Circular No. 006/SP/2024 amending Circular No. 01/EP/19 on the sanction matrix applicable to payment institutions and other payment service providers

BANQUE DE LA REPUBLIQUE DU BURUNDI LE GOUVERNEUR

CIRCULAIRE N° 006/SP/2024 AMENDING CIRCULAR N° 01/EP/19 ON THE SANCTION MATRIX APPLICABLE TO PAYMENT INSTITUTIONS OR ANY OTHER PAYMENT SERVICE PROVIDER, ENACTED PURSUANT TO REGULATION N° 002/2024 AMENDING REGULATION N° 001/2017 RELATING TO PAYMENT SERVICES AND THE ACTIVITIES OF PAYMENT INSTITUTIONS

Having regard to Law No. 1/34 of December 2, 2008 establishing the Statutes of the Bank of the Republic of Burundi;

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

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

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

Having regard to Regulation No. 003/2024 amending Regulation No. 002/2017 relating to the activities of Commercial Agents in banking and payment services operations;

Having regard to Circular No. 001/SP/2024 relating to the activities of payment institutions issuing electronic money;

Having regard to Circular No. 002/SP/2024 relating to aggregator payment institutions;

Having regard to Circular No. 003/SP/2024 relating to the approval of Directors and Senior Management of payment institutions;

Having regard to Circular No. 004/SP/2024 relating to the approval and exercise of the function of statutory auditor of payment institutions;

Having reviewed Circular No. 01/EP/19 relating to the sanction matrix applicable to payment institutions;

The Bank of the Republic of Burundi, hereinafter referred to as the "Central Bank":

Enacts this Circular.

Article 1: Object and Scope

This circular aims to clarify the sanctions applicable to payment institutions and any other payment service provider in the event of non-compliance with the legal and regulatory framework governing their activities, particularly if a payment institution or any other payment service provider:

1. violates a legal or regulatory provision relating to the conditions of its approval or the exercise of its activity;
2. violates an agreement signed between it and the Central Bank;
3. fails to comply with an injunction or ignores a warning;
4. resorts to unsafe or unreliable practices;
5. has obstructed or refused to submit to control;
6. has created a situation that puts the interests of clients or the public in danger.

Article 2: Compliance with Legal and Regulatory Provisions

Payment institutions or any other payment service provider are required to strictly comply with the legal and regulatory provisions governing their activities, under penalty of being subject to the sanctions listed in the matrix annexed to this circular.

Article 3: Categorization of Infractions

The infractions retained by the sanction matrix are subdivided into the following categories:

1. Infractions relating to non-compliance with operating conditions;
2. Infractions relating to non-compliance with approval conditions;
3. Infractions relating to non-compliance with conditions for obtaining approval and non-objection;
4. Infractions relating to non-participation in platform interoperability with other partners;
5. Infractions relating to non-satisfaction of payment institution obligations;
6. Infractions relating to exceeding limits for international transfers;
7. Infractions relating to non-compliance with internal control and anti-money laundering and counter-terrorist financing measures;
8. Infractions relating to the registration conditions of Commercial Agents;
9. Miscellaneous infractions.

The infractions, the regulatory provisions referenced, and the corresponding sanctions are recorded in the matrix annexed to this circular.

Article 4: Types of Sanctions

When a payment institution or any other payment service provider has committed one of the faults listed in the previous article, the Central Bank may impose one and/or the other of the sanctions against it pursuant to Article 92 of Regulation No. 002/2024 relating to payment services and the activities of payment institutions, without prejudice to any criminal proceedings against the directors and/or statutory auditors.

Article 5: Procedure for Applying Sanctions

In order to ensure progressivity in the application of sanctions and to give payment institutions and any other payment service provider the opportunity to implement appropriate corrective measures, the Central Bank follows the following procedure:

1. upon finding an infraction or violation, the Central Bank sends a letter to the concerned institution/establishment, recommending that it regularize the situation and/or provide explanations regarding it;
2. in the case of an infraction or violation whose regularization must be immediate and where the explanation provided is not deemed satisfactory, the Central Bank issues an injunction with a deadline beyond which a sanction may be imposed;
3. in the case of an infraction or violation whose regularization requires complex corrective measures, the Central Bank may grant the institution/establishment a deadline for their implementation. Otherwise, the Central Bank issues an injunction with a deadline beyond which a sanction may be imposed;
4. in the case of an infraction or violation involving a Director, Administrator, or Statutory Auditor, the same procedure is applied: a request for explanations followed by an injunction serving as a final warning is issued before imposing the sanction.

Notwithstanding the above procedure, for cases deemed serious, the Central Bank may directly apply one or the other sanction provided for in the matrix.

Article 6: Payment of Penalties

In the event of pecuniary penalties or sanctions, the corresponding sums are paid immediately, by automatic debit, from the account of the institution/establishment concerned held in the books of the Central Bank or paid by the establishment into the account opened at the Central Bank for this purpose.

Article 7: Entry into Force

This circular replaces Circular No. 01/EP/19 and enters into force on the day of its publication in the Official Bulletin of Burundi and on the website of the Bank of the Republic of Burundi.

Done in Bujumbura, on September 20, 2024

Edouard Normand BIGENDAKO Governor.

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ANNEX TO CIRCULAR N° 006/SP/2024 RELATING TO THE SANCTION MATRIX APPLICABLE TO PAYMENT INSTITUTIONS AND ANY OTHER PAYMENT SERVICE PROVIDER

N°	I. Infractions relating to operating conditions	References to Legal and Regulatory Provisions	Sanctions
1	Providing payment services without having been previously approved by the Central Bank.	Articles 12 and 71 of Law No. 1/17 of August 22, 2017 governing banking activities	Immediate cessation of illegal activities and/or Pecuniary sanction of 1% of the minimum capital
		Article 3 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	and/or Freezing of accounts in financial institutions
2	Failure to display the approval license	Article 11 of Regulation No. 002/2024 relating to payment services and the activities of payment institutions	Disciplinary sanction against the Director Pecuniary sanction of 1,000,000 BIF
3	Exercise by Payment Institutions of unauthorized operations	Article 9 of Law No. 1/17 of August 22, 2017 governing banking activities	Pecuniary sanction of 1,000,000 BIF. and/or Disciplinary sanction against the Director
		Article 70 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions
4	Providing payment services without own funds exceeding the required minimum capital	Article 43 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Pecuniary sanction of 1% of the amount below the minimum capital and/or

N°	I. Infractions relating to operating conditions	References to Legal and Regulatory Provisions	Sanctions
5	Providing payment services without having previously opened a special account.	Article 15 of Circular 001/SP/2024 relating to the activities of electronic money issuing institutions	Suspension of benefits for the Director and staff until own funds are at the level of the minimum capital and after agreement of the Central Bank. and/or Pecuniary sanction of 0.5% of the minimum capital.
6	Suspension or cessation of payment service provision activities without informing the Central Bank, users at least three (03) months before the cessation of operations nor reimbursing electronic money in circulation.	Article 30 and 46 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Article 14 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Disciplinary sanction against the Director and/or Withdrawal of approval from the Institution.
7	Exceeding a suspension period of 6 months of activities without informing the Central Bank.	Articles 14 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Withdrawal of approval from the Institution.
8	Delay in payment of annual supervision fees.	Art 43, 2°, last dash of Law No. 1/17 of August 22, 2017 governing banking activities Articles 12 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions. Article 41 of Law No. 1/17 of August 22, 2017 governing banking activities	Pecuniary sanction per day of delay: • 20,000 BIF per day of delay during the first fifteen days. • 30,000 BIF per day of delay during the following fifteen days. • 50,000 BIF per day of delay during the following days without exceeding 0.5% of the share capital. and/or Disciplinary sanction against the Director. Pecuniary sanction of 10,000,000 BIF and/or Disciplinary sanction against the Director.
9	Absence of a Statutory Auditor in a Payment Institution.	Article 74 of Law No. 1/17 of August 22, 2017 governing banking activities.

N°	I. Infractions relating to operating conditions	References to Legal and Regulatory Provisions	Sanctions
10	Non-compliance with the term of office of the statutory auditor	Article 83 of Regulation No. 002/2024 relating to payment services and the activities of payment institutions Article 83 of Regulation No. 002/2024 relating to payment services and the activities of payment institutions and Article 4 of Circular No. 004/SP/2024 relating to the approval and exercise of the function of statutory auditor Article 74 of Law No. 1/17 of August 22, 2017 governing banking activities	Revocation of the statutory auditor. and/or Pecuniary sanction of 5,000,000 BIF to the establishment for each additional year.
11	Delay in the request for renewal of the term of office of the statutory auditor	Article 83 of Regulation No. 002/2024 relating to payment services and the activities of payment institutions and Article 4 of Circular No. 004/SP/2024 relating to the approval and exercise of the function of statutory auditor	Revocation of the statutory auditor. and/or Pecuniary sanction of 100,000 BIF to the establishment per month of delay.
12	Statutory Auditors whose domicile is located outside Burundi during the duration of their term without derogation granted by the Central Bank	- Article 83 of Regulation No. 002/2024 relating to payment services and the activities of Administration; - Article 6 of Circular No. 005/SP/2024 relating to the approval and exercise of the function of statutory auditor of payment institutions - Article 74 of Law No. 1/17 of August 22, 2017 governing banking activities	Disciplinary sanction against the President of the Council; and/or Pecuniary sanction of 10,000,000 BIF to the establishment
13	Exceeding a vacancy period of three months for the position of statutory auditor	Article 86 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions; Article 4 of Circular No. 004/2024 relating to the approval and exercise of the function of statutory auditor of payment institutions Article 81 of Law No. 1/17 of August 22, 2017 governing banking activities	Pecuniary sanction of 5,000,000 BIF to the establishment

N°	I. Infractions relating to operating conditions	References to Legal and Regulatory Provisions	Sanctions
14	Refusal to submit to an in-depth external audit	Article 87 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Article 82 of Law No. 1/17 of August 22, 2017 governing banking activities	Disciplinary sanction against the Director and/or Pecuniary sanction of 30,000,000 BIF to the establishment
15	Non-compliance with a three (3) month deadline to return funds held for clients.	Article 17 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Article 46, para 2 of Law No. 1/17 of August 22, 2017 governing banking activities	Freezing of the establishment's accounts opened in financial institutions to compensate victims. and/or Disciplinary sanction against the Director and/or Withdrawal of approval from the Payment Institution.
N°	II. Infractions relating to approval conditions	References to Regulatory Provisions	Sanctions
1	Non-compliance with the mandatory minimum capital	Article 6 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Article 37 of Law No. 1/17 of August 22, 2017 governing banking activities	Withdrawal of approval or dispossessing the payment institution
2	Opening in Burundi a subsidiary or representative office of a foreign payment institution without the approval of the Central Bank	Article 20 of Law No. 1/17 of August 22, 2017 governing banking activities	Closure of the subsidiary or representative office
3	Opening a subsidiary or representative office abroad without the authorization of the Central Bank	Article 21 of Law No. 1/17 of August 22, 2017 governing banking activities	Pecuniary sanction of 5% of the mandatory minimum capital or withdrawal of approval from the payment institution or from the Directors or Administrators and/or Immediate closure of the subsidiary or representative

N°	II. Infractions relating to approval conditions	References to Regulatory Provisions	Sanctions
			office
4	Failure by the payment institution to use the approval license within 12 months after obtaining it	Article 15 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Article 43, 2°, 4th dash of Law No. 1/17 of August 22, 2017 governing banking activities Article 15 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Withdrawal of approval from the payment institution
5	Ceasing to provide payment services for a period of one (01) month	Article 15 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Disciplinary sanction against the Director and/or Pecuniary sanction of 10,000,000 BIF to the establishment
6	The approval criteria are no longer respected by the payment institution	Article 15 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Article 43, 2°, 2nd dash of Law No. 1/17 of August 22, 2017 governing banking activities	Disciplinary sanction against the Director and/or Pecuniary sanction of 10,000,000 BIF to the establishment
7	The activities of the payment institution are of a nature to endanger the stability of the financial system	Article 15 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Withdrawal of approval from the payment institution
8	The foreign payment institution having a branch in Burundi is in liquidation in its country of origin or has been subject to withdrawal of approval in its country of origin	Article 15 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Withdrawal of approval from the payment institution
9	Exercise of the functions of Administrator or Director without having been previously approved by the Central Bank	Article 15 of Law No. 1/17 of August 22, 2017 governing banking activities. Article 21 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions and Articles 5 and 6 of Circular No. 003/SP/2024 relating to the approval of Directors and	Pecuniary sanction of 50,000,000 BIF to the establishment. and/or Disciplinary sanction against the President of the Board of Directors

N°	II. Infractions relating to approval conditions	References to Regulatory Provisions	Sanctions
10	Modification of approval conditions without authorization from the Central Bank	Article 38 of Law No. 1/17 of August 22, 2017 governing banking activities. Article 13 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Pecuniary sanction ranging from 10,000,000 to 50,000,000 BIF to the establishment according to the severity and/or Disciplinary sanction against the Director.
11	Issuing electronic money without prior deposit of a corresponding amount in cash	Article 8 of Circular No. 001/SP/2024 relating to the activities of payment institutions issuing electronic money	Pecuniary sanction of 100% of the amount issued without counter-value and/or Disciplinary sanction against the Director
12	Granting digital credits.	Article 8 of Circular No. 001/SP/2024 relating to the activities of payment institutions issuing electronic money	Immediate suspension of credit granting activities. and/or Disciplinary sanction against the Director and/or Pecuniary sanction of 0.5% of the minimum capital. Pecuniary sanction of 10,000,000 BIF
13	Collection of public deposits by electronic money issuing institutions	Article 8 of Circular 001/SP/2024 relating to the activities of payment institutions issuing electronic money	Disciplinary sanction against the Director and/or Pecuniary sanctions of 5,000,000 BIF to the establishment and/or Disciplinary sanction against the President of the Board of Directors
14	Discovery of false information and elements provided to the Central Bank during the approval request	Article 43 of Law No. 1/17 of August 22, 2017 governing banking activities	Withdrawal of approval and/or Pecuniary sanction of 10,000,000 BIF. and/or Disciplinary sanction against the Director
15	Non-compliance with the principle of protection of funds received from holders of electronic money	Article 47 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Article 25 of Circular No. 001/SP/2024 relating to the activities of payment institutions issuing electronic money	Obligation to regularize the situation within a period not exceeding three months.

N°	II. Infractions relating to approval conditions	References to Regulatory Provisions	Sanctions
16	Exercising the function of Statutory Auditor without the approval of the Central Bank	Article 74, para 4 of Law No. 1/17 of August 22, 2017 governing banking activities Article 2 of Circular No. 004/SP/2024 relating to the approval and exercise of the function of statutory auditor	Pecuniary sanction of 0.5% of the mandatory minimum capital. and/or Cancellation of the contract between the payment institution and the Statutory Auditor and/or Withdrawal of approval from the Directors and/or Administrators.
N°	III. Infractions relating to conditions for obtaining approval and non-objection	References to Regulatory Provisions	Sanctions
1	Providing mobile payment services to its clients without requesting the approval of the Central Bank.	Article 26 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions and Article 12 of Circular No. 001/SP/2024 relating to the activities of electronic money issuing institutions	Immediate cessation of illegal activities or compliance with regulations. Pecuniary sanction of 10,000,000 BIF. and/or Disciplinary sanction against the Director
2	Modification of the constituent elements of the approval request file without prior authorization from the Central Bank.	Article 32 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Cancellation of decisions taken and/or Pecuniary sanction of 10,000,000 BIF before continuing the activity and/or Disciplinary sanction against the Director
3	Suspension of mobile payment service provision activities without informing the Central Bank.	Article 34 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions	Pecuniary sanction of 10,000,000 BIF. and/or Disciplinary sanction against the Director
4	Suspension of approved mobile payment service provision activities without informing the	Article 34 of Regulation 002/2024 relating to payment services and the activities of Payment Institutions	Pecuniary sanction of 10,000,000 BIF. and/or Disciplinary sanction against the Director

N°	III. Infractions relating to conditions for obtaining approval and non-objection	References to Regulatory Provisions	Sanctions
5	Suspension of approved payment service provision activities without reimbursing electronic money in circulation.	Article 34 of Regulation 002/2024 relating to payment services and the activities of Payment Institutions	Freezing of accounts opened in the name of the establishment in financial institutions to compensate victims. and/or Disciplinary sanction against the Director Withdrawal of approval.
6	Exceeding a suspension period of six (6) months of approved activities.	Articles 34 of Regulation 002/2024 relating to payment services and the activities of Payment Institutions	Immediate cessation of illegal activities or compliance with regulations. and/or Pecuniary sanction of 5,000,000 BIF.
7	Offering innovative payment services, using electronic money with restricted acceptance without requiring a non-objection from the Central Bank	Article 4 of Regulation No. 002/2024 relating to payment services and the activities of Payment Institutions Ar

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