Banque de the Republic of Haiti

CIRCULAR No. 119

TO FOREIGN EXCHANGE INTERMEDIARIES

Pursuant to Article 45 of the Decree of November 25, 2020, concerning foreign exchange intermediaries, the latter are required to comply with the provisions of this circular on foreign exchange operations. This circular applies to all foreign exchange intermediaries, with the exception of banks, which remain subject to the provisions of Circular 81-6 on foreign exchange risk management.

1. Definitions

The following definitions apply to this circular:

a) Foreign Exchange Intermediary: any entity that carries out foreign exchange operations in accordance with the provisions of the Decree of November 25, 2020.

b) Foreign Exchange Operation: an operation involving the conversion of one currency into another. Accepting payment in foreign currency by a client in the form of cash, check, payment card, or any other means of payment, provided that it is denominated in a different currency, also constitutes a foreign exchange operation.

c) Spot and Forward Foreign Exchange Operations: purchases or sales of currencies where the time separating the commitment date and the delivery date differs. For spot operations, this period generally does not exceed two (2) business days, whereas for forward operations, this period exceeds two (2) business days.

d) Reference Rate (Reference Price): the daily exchange rate calculated by the BRH (Banque de la République d’Haïti).

2. Foreign Exchange Position of Foreign Exchange Intermediaries

The foreign exchange position is the difference between assets and liabilities in foreign currencies (balance sheet items only, excluding off-balance sheet items). It is classified as long when assets exceed liabilities and short in the opposite case. It results from the overall structure of asset and liability items recorded on the balance sheet of a foreign exchange intermediary as well as from daily currency trading.

The foreign exchange position of a foreign exchange intermediary is determined exclusively by its currency position, which is the difference between currency purchases and sales during a business day. The currency position is said to be long when purchases exceed sales at the end of the day and short in the opposite case.

Foreign exchange intermediaries are subject only to the currency position in the context of their foreign exchange operations. Their currency position must be zero at the end of the day. In other words, for

a given day, all currencies purchased from third parties must be obligatorily sold by the end of that day. However, at no time can balance sheet and off-balance sheet items be considered in the calculation of this foreign exchange position.

In the event of a long currency position observed, the BRH automatically becomes the purchaser, at the average purchase rate of the foreign exchange intermediaries for the day. In this case, the BRH will debit the dollar account of the offending institution domiciled with it within seventy-two (72) hours following this transaction, regardless of the balance of said account.

3. Internal Needs

Internal needs represent the foreign exchange needs of the foreign exchange intermediary for the purpose of, among other things, acquiring materials, equipment, and supplies. These needs can be met from their currency position, that is to say, from intervention in the foreign exchange market to buy currencies for their own account during a day.

Foreign exchange intermediaries must first use the resources generated from their operations to meet their internal needs. If these resources are insufficient, they may go to the market to acquire the difference.

Transactions for internal needs must be recorded at the intermediary's average purchase rate for the day. The details of the transactions must be reported in Annex I (I.5. Report on the breakdown of internal needs) of this circular. Furthermore, foreign exchange intermediaries must submit a breakdown of transactions indicating the reasons for which they were carried out, as well as the amount and the rate used on the day of the transaction.

4. Obligations of Foreign Exchange Intermediaries

Foreign exchange intermediaries are required to comply with all legal and regulatory obligations regarding money laundering and the financing of terrorism. Pursuant to Article 34 of the Decree of November 25, 2020, transactions equal to or greater than three hundred fifty thousand gourdes (HTG 350,000.00) or the equivalent in foreign currencies must be made by check or bank transfer.

During the foreign exchange operation, foreign exchange intermediaries must identify their regular or occasional client, in accordance with the provisions of existing laws and regulations, and provide the client with a receipt for the transaction. The receipt must contain, among other things, the amount and the currency in which the foreign exchange operation is carried out, the exchange rate of the transaction, the name of the exchange office, and the address of the service point.

Foreign exchange intermediaries are obligated to visibly display in their premises their purchase and sale rates, as well as the reference rate calculated by the BRH. They must also ensure that this rate is visible in all service points managed by their sub-agents, if applicable.

5. Reporting

Foreign exchange intermediaries are required to complete and send to the BRH a daily report on the currency position – via the exchange module of the SIF according to the models in the annex, by noon on the next business day following the reference date of the report.

6. Sanctions

In the event of non-compliance with the obligations defined in this circular, foreign exchange intermediaries are subject to the following penalties:

a) Reliability of information: At all times, the amounts declared in the reports provided for by this circular must be those appearing in the accounting books of the institution.

Failing to comply with this directive, the BRH may, after an inquiry into the circumstances and the nature of the violation, impose a penalty of 30% of the difference between the amounts declared in the reports and the amounts appearing in the accounting books.

b) Penalty for late transmission of compliance report: Failing to provide, within the required deadline, the report provided for in section 5, the foreign exchange intermediary is subject to a penalty of fifty thousand gourdes (HTG 50,000.00) per day of infringement. The penalty period extends from the day of the infringement until the day when the reports are made available to the BRH.

c) Penalty for overdraft account at the BRH: in the event that the account of a foreign exchange intermediary domiciled at the BRH is overdrawn, it is subject to penalties of approximately 1/10 of 1% per day.

Any penalty will be deducted from the account of the offending foreign exchange intermediary.

7. Entry into Force

This circular enters into force on June 1, 2021.

Port-au-Prince, May 11, 2021.

Jean Baden Dubois Governor

Annex - Daily Report on Currency Position (via SIF) I.1. Report on Dollar Purchases I.2. Report on Dollar Sales from Day's Purchases I.3. Daily Compliance Report I.4. Report on Dollar Sales from Liquidity Other Than Day's Purchases (or from Structural Position) I.5. Report on the Breakdown of Internal Needs

# ANNEX I
(1 of 5)

## CURRENCY POSITION
## DAILY REPORT

Name of Foreign Exchange Intermediary: ________________________ Date: _______________

### I.1. REPORT ON DOLLAR PURCHASES

| Identification of Clients | E, M and A * | Amount | Average Purchase Rate | Account # | Bank |
|----------------------------|-------------|---------|--------------------|-------------|--------|
| I. NGOs (list all NGOs) | | | Reference Rate | | |
| 1 - | | | | | |
| 2 - | | | | | |
| ... | | | | | |
| **Subtotal - I. NGOs** | | **Sum 1, 2, ...** | **Reference Rate** | | |
| II. Clients whose transactions are greater than 10,000 dollars – excluding NGOs (to list) | | | **Market Rate** | | |
| 1 - | | | purchase rate | | |
| 2 - | | | purchase rate | | |
| ... | | | purchase rate | | |
| **Subtotal - II. Transactions > 10,000 dollars** | | **Sum 1, 2, ...** | **Average Purchase Rate – Trans. II** | | |
| III. Subtotal - Others (Aggregated) | | **Sum – III** | **Average Purchase Rate (III)** | | |
| **TOTAL PURCHASES** | | **Sum I, II II** | **Average Purchase Rate** | | |
| Less: Internal Needs (Annex I.5) | | | **Average Purchase Rate** | | |
| **Total Net Dollar Purchases after Internal Needs** | | | **Average Purchase Rate** | | |

* E = Enterprises, Households = M and A = Others

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# ANNEX
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# (2 of 5)

## CURRENCY POSITION
## DAILY REPORT

### I.2. REPORT ON DOLLAR SALES FROM DAY'S PURCHASES

| Identification of Clients | E, M, and A* | Amount | Sale Rate | Account # | Bank |
|----------------------------|-------------|---------|---------------|-------------|--------|
| I. Clients whose transactions are greater than or equal to 10,000 dollars (to list) | | | | | |
| 1 - | | | sale rate | | |
| 2 - | | | sale rate | | |
| ... | | | sale rate | | |
| **Subtotal - I. Transactions > 10,000 dollars** | | **Sum 1, 2, ...** | **Average Sale Rate – Trans. I** | | |
| II. Subtotal - Others (aggregated) | | | **Average Sale Rate - Others II** | | |
| **TOTAL** | | **Sum (I and II)** | **Average Sale Rate** | | |

* E = Enterprises, Households = M and A = Others

5 /3

# CURRENCY POSITION
## DAILY REPORT

### 1.3. DAILY COMPLIANCE REPORT

**CURRENCY POSITION**

| Net Dollar Purchases | Dollar Sales from Day's Purchases | Difference |
|------------------------|------------------------------------------------------|-------|
|                        |                                                      |       |

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# ANNEX
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# 1.4. REPORT ON DOLLAR SALES FROM LIQUIDITY OTHER THAN DAY'S PURCHASES (OR FROM STRUCTURAL POSITION)

| Identification of Clients | E, M, and A* | Amount | Sale Rate | Account # | Bank |
|----------------------------|-------------|---------|---------------|-------------|--------|
| I. Clients whose transactions are greater than or equal to 10,000 dollars (to list) |             |         |               |             |        |
| 1 -                        |             |         | Sale Rate |             |        |
| 2 -                        |             |         | Sale Rate |             |        |
| ...                        |             |         | Sale Rate |             |        |
| **Subtotal - I. Transactions > 10,000 dollars** |             | **Sum (1, 2, ...)** | **Average Sale Rate-Trans. I** |             |        |
| **II. Subtotal - Others (aggregated)** |             |         | **Average Sale Rate -Others II** |             |        |
| **TOTAL**                  |             | **Sum (I and II)** | **Average Sale Rate** |             |        |

* E = Enterprises, Households = M and Others = A

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# ANNEX
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# 1.5 REPORT ON THE BREAKDOWN OF INTERNAL NEEDS

| Reasons | Amount | Types of Transaction | Purchase Rate |
|--------|---------|----------------------|--------------|
|        |         |                      |              |
|        |         |                      |              |
|        |         |                      |              |
|        |         |                      |              |
|        |         |                      |              |
|        |         | -                    |              |

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# ANNEX
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