuers shall be governed by the following provisions:
a) Registration: The Register of Non-Bank Issuers of the Superintendence is created. For enrollment in the Register, non-bank issuers must submit an application to the Superintendent and attach the following:

1. Notarially certified copy of the deed of incorporation and its statutes registered in the relevant registry;

2. Notarially certified copy of the power of attorney of the legal representative of the company;

3. Contact data of the company, such as: physical address, telephone numbers, email, website, among others;

4. Models of credit card issuance contracts;

5. Policies for granting credit cards;

6. Policies for the attention of credit card users, which, as a minimum, must comply with the applicable provisions of the regulations governing the matter on transparency in financial operations;

7. Regarding shareholders, members of the board of directors, general manager or principal executive, and the official in charge of handling credit card user complaints, the following must be presented:
   i. Notarially certified copy of the official identification document according to the law on the matter.
   ii. Notarially certified copy of their respective appointments.
   iii. Declaration before a public notary stating that they are not subject to the impediments of article 29 of the General Banking Law, in accordance with the format established by Annex 2 of the regulation governing the matter on requirements to be a director, general manager and/or principal executive and internal auditor of financial institutions.

8. Any other requirement determined by the Superintendent related to their credit card operations.
   b) Enrollment Procedure: The Superintendence shall have a period of two months from the submission of the application with all required documentation to analyze the documentation and proceed with the enrollment. In case it finds it in compliance with the provisions of Law No. 515 and this standard, it will proceed to enroll the non-bank issuer; if deficiencies are found, it will inform the interested parties so that they may remedy them within the period specified.

Non-bank issuers that are enrolled in the Register must submit to the Superintendence, at the latest within a period of 30 days counted from the receipt of the notification of enrollment, copies of the registration as an Obligated Subject before the Financial Analysis Unit (UAF) and of the registration of the company's Compliance Officer, both documents notarially certified. The aforementioned period may be extended through a reasoned request by the interested party. In case the non-bank issuer is operating at the time of submitting the application, it must attach to it its registration as an obligated subject before the UAF, if applicable, as part of the requirements for its enrollment in the Register. Non-bank issuers may request the cancellation of their enrollment at any time. In this case, they may not carry out the operations referred to in Law No. 515. Any significant change in the background presented by a non-bank issuer regarding its shareholding composition, members of the board of directors, principal executive, and official in charge of handling credit card user complaints, must be reported to the Superintendence within five business days following its occurrence. In the event of a new appointment of any of the aforementioned officials, the information required in numeral 7, of letter a) of this article, must be presented. The enrollment in the Register may not be used by the non-bank issuer as evidence or accreditation that it implements and complies with its obligations in matters of prevention, detection, and reporting of activities related to AML/CFT/FP in an adequate and effective manner, an aspect that corresponds to the UAF to evaluate according to its legal powers. c) Sanctions: Non-compliance by non-bank issuers with the provisions established in this standard and with the instructions issued by the Superintendent within the scope of its competence, shall be sanctioned as follows:

1. Reprimand; or

2. Cancellation of the registration. After the period of one (1) year counted from the date on which the resolution of cancellation of the registration became final, the non-bank issuer may request its enrollment in the register again. For this purpose, in addition to complying with the requirements required for an initial application, it must demonstrate that it remedied the circumstances that motivated its cancellation.
   For the application of the aforementioned sanctions, the Superintendent shall take into consideration the following criteria:
   i. The gravity and/or recurrence of the infringement;
   ii. The background of the non-bank issuer in compliance with the provisions established in this standard and of the Superintendent's instructions; and
   iii. The benefit or profit that the non-bank issuer has obtained from the infringement.
   The Superintendence shall cancel the enrollment of non-bank issuers that have not initiated operations and/or that, having initiated them, discontinue them for a period greater than one (1) year.
   In the case of special regime financial companies that carry out credit card operations, they must comply with the information requirements established in numerals 4), 6) and 7) of letter a) of this article, for the latter numeral with respect to the contact information of the official in charge of handling credit card user complaints. This is without prejudice to the consolidated supervision powers established in the General Banking Law and the regulation governing the matter of financial groups."

THIRD: This standard shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Gazette. (F) S. Rosales C. (F) Illegible (Luis Ángel Montenegro E.) (F) Fausto Reyes B. (F) Illegible (Silvio Moisés Casco Marenco) (F) Illegible (Rafael Ángel Avellán Rivas.
RAFAEL ÁNGEL AVELLÁN RIVAS
Secretary of the Board of Directors SIBOIF