BANK OF THE REPUBLIC OF BURUNDI

THE GOVERNOR

CIRCULAR No. 001/SP/2024 ON THE ACTIVITIES OF ELECTRONIC MONEY ISSUING PAYMENT INSTITUTIONS, ISSUED PURSUANT TO REGULATION No. 002/2024 AMENDING REGULATION No. 001/2017 ON PAYMENT SERVICES AND THE ACTIVITIES OF PAYMENT INSTITUTIONS.

Having regard to Law No. 1/34 of 02 December 2008 establishing the Statutes of the Bank of the Republic of Burundi;

Having regard to Law No. 1/17 of 22 August 2017 governing banking activities;

Having regard to Law No. 1/07 of 11 May 2018 establishing the national payment system;

Having regard to Regulation No. 002/2024 amending Regulation No. 001/2017 on payment services and the activities of payment institutions.

The Bank of the Republic of Burundi, hereinafter referred to as the "Central Bank", hereby issues: this Circular.

Article 1: Object and Scope of Application

This Circular clarifies certain provisions of Regulation No. 002/2024 on payment services and the activities of payment institutions, concerning the rules governing the issuance and distribution of electronic money as well as the safeguarding measures for electronic money.

This Circular applies to any institution approved by the Central Bank or having obtained approval to provide services related to the issuance and distribution of electronic money, namely:

1. banks;
2. microfinance institutions;
3. the National Postal Service;
4. electronic money issuing payment institutions.

It governs all uses of electronic money regardless of the medium, notably cards, internet, and telephones, with the exception of those related to restricted acceptance electronic money, whose uses are limited to subsidiaries of the issuing payment institution or restricted to the purchase of goods and services previously determined by the latter. For this latter category of use, the Bank is requested to obtain a no-objection to exercise this activity.

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Article 2: Definitions

For the purposes of this Circular, the following terms shall mean:

1. Central Bank: Bank of the Republic of Burundi;

2. Electronic money issuing payment institution: any legal entity, other than credit institutions, microfinance institutions, and the National Postal Service, approved by the Central Bank to issue and manage electronic money as a regular profession;

3. Electronic money: a claim on the issuer represented by a monetary value, which is:
   a. stored in electronic form; b. issued against the handover of funds of an amount whose value cannot be less than the monetary value issued for payment operations;
   c. accepted as a means of payment by third parties other than the electronic money issuer;
   d. convertible into cash;

4. Payment service user: a natural or legal person who uses a payment service as a payer and/or beneficiary.

Article 3: Obtaining Approval

Any legal person wishing to issue electronic money must obtain approval from the Central Bank as an electronic money issuing payment institution, under penalty of sanctions.

Obtaining approval as an electronic money issuing payment institution is subject to the submission of a written application to the Central Bank, accompanied by the information and documents listed in Annex 1 and 2 of this Circular.

Article 4: Minimum Share Capital

The minimum share capital of an electronic money issuing payment institution is one billion (1,000,000,000 BIF) Burundian francs.

This capital must be fully subscribed and paid in cash, in an account held at a commercial bank, a 1st or 3rd category microfinance institution, or the National Postal Service, prior to the granting of approval.

The amount of share capital may be revised based on the evolution of sector activities.

Article 5: Conditions for Establishment and Operation of Electronic Money Issuing Institutions

Electronic money issuing payment institutions are required, prior to exercising payment services, to meet, among other conditions, the following:

1. Justify the required minimum capital, fully paid at the time of application and deposited into the establishment's formation bank account;

2. Have a global account opened at a commercial bank, a 1st or 3rd category microfinance institution, or the National Postal Service, to guarantee operations in accordance with the relevant regulation.

Article 6: Fees Applied to Services Rendered to Electronic Money Issuing Payment Institutions

The fees applied to each of the services rendered by the Central Bank to electronic money issuing payment institutions are listed in the circular on the pricing of services rendered by the Central Bank to payment institutions.

Article 7: Partnership Agreements

An electronic money issuing payment institution may conclude a partnership agreement with one or more technical operators. The activity of these partners must be limited to the technical processing of electronic money or its distribution, under the responsibility of the issuer.

In this case, the technical partner's communication actions or any other actions directed at the public must indicate the issuing institution, including when the latter acts within the framework of partnerships with multiple issuers.

The responsibility for issuing electronic money cannot be outsourced to a technical operator.

Article 8: Prohibited Operations

It is prohibited for any electronic money issuing payment institution to issue electronic money without a prior cash deposit of a corresponding amount.

Electronic money issuing institutions are not authorized to receive public deposits.

Electronic money issuing payment institutions are not authorized to grant digital credits.

Article 9: Technical Requirements

Any electronic money issuance platform must meet technical requirements aimed at:

1. ensuring high availability;
2. preserving message integrity;
3. maintaining information confidentiality;
4. guaranteeing transaction authenticity;
5. ensuring transaction non-repudiation.

The electronic money issuing payment institution must, in particular:

1. implement a proven business continuity arrangement;

2. implement a risk management strategy defining policy and practices;

3. ensure that technical and operational provisions have been made to facilitate interoperability with other payment systems;

4. prove the existence of an audit trail ensuring traceability of operations from the origin of the payment order to its settlement.

The electronic money issuing payment institution ensures the traceability of operations for a period of at least two (2) years, from the date of their execution.

Compliance with these requirements must be attested by periodic audits conducted at least once (1) every three (3) years by a qualified external body, in order to guarantee, in particular, the relevance of the implemented security arrangement.

This technical audit, which may also cover service quality, must be extended to the technical partner operator of the issuing institution, where applicable.

When outsourcing its technical arrangement, the issuing institution is required to ensure that the technical provider meets the aforementioned requirements. To this end, it must have control means over the activity of this provider.

The issuing institution must transmit to the Central Bank a copy of the agreement concluded with the technical provider.

The outsourcing of the technical arrangement must not alter the quality or scope of the controls provided for in Article 23 of this Circular.

The electronic money issuing payment institution remains responsible for the compliance of the outsourced technical arrangement with the stated requirements.

Article 10: Registered Office

Any electronic money issuing payment institution must have its registered office on the territory of Burundi.

Article 11: Obtaining a No-Objection

Any entity wishing to offer innovative payment services using restricted acceptance electronic money must request a no-objection from the Central Bank, under penalty of sanctions.

Obtaining the no-objection to issue and distribute restricted acceptance electronic money is subject to the submission of a written application to the Central Bank, accompanied by the information and documents listed in Annex 7 of this Circular.

In addition to the no-objection application forms and information in said Annex, the following information is required:

1. Document describing the services to be offered:
   a. the scope of availability and use of said services;

   b. the terms and conditions of service offering (pricing, transparency requirements, etc.);

   c. the target clientele type.

2. Proof of registration in the Commercial Register;

3. Notarized statutes and the internal rules of the requesting company;

4. Proof of payment of the file analysis fees;

5. Tax Identification Certificate;

6. The security arrangement;

7. The customer protection arrangement, in particular recourse procedures;

8. Characteristics of the instrument made available to the client:
   a. validity and replacement of the instrument; b. cost of the instrument;
   c. instrument reloading method.

9. Contracts and protocols concluded with technical and financial partners for the provision of payment services;

10. Document describing governance, risk management, and internal control procedures;

11. Business plan;

12. Draft agency contract;

13. Any other document the Bank deems useful.

Article 12: Obtaining Approval to Offer Payment Services

Any credit institution, the National Postal Service, and microfinance institutions intending to provide mobile payment services to their clients must request approval from the Central Bank via a written application accompanied by information and documents in accordance with Article 26 of the Regulation mentioned in Article 1 of this Circular.

Article 13: Use of Distributor Services

The electronic money issuing payment institution is authorized to use, within the limits of its approval or operating authorization, the services of one or more legal or physical persons, referred to as distributors, for the marketing of services related, in particular:

1. to the subscription of usage contracts with the clientele;

2. to the loading of electronic money units;

3. to cash withdrawal and refund operations of electronic money units;

4. to payment operations.

Distributors provide the necessary assistance to the issuing institution to ensure transaction traceability.

They are required to maintain a register of operations recording detected fraud and customer complaints.

Electronic money issuing payment institutions must communicate to the Central Bank, in accordance with Article 29 of this Circular, the updated list of their distributors as well as the provisions put in place for risk management, in particular governance and liquidity within their distribution network.

The distribution contract concluded between the electronic money issuing institution and its distributor must specify the respective obligations of each party.

The distributor may, in no case, be forced to limit its activities to a single electronic money issuing institution.

The distribution network may be organized around main distributors and sub-distributors.

Main distributors may be legal persons possessing sufficient liquidity to meet the needs of electronic money unit holders.

A sub-distributor is a natural or legal person who has received a mandate from a main distributor responsible for supplying it with electronic money and/or liquidity, for the purpose of carrying out one or more operations referred to in paragraph 1 of this Article.

Article 14: Responsibilities of Issuing Institutions towards Distributors

Electronic money issuing institutions ensure that distributors provide the public, by any appropriate means, notably by visible and legible posting, information relating to the legal name, logo, trade name, and address of the electronic money issuing institution.

Issuing institutions ensure that main distributors and sub-distributors apply security and vigilance prescriptions defined within the framework of their commercial relationship, including measures related to combating money laundering and terrorist financing.

Notwithstanding any contrary clause, issuing institutions remain responsible, towards their clients and third parties, for operations carried out by their distributors, within the framework of the provision of services for which they were mandated.

In this regard, they are responsible for the integrity, reliability, security, confidentiality, and traceability of transactions carried out by each of their distributors.

Article 15: Capital Adequacy Requirements

Any electronic money issuing payment institution must at all times maintain a level of own funds above the minimum capital.

The own funds of any electronic money issuing payment institution must, at all times, be equal to or greater than three percent (3%) of its outstanding issued electronic money or ten percent (10%) of its fixed overheads for the previous year. The Central Bank may adjust this requirement in case of a significant modification of the electronic money issuing payment institution's activity compared to the previous year.

When an institution has not recorded a full year of activity at the calculation date, it is required that the amount of its own funds be at least equal to ten percent (10%) of the corresponding fixed overheads provided for in its business plan, unless the Central Bank requires an adjustment of this plan.

Article 16: Calculation of Own Funds

Own funds are calculated as follows:

1. The following are included:
   a. subscribed share capital; b. legal, statutory, voluntary, and other reserves;
   c. credit carried forward;
   d. 50% of the provisional positive net result of the current fiscal year; e. 50% of the net profit pending approval.

2. The following are to be deducted:
   a. the unpaid portion of share capital; b. debit carried forward;
   c. net intangible fixed assets less depreciation and impairment provisions;
   d. financial assets, namely participations held in other financial institutions; e. the provisional negative result of the current fiscal year; f. the negative result pending approval; g. supplementary provisions to be established in accordance with Central Bank requirements.

Article 17: Accounting of Operations

Electronic money issuing payment institutions must keep accounting records of all their operations carried out. They prepare their accounts in accordance with national accounting provisions and other specific rules set by the Central Bank.

The institution's accounts must be certified as regular and true by a statutory auditor, a natural or legal person of Burundian law approved by the Central Bank.

Article 18: Internal Control Framework

Electronic money issuing payment institutions must be managed in a sound and prudent manner to guarantee their solvency and financial balance.

They are in particular obligated to have manuals for accounting, administrative, and financial procedures as well as adequate internal control procedures.

The control arrangement must in particular ensure:

1. the reliability of books and accounting documents;

2. the prevention and detection of risks;

3. compliance with legislative and regulatory provisions.

Electronic money issuing payment institutions must ensure that their distributors are equipped with an effective internal control arrangement, adapted to their organization, the nature and volume of their activities, as well as the risks to which they are exposed.

The governing bodies are responsible for the proper functioning of the internal control system within electronic money issuing payment institutions and at their distributors. In this regard, they must implement a risk management arrangement to identify and control all significant risks related to the requirements of their activities.

Article 19: Anti-Money Laundering and Counter-Financing of Terrorism Framework.

Any electronic money issuing payment institution and any distributor must comply with anti-money laundering and counter-financing of terrorism obligations as defined in the applicable law on combating money laundering and terrorist financing and its implementing texts.

In particular, electronic money issuers and distributors must implement an automated surveillance system for unusual transactions using electronic money as the medium.

The distributor communicates to the issuer any anomalies detected related to the circulation of electronic money.

The issuer must take provisions to ensure that distributors apply legal and regulatory standards regarding operational security and vigilance.

Detected anomalies are reported to the Central Bank and the National Financial Intelligence Unit (CNRF).

Article 20: Customer Identification

Any issuing payment institution is required to identify its clients upon presentation of a valid official document, prior to opening an electronic money account. The institution retains a copy of the identification document produced upon account opening.

Unemancipated minors may hold an electronic money account, subject to duly established authorization from a parent or guardian holding a valid official document.