Decision on the Verification of Authenticity and Suitability of Cash and its Return into Circulation

1 / 35 Central Bank of Bosnia and Herzegovina

Pursuant to Article 2, paragraph 3, item h), Article 7, item b), and Articles 39, 43, 44, 46, 47, and 70 of the Law on the Central Bank of Bosnia and Herzegovina ("Official Gazette of BiH", nos. 1/97, 29/02, 8/03, 13/03, 14/03, 09/05, 76/06, and 32/07), the Governing Board of the Central Bank of Bosnia and Herzegovina, at its 1st session held on January 29, 2026, adopts

DECISION on the verification of authenticity and suitability of cash and its return into circulation

PART ONE - GENERAL PROVISIONS

Article 1. (Subject and Purpose) (1) This Decision regulates the procedure for verifying the authenticity and suitability of cash, the obligated entities required to perform verification, types of verification, devices used in the verification procedure, the procedure for returning cash into circulation, and the method of control by the Central Bank of Bosnia and Herzegovina (hereinafter: Central Bank). (2) The purpose of the Decision is to protect the integrity of cash by prescribing the obligation to verify the authenticity and suitability of cash in circulation in Bosnia and Herzegovina.

Article 2. (Alignment with European Union Standards) This Decision aligns the procedure for verifying the authenticity and suitability of banknotes and coins of the convertible mark with European Union standards, specifically the method and procedure for verifying the authenticity of euro banknotes and euro coins.

Article 3. (Terms) The terms used in this Decision have the following meanings: a) cash refers to banknotes and coins of the convertible mark as legal tender in Bosnia and Herzegovina, b) suspicious cash refers to banknotes and coins whose authenticity cannot be clearly established by manual handling or device processing, or for which there are sufficient grounds to suspect counterfeiting, c) counterfeit cash refers to banknotes and coins denominated in convertible marks that partially or wholly resemble banknotes or coins of the convertible mark, but for which technical analysis has determined to be partially or wholly unauthorizedly produced or altered. Counterfeit cash also includes banknotes and coins that have ceased to be legal tender and are partially or wholly unauthorizedly produced or altered, d) unsuitable cash refers to banknotes and coins defined as such by the Decision on Handling Unsuitable Banknotes and Coins of the Convertible Mark and Damaged Banknotes of Effective Foreign Currency ("Official Gazette of BiH", no. 88/24),

e) suitable cash refers to banknotes and coins that have been verified in the authenticity and suitability procedure and classified as correct and fit for return into circulation, f) qualified employee refers to an employee of the obligated entity who has undergone training at the Central Bank of Bosnia and Herzegovina and obtained the status of an instructor for the procedure of verifying the authenticity of banknotes and coins, or an employee of the obligated entity who has undergone training by an instructor, g) authenticity verification is the procedure for checking cash to separate suspicious specimens, and h) cash processing is the procedure of counting and verifying the authenticity and suitability of banknotes and coins, manually and/or by device.

PART TWO - OBLIGATED ENTITIES AND TYPES OF AUTHENTICITY AND SUITABILITY VERIFICATION OF CASH

Article 4. (Obligated Entities for Verification) (1) Obligated entities required to perform verification of the authenticity and suitability of cash, by processing banknotes and coins manually and/or via devices, are commercial banks with headquarters in Bosnia and Herzegovina, other payment service providers in the conduct of payment transactions, and all other legal entities participating in the processing of banknotes and coins and their distribution to the public, including institutions whose activity consists of the exchange of banknotes and coins of different currencies, such as authorized exchange offices. (2) The obligated entities from paragraph (1) of this Article are required to ensure that cash received by them and returned to circulation is verified in the authenticity and suitability verification procedure. (3) Obligated entities are required to establish internal acts determining procedures for handling in accordance with this Decision.

Article 5. (Types of Verification) (1) Verification of the authenticity and suitability of cash is performed: a) manually, by qualified employees of the obligated entity, and b) by means of devices. (2) Verification of the authenticity and suitability of cash implies the procedure of confirming, manually and/or by device, that banknotes and coins are authentic and suitable for circulation. (3) Manual verification of the authenticity of banknotes and coins is conducted by visual inspection without the use of additional aids, according to the minimum standards for manual verification of the authenticity and suitability of banknotes for circulation (Annex 2) and criteria for manual verification of the authenticity and suitability of coins (Annex 5). (4) Obligated entities are required to ensure that manual verification of the authenticity of banknotes and coins can only be performed by qualified employees who have undergone training at the Central Bank. (5) Verification of the authenticity and suitability of banknotes by device is conducted in accordance with the minimum standards for automatic verification of the suitability of banknotes for circulation (Annex 1) and in such a way that banknotes are classified and handled in accordance with Annex 4a (Classification and sorting of banknotes by devices used by clients of the obligated entity) and Annex 4b (Classification and sorting of banknotes by devices handled by employees of the obligated entity).

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PART THREE - VERIFICATION OF AUTHENTICITY AND SUITABILITY OF KM BANKNOTES FOR CIRCULATION

Article 6. (Method of Banknote Verification) (1) Verification of the authenticity and suitability of KM banknotes is performed: a) manually by a qualified employee of the obligated entity and/or, b) automatically via devices for processing banknotes that have been successfully tested by the Central Bank. (2) Verification of the authenticity and suitability of banknotes is the confirmation that banknotes are authentic and suitable for circulation.

Article 7. (Minimum Standards for Verification of Authenticity and Suitability of Banknotes) (1) The obligated entity performs manual verification of banknotes from Article 6, paragraph (1), item a) of this Decision in accordance with the minimum standards for manual verification of the authenticity and suitability of banknotes for circulation (Annex 2). (2) The obligated entity performs automatic verification via devices for processing banknotes from Article 6, paragraph (1), item b) of this Decision in accordance with the minimum standards for automatic verification of the suitability of banknotes for circulation (Annex 1).

Article 8. (Categories of Banknote Processing Devices) (1) Devices for processing banknotes that have been successfully tested by the Central Bank are classified into two categories: a) devices handled by clients, b) devices handled by qualified employees of the obligated entity. (2) Devices handled by clients from paragraph (1), item a) of this Article are divided into subcategories: a) cash deposit devices (CIM), b) cash deposit/withdrawal devices with processing (CRM), c) cash deposit/withdrawal devices (CCM), d) cash withdrawal devices (COM), and e) coin withdrawal devices (CDM). (3) Devices handled by qualified employees of the obligated entity from paragraph (1), item b) of this Article are divided into subcategories: a) banknote processing devices (BPM), b) banknote authenticity verification devices (BAM), c) devices assisting the cashier in processing and stacking banknotes (TARM), d) devices assisting the cashier in stacking banknotes (TAM). (4) The general technical requirements that devices from paragraph (1) of this Article must meet are found in Annex 3 of this Decision. (5) Devices from paragraph (1) of this Article may be put into operation by the obligated entity only if they have been successfully tested by the Central Bank and included in the List of Successfully Tested Devices.

Article 9. (Classification of Banknotes via Devices) (1) Banknotes verified via devices handled by clients are classified and handled in accordance with Annex 4a of this Decision. (2) Banknotes verified via devices handled by employees of the obligated entity are classified and handled in accordance with Annex 4b of this Decision.

PART FOUR - VERIFICATION OF AUTHENTICITY AND SUITABILITY OF KM COINS FOR CIRCULATION

Article 10. (Method of Coin Verification) (1) Verification of the authenticity and suitability of KM coins is performed: a) manually by a qualified employee at the obligated entity and/or, b) automatically via coin handling devices that have been successfully tested by the Central Bank. (2) Verification of the authenticity and suitability of coins is the confirmation that the coins are authentic and suitable for circulation.

Article 11. (Minimum Standards for Manual Verification of Coins) The obligated entity performs manual verification of the authenticity and suitability of coins in accordance with the criteria for manual verification of the authenticity and suitability of coins in Annex 5 of this Decision.

Article 12. (Categories of Coin Handling Devices) (1) Devices for processing coins that have been successfully tested by the Central Bank are classified into two categories: a) devices handled by clients, and b) devices handled by employees of the obligated entity. (2) Devices for processing coins handled by clients from paragraph (1), item a) of this Article are divided into subcategories: a) coin deposit devices that reject suspicious coins, b) coin deposit devices that retain suspicious coins, c) coin redistribution devices. (3) Devices for processing coins handled by employees of the obligated entity from paragraph (1), item b) of this Article are divided into subcategories: a) coin sorting devices, b) coin authenticity verification devices. (4) The general technical requirements that devices from paragraph (1) of this Article must meet and their categorization are listed in Annex 6 of this Decision. (5) Devices from paragraph (1) of this Article may be put into operation by the obligated entity only if they have been successfully tested by the Central Bank and included in the List of Successfully Tested Devices.

PART FIVE - TESTING OF DEVICES FOR VERIFICATION OF AUTHENTICITY AND SUITABILITY OF BANKNOTES AND COINS

Article 13. (Verification of Operation of Cash Processing Devices) (1) The Central Bank conducts verification of the operation of cash processing devices based on a request (form in Annex 7) signed by the responsible person of the applicant and certified with a stamp. (2) A request for verification of the operation of devices from paragraph (1) of this Article may be submitted by the device manufacturer or the manufacturer's representative (distributor) or the obligated entity, along with the technical characteristics of the device. (3) Verification of the operation of cash processing devices from paragraph (1) of this Article includes verification of the method of operation in determining the authenticity of cash used to test the detector system installed in the device, or depending on the type of device, the Central Bank examines: a) the device's ability to determine the authenticity of cash, b) the device's ability to determine whether cash is suitable for circulation, c) the device's ability to physically sort verified cash into appropriate compartments, d) the device's ability to determine the accuracy of the quantity of cash, e) the device's ability to record data about the client who performed the transaction. (4) The Central Bank performs verification of the operation of cash processing devices using a test kit consisting of representative types of known counterfeits and types of suitable and unsuitable cash.

Article 14. (Report on Verification of Device Operation) (1) After the completion of the verification from Article 13 of this Decision, the Central Bank prepares a Report on Successful Verification of Device Operation and delivers it to the applicant within 15 days from the date of the verification of the device's operation. (2) The Report from paragraph (1) of this Article is valid for one year from the date of issuance of the report. (3) No later than one month before the expiration of the validity period of the report from paragraph (2) of this Article, the device manufacturer or authorized representative (distributor) of the device manufacturer or the obligated entity is obliged to submit a request for the issuance of a new report on successful verification of the device's operation. (4) Exceptionally from paragraphs (1) and (2) of this Article, the device manufacturer or authorized representative (distributor) of the device manufacturer or the obligated entity is obliged to immediately submit a request for successful verification of the device's operation in cases: a) after every upgrade or update of the device's hardware and/or software, b) in the event of the appearance of a new type of counterfeit cash, c) when the Central Bank puts into circulation a new issue of banknotes and/or coins.

Article 15. (List of Successfully Tested Devices) (1) The Central Bank establishes the List of Successfully Tested Devices and publishes it on its website. (2) The List from paragraph (1) of this Article contains the following data: device type, name of manufacturer/representative, device name, designation (hardware/software version), denominations of cash the device can process, and the date the device type was published on the list. (3) The Central Bank regularly enters all changes to the data from paragraph (2) of this Article. (4) Exceptionally, the device manufacturer, authorized representative (distributor) of the device manufacturer, or obligated entity for devices, which have the same hardware, software, and other components as devices on the List of Successfully Tested Devices, does not require verification in accordance with Article 14 of this Decision but submits a Declaration of Conformity for the purpose of inclusion on the list from this Article. (5) The Central Bank determines the content of the Declaration of Conformity from paragraph (4) of this Article.

PART SIX - HANDLING OF CASH AFTER VERIFICATION AND RETURN OF CASH INTO CIRCULATION

Article 16. (Obligations to Verify Authenticity and Suitability of Cash) (1) Obligated entities are required to ensure that banknotes and coins received through the conduct of business activities and returned to circulation are previously, manually and/or by device, verified through the procedure of verification of authenticity and suitability of cash for circulation. (2) Cash taken over by the obligated entity from the Central Bank is not verified through the procedure of verification of authenticity and suitability of cash, but the obligated entity is required to perform a control count of the taken-over cash.

Article 17. (Classification of Banknotes and Coins After Verification) (1) In the procedure of verification of authenticity and suitability, banknotes and coins may be classified as: a) banknotes and coins suitable for circulation, b) banknotes and coins unsuitable for circulation, c) suspicious and counterfeit banknotes and coins. (2) Obligated entities return banknotes and coins from paragraph (1), item a) of this Article into circulation. (3) Handling of banknotes and coins from paragraph (1), items b) and c) of this Article is carried out in accordance with regulations of the Central Bank governing the handling of unsuitable, suspicious, and counterfeit cash.

Article 18. (Return of Suitable Banknotes and Coins into Circulation) (1) Banknotes and coins may be returned into circulation only if it has been established in the verification procedure that they are authentic and suitable for circulation. (2) Banknotes and coins may be returned into circulation by devices handled by clients only if the verification of their authenticity and suitability was performed by a type of device for processing banknotes and coins that has been successfully tested by the Central Bank and if the banknotes and coins are classified as authentic and suitable for circulation. (3) Manual verification of the authenticity and suitability of banknotes and coins can only be performed by qualified employees of the obligated entity who have undergone training. (4) Banknotes and coins that have been manually verified can be paid out exclusively via the cash register (counter) of the obligated entity. (5) Exceptionally from paragraph (4) of this Article, the return into circulation of banknotes and coins, whose authenticity and suitability have been manually verified by a qualified employee of the obligated entity, is permitted using devices handled by clients or via withdrawal devices in remote branches of the obligated entity with very low volume of cash transactions. (6) The quantity of banknotes and coins that can be returned into circulation in accordance with paragraph (5) of this Article is determined individually by the Central Bank for each obligated entity, and cannot exceed 5% of the total quantity of banknotes and coins that the obligated entity distributes annually throughout its entire business network via devices handled by clients. (7) In the event of an emergency that results in a significant reduction in the stock of banknotes and/or coins, a qualified employee of the obligated entity may, temporarily and based on an obtained assessment by the Central Bank that it is an emergency, perform manual verification of the suitability of banknotes and/or coins to be returned into circulation via devices handled by clients. (8) Banknotes and coins for which the authenticity and suitability for return into circulation have not been verified cannot be paid out into circulation by the obligated entity.

PART SEVEN - TRAINING FOR THE PURPOSES OF MANUAL VERIFICATION OF AUTHENTICITY AND SUITABILITY OF BANKNOTES AND COINS

Article 19. (Training for Performing Manual Verification of Authenticity and Suitability) (1) The Central Bank conducts training to qualify employees of obligated entities to perform manual verification of the authenticity and suitability of banknotes and coins. (2) Training is organized and conducted in the manner determined by the Central Bank. (3) The Central Bank determines individually for each obligated entity the number of employees who will attend training, taking into account the total number of employees of each obligated entity who perform manual processing of banknotes and coins.

Article 20. (Instructor for Training) (1) An employee of the obligated entity, after completing training and successfully passing the test, obtains the status of an instructor for conducting training at the obligated entity. (2) The Central Bank issues a certificate to the instructor from paragraph (1) of this Article for a period of four years. (3) No later than 60 days before the expiration of the period from paragraph (2) of this Article, the obligated entity is required to submit a request to the Central Bank for retraining of the instructor. (4) The Central Bank may, in the case of the issuance of new banknotes and coins, the appearance of new counterfeits, and other newly arising circumstances, subsequently organize additional training for instructors. (5) Instructors are required to conduct training at the obligated entity where they are employed for employees who perform manual processing of banknotes and coins and to submit periodic reports to the Central Bank. (6) The Central Bank maintains a register of instructors and employees of obligated entities trained by instructors. (7) If an instructor ceases to perform cash-related duties or terminates the employment relationship with the obligated entity, the obligated entity is required to notify the Central Bank.

Article 21. (Invalidation of Certificate of Completed Instructor Training) The Central Bank may declare the certificate from Article 20, paragraph (2) of this Article invalid, in the case: a) if the instructor does not conduct training or does not submit reports to the Central Bank about the conducted training, b) if the instructor has not undergone additional training, and according to the assessment of the Central Bank, additional training significantly affects the instructor's ability to conduct further training, and c) if the instructor ceases to perform cash-related duties or terminates the employment relationship with the obligated entity where they are employed.

PART EIGHT - CONTROL AND DATA COLLECTION

Article 22. (Control of Obligated Entities) The Central Bank performs control of the handling of obligated entities in accordance with this Decision.

Article 23. (Reporting) (1) For the purpose of monitoring the handling of cash by obligated entities, in accordance with this Decision, and overseeing the movement of the cash cycle, the Central Bank collects data from obligated entities in written or electronic form. (2) Obligated entities are required to submit data from Annex 8 of this Decision to the Central Bank annually.

PART NINE - TRANSITIONAL AND FINAL PROVISIONS

Article 24. (Adaptation Plan) (1) Obligated entities are required to align their business operations with the provisions of this Decision by January 1, 2027. (2) In the period from the entry into force of this Decision until the deadline for alignment specified in paragraph (1) of this Article, obligated entities will apply this Decision to the extent that they are qualified, in accordance with the implementation schedule of this Decision established in the Adaptation Plan from paragraph (3) of this Article. (3) Obligated entities are required to submit an Adaptation Plan for the implementation of this Decision to the Central Bank within two months from the date of entry into force of this Decision, which must contain at least the following: a) a list of business units dealing with cash, b) the volume of processing of banknotes and coins intended for return into circulation during the year, by business units, in accordance with this Decision, c) the organization of processing of the planned volume of banknotes and coins and the adoption of procedures for processing, in accordance with this Decision, d) the current status of the number and types of installed banknote and coin processing devices and the schedule of installed devices by location, as well as the number of bank officials who work or will work with cash, e) the plan and schedule for the purchase and installation of devices by location in the preparatory period, f) the total planned capacity of all installed banknote and coin processing devices after the end of the preparatory period (capacity of installed devices increased by the capacity of devices planned to be installed by the end of the preparatory period), elaborated individually for each type of device, and g) a list of business units where manual verification of suitability and authenticity of banknotes will be performed exceptionally in accordance with the conditions established in the Decision and the estimated amount of small transactions in one day. (4) If the Central Bank determines that the submitted Adaptation Plan for the implementation of this Decision does not contain all the necessary data specified in paragraph (3) of this Article or if the data are not aligned with this Decision, the obligated entity is required to supplement and elaborate the Adaptation Plan upon the request of the Central Bank. (5) The Central Bank is required to keep data received based on this Decision as business secrets, and data relating to individual obligated entities cannot be provided to third parties. (6) The Central Bank will publish on its website the technical procedures for verification of device operation, which are submitted in accordance with Article 13 of this Decision, within six months after the entry into force of this Decision. (7) The Central Bank will, within six months from the date of entry into force of this Decision, prepare a plan for training employees at obligated entities and begin training in accordance with Article 19 of this Decision.

Article 25. (Fees) The Central Bank may prescribe fees for testing the operation of banknote processing devices, coin processing, and for training employees of obligated entities.

Article 26. (Annexes) Annex 1, Annex 2, Annex 3, Annex 4a, Annex 4b, Annex 5, Annex 6, Annex 7, and Annex 8 are an integral part of this Decision.

Article 27. (Implementation of the Decision) The Governor of the Central Bank is authorized to adopt regulations necessary for the implementation of this Decision.

Article 28. (Entry into Force) (1) This Decision enters into force on the eighth day from the date of publication in the "Official Gazette of BiH". (2) This Decision is also published in the "Official Gazette of the Federation of BiH", "Official Gazette of the Republic of Srpska", and "Official Gazette of the Brčko District of Bosnia and Herzegovina".

Chairwoman No.: UV-122-02-1-242-17/26 of the Governing Board of the Central Bank of Bosnia and Herzegovina Sarajevo, January 29, 2026

GOVERNOR dr. Jasmina Selimović

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Annex 1 MINIMUM STANDARDS FOR AUTOMATIC VERIFICATION OF SUITABILITY OF BANKNOTES FOR CIRCULATION

This Annex establishes the minimum standards for the automatic verification of physical characteristics of banknotes for circulation by banknote processing devices.

Banknotes that do not meet the mandatory criteria for automatic verification of suitability of banknotes for circulation established in this Annex are considered unsuitable for circulation.

In the process of machine sorting of banknotes, a deviation of 5% is acceptable, meaning that up to 5% of the total quantity of machine-sorted banknotes that do not meet the established criteria from this Annex may be sorted as...