Conditions and Modalities for the Exercise of Activities of Electronic Money Issuers

CENTRAL BANK OF DJIBOUTI

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INSTRUCTION NO. 2017-01
CONDITIONS AND MODALITIES FOR THE EXERCISE OF ACTIVITIES OF ELECTRONIC MONEY ISSUERS

The Governor of the Central Bank of Djibouti,

Having regard to Law No. 118/AN/11/6ème L of January 22, 2011, establishing the Statutes of the Central Bank;

Having regard to Law No. 118/AN/15/7ème L of July 16, 2016, establishing a National Payment System, its Regulation and Supervision;

Having regard to Law No. 119/AN/15/7ème L of July 16, 2016, establishing a credit information system;

Having regard to Law No. 119/AN/11/6ème L of January 22, 2011, relating to the establishment and supervision of credit institutions and financial auxiliaries;

Having regard to Law No. 110/AN/11/6ème L of May 25, 2011, relating to the fight against terrorist financing;

Having regard to Law No. 116/AN/ 11/6ème L of January 22, 2011, relating to the establishment of Islamic Banks in Djibouti;

Having regard to Law No. 196/AN/02/4ème L on money laundering, confiscation and international cooperation in relation to proceeds of crime;

Having regard to Law No. 112/AN/11 6èmeL of May 25, 2011, supplementing Law No. 196/AN/02/4ème L on money laundering, confiscation and international cooperation in relation to proceeds of crime;

Having regard to Book 3 of the Commercial Code relating to Company Rights;

Having regard to Decree No. 2013-009/PRE of January 29, 2013, appointing the Acting Governor of the Central Bank of Djibouti.

Orders:

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PRELIMINARY CHAPTER: DEFINITIONS

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

Acceptor: the supplier of goods and services accepting electronic money as payment.

Supervisory Authority: the Central Bank of Djibouti.

Holder: the person who, pursuant to a contract concluded with an issuing institution, holds electronic money.

Prudential Provisions: the set of rules defined within the framework of the prudential supervision of electronic money issuing institutions.

Distributor: the legal or natural person registered in the Trade and Companies Register offering the public, pursuant to a contract with the issuing institution, a service for the distribution of electronic money.

Distribution of electronic money: cash withdrawal services, loading and reloading against the handover of cash or book money, payment and money transfer services linked to electronic money.

Issuance of electronic money: the issuance of electronic value units in exchange for received funds.

Electronic money institution: any legal person, other than credit institutions, authorized to issue payment instruments in the form of electronic money and whose activities are limited to:

• The issuance of electronic money;
• The distribution of electronic money.

Issuing institution: credit institutions and electronic money institutions.

Electronic money: a monetary value representing a claim on the issuing institution which is:

• stored in electronic form, including magnetic form;
• issued without delay against the handover of funds in an amount not less than the monetary value issued;
• and accepted as a means of payment by natural or legal persons other than the issuing institution.

Technical operator: the entity that provides an issuing institution with technical services as well as the hardware and software conditions for processing operations related to electronic money, without itself being an issuer of electronic money.

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Sub-distributor: the legal or natural person or decentralized financial system, offering the public, pursuant to a contract with the distributor, under the responsibility of the issuer, a service for the distribution of electronic money.

CHAPTER I: CONDITIONS FOR GRANTING A LICENSE OR AUTHORIZATION TO CARRY OUT ELECTRONIC MONEY ISSUANCE ACTIVITIES

SECTION 1: OBLIGATION TO OBTAIN A PRIOR LICENSE OR AUTHORIZATION

Article 1: Except for credit institutions authorized by the law regulating banking, no structure or institution may carry out electronic money issuance activities without having duly obtained a license previously issued by the Central Bank.

Article 2: Electronic money institutions, which are constituted by any legal person, other than credit institutions, wishing to issue payment instruments in the form of electronic money and whose activities are limited to — the issuance of electronic money and the distribution of electronic money — must be approved by the Central Bank before commencing their electronic money issuance activities.

Article 3: Credit institutions are required to inform the Central Bank in order to be authorized, at least two months before the start of their electronic money issuance activities or the commercialization to the general public, of any new service related to electronic money.

SECTION 2: LEGAL FORM AND CORPORATE OBJECT OF ELECTRONIC MONEY INSTITUTIONS

Article 4: Electronic money institutions established in the Republic of Djibouti are constituted as Public Limited Companies or Multi-member Limited Liability Companies. The Central Bank reserves the right to assess the adequacy of the institution's legal form to the activities it intends to carry out.

Article 5: Except for credit institutions, the issuance of electronic money may only be carried out by a legal person whose corporate object exclusively covers this activity.

SECTION 3: REGISTERED OFFICE

Article 6: Electronic money institutions must have their registered office on the territory of the Republic of Djibouti.

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SECTION 4: REQUIREMENTS REGARDING MINIMUM SHARE CAPITAL OR MINIMUM DEPOSIT

Article 7: The minimum share capital of an electronic money institution is one hundred million FDJ. It must be fully subscribed and paid in cash in an account held at the Central Bank, before the approval is granted.

Article 8: The Central Bank may, based on its assessment of the risk profile, require an increase in the share capital of an electronic money institution to bring it into line with its volume of activities.

SECTION 5: APPLICATION PROCEDURES FOR A LICENSE OR AUTHORIZATION TO CARRY OUT ELECTRONIC MONEY ISSUANCE ACTIVITIES

Article 9: The application file for approval or authorization is submitted for processing to the Central Bank. The Central Bank has a period of two months to respond from the receipt of the complete file.

Article 10: The applicant is obliged to submit, to the Central Bank, a complete file comprising the documents listed in Annex I accompanied by the electronic version of said documents. The documents and information constituting the application file for the license or authorization are presented according to the template provided in Annex II of this Instruction.
Any incomplete application shall be deemed inadmissible. In the event of a refusal, the Central Bank of Djibouti shall provide reasons for its decision.

Article 11: For the purposes of processing the application for a license or authorization, the Central Bank may:

• request any additional information or elements it deems necessary;
• conduct on-site visits to ensure the relevance of the information provided;
• summon the applicant for a hearing.

CHAPTER II: GENERAL MODALITIES AND CONDITIONS FOR THE EXERCISE OF ELECTRONIC MONEY ISSUANCE ACTIVITIES

SECTION 6: SCOPE

Article 12: The provisions of this chapter apply to all electronic money issuing institutions, notably credit institutions and approved electronic money institutions.

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SECTION 7: NATURE OR TYPOLOGY OF ACTIVITIES OF ELECTRONIC MONEY ISSUING INSTITUTIONS

Article 13: Electronic money issuing institutions, approved or authorized by the Central Bank, may provide services related to the issuance and distribution of electronic money, as well as data storage on electronic media for the account of other legal persons.

Article 14: In the course of their activities, the concerned institutions must comply with the prudential requirements defined by the Central Bank.

SECTION 8: USE OF DISTRIBUTOR SERVICES

Article 15: The electronic money issuing institution is authorized to use, within the limits of its approval or authorization to operate, the services of one or more legal or natural persons, referred to as distributors, for the commercialization of services related, notably:

• to the subscription of usage contracts with clients;
• to the loading of electronic money units;
• to cash withdrawal and reimbursement operations for electronic money units;
• to payment operations.

Article 16: Distributors provide the necessary assistance to the issuing institution to ensure transaction traceability. They are required to maintain a journal of routine operations recording identified frauds and customer complaints.

Article 17: Electronic money issuing institutions must communicate to the Central Bank an updated list of their distributors as well as the measures put in place for risk management, notably governance and liquidity risks within their distribution network.

Article 18: The distribution contract concluded between the electronic money issuing institution and its distributor must specify the respective obligations of each party.

Article 19: The distributor may in no case be required to limit its activities to a single electronic money issuing institution. The distribution network may be organized around distributors and sub-distributors.

Article 20: Distributors may notably be non-banking financial institutions, notably Post Offices and insurance companies, non-financial private enterprises or any other person registered in the Trade and Companies Register possessing sufficient liquidity to meet the needs of holders of electronic money units.

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Article 21: Sub-distributors are natural or legal persons, registered in the Trade and Companies Register or any other equivalent register, who have received a mandate from one or more principal distributors responsible for supplying them with electronic money and liquidity, for the purpose of carrying out one or more operations referred to in Article 15.

SECTION 9: LIABILITIES OF ISSUING INSTITUTIONS TOWARDS DISTRIBUTORS

Article 22: Electronic money issuing institutions ensure that distributors provide the public, by any appropriate means, notably through visible and legible posting, information relating to the corporate name, logo, trade name, address of the electronic money issuing institution as well as the tariff conditions.

Article 23: Issuing institutions ensure that principal distributors and sub-distributors apply the security and vigilance requirements defined within the framework of their commercial relationship, including measures related to the fight against money laundering and terrorist financing.

Article 24: Notwithstanding any contrary clause, issuing institutions remain liable, towards their clients and third parties, for operations carried out by their distributors, within the framework of the provision of services for which they have been mandated. In this regard, they are responsible for the integrity, reliability, security, confidentiality and traceability of transactions carried out by each of their distributors.

CHAPTER III - SPECIFIC MODALITIES AND CONDITIONS APPLICABLE TO ELECTRONIC MONEY INSTITUTIONS

SECTION 10: SCOPE

Article 25: The provisions of this chapter apply to electronic money institutions, excluding other electronic money issuing institutions, namely duly authorized credit institutions.

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SECTION 11: GOVERNANCE

Article 26: The management of the electronic money institution must enjoy impeccable integrity. In this regard, any person who has been finally convicted for offenses against property or for common law crimes, shall not:

• be a member of an administrative body of an electronic money institution, either directly or through an intermediary;
• administer, direct, manage or control an electronic money institution or any of its agencies, subsidiaries or branches;
• create an electronic money institution.

Article 27: The institution is required to inform the Central Bank of any modification in its governance.

Article 28: Responsible managers must hold a higher education diploma and demonstrate at least 3 years of professional experience. They must also possess the necessary skills for the sound and prudent management of their institution. Responsible managers must have written and oral mastery of one of the official languages of the Republic of Djibouti.

Article 29: The Central Bank may suspend all or part of the activity or withdraw the approval or authorization to issue electronic money, if it has reason to consider that the managers no longer possess the necessary qualities to guarantee the sound and prudent management of the electronic money institution.

Article 30: Any person involved in the administration, control, direction, management or operation of the institution is bound by professional secrecy. They are prohibited from using confidential information known to them in the course of their activity to carry out operations directly or indirectly for their own account or to benefit other persons.

Article 31: Professional secrecy may not be invoked against the Central Bank or the judicial authority acting within the framework of a criminal procedure.

SECTION 12: MINIMUM OWN FUNDS REQUIREMENTS

Article 32: The own funds of an electronic money institution must, at all times, be greater than or at least equal to the minimum share capital amount of one hundred million FDJ.

Article 33: The own funds of any electronic money institution must, at all times, be equal to or greater than three percent of its outstanding volume of issued electronic money.

SECTION 13: HOLDINGS IN OTHER ENTITIES

Article 34: The electronic money institution may only hold holdings in companies that carry out activities related to the electronic money it issues or distributes.

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Article 35: Any operation to acquire, extend or transfer a direct or indirect holding in an electronic money institution is subject to the prior authorization of the Central Bank. Any merger-absorption, demerger or early dissolution operation is also subject to the prior authorization of the Central Bank.

SECTION 14: ACCOUNTING OF OPERATIONS

Article 36: Electronic money institutions must keep accounts of all operations carried out in accordance with the accounting standards in force in the Republic of Djibouti.

Article 37: These accounts must be certified as regular and fair by one or more statutory auditors and must be finalized on December 31 of the preceding year.

Article 38: The annual accounts must be published in a legal announcements journal no later than June 30 of the following year.

SECTION 15: INTERNAL CONTROL SYSTEM

Article 39: Electronic money institutions must be managed in a sound and prudent manner, in order to guarantee their solvency and financial equilibrium.

Article 40: Electronic money institutions are notably obliged to have manuals of accounting, administrative and financial procedures as well as adequate internal control procedures.

Article 41: The control system must notably ensure:

• the reliability of accounting books and documents;
• the prevention and detection of risks;
• compliance with legislative and regulatory provisions.

Article 42: Electronic money institutions must ensure that their distributors are equipped with an effective internal control system, adapted to their organization, the nature and volume of their activities as well as the risks to which they are exposed.

Article 43: Managers are responsible for the proper functioning of the internal control system within electronic money institutions and with their distributors. In this regard, they must put in place a risk management system, in order to identify and control all significant risks related to the requirements of their activities. They must report any fraud immediately upon its occurrence through their internal control system to the Central Bank of Djibouti.