Instruction No. 002/2017-CSBF on the Approval of Electronic Money Institutions

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BANKY FOIBEN'I MADAGASIKARA

COMMISSION DE SUPERVISION BANCAIRE ET FINANCIERE

INSTRUCTION NO. 002/2017-CSBF
ON THE APPROVAL
OF ELECTRONIC MONEY INSTITUTIONS

The Banking and Financial Supervision Commission (CSBF),

Having regard to Law No. 95-030 of February 22, 1996, on the activity and supervision of credit institutions, as amended;

Having regard to Law No. 2016-056 of February 2, 2017, on electronic money and electronic money institutions;

Having regard to Law No. 2016-004 of July 27, 2016, supplemented by Law No. 2016-057 of February 2, 2017, establishing the Statutes of the Central Bank of Madagascar;

Having regard to Decree No. 2014-1684 of October 29, 2014, appointing the Governor of Banky Foiben'i Madagascar;

Having regard to Decree No. 2016-151 of March 8, 2016, partially repealing Decree No. 2013-559 of July 23, 2013, appointing the members of the Banking and Financial Supervision Commission;

DECIDES

Article 1: Purpose

This instruction sets out the procedures for submitting and processing the application for approval as an electronic money institution, as defined by the law on electronic money and electronic money institutions (hereinafter referred to as the "Electronic Money Law").

In particular, it specifies the filing procedures and the documents to be provided to the General Secretariat of the CSBF.

Article 2: Filing and Content of the Application

The promoter, represented by a duly authorized representative, must submit an application for approval addressed to the President of the CSBF to the General Secretariat of the CSBF.

The application file must be submitted in paper format accompanied by an electronic version.

Under penalty of inadmissibility, the file must include all elements required in Annex 1.

Article 3: Processing of the Application File

3.1. Upon receipt of the file, the General Secretariat of the CSBF verifies whether the documents and information required under Article 2 are provided. The General Secretariat of the CSBF issues an acknowledgment of receipt and notifies the applicant of the opening of the file processing.

3.2. In the course of processing the file, the General Secretariat of the CSBF:

• verifies the compliance and consistency of the file's elements with the requirements applicable to electronic money institutions;
• analyzes the origin of the funds constituting the share capital, the viability, and the sustainability of the project;
• identifies the future management and assesses their competence and integrity.

3.3. The General Secretariat of the CSBF is authorized at any time to request any additional information necessary for processing the file.

Article 4: Closure of File Processing

4.1. When all elements required by the regulations applicable to electronic money institutions are gathered and no further observations are raised by the General Secretariat of the CSBF, the processing of the file is closed.

4.2. The applicant receives notification, by any means leaving a written record, of the closure of the file processing.

Article 5: Decision-Making by the CSBF

5.1. The CSBF has a period of one (1) month from the date of closure of the file processing to rule on the approval application.

5.2. The CSBF may invite the applicant or the proposed management to present the project and answer any questions that may clarify the decision-making process.

Article 6: Approval Decision

6.1. The CSBF grants approval based on the file processing conducted by the General Secretariat of the CSBF and, where applicable, the presentation made by the applicant.

6.2. The CSBF may attach one or more suspensive conditions with a deadline in the approval decision to allow the applicant to fulfill them.

Article 7: Suspensive Conditions

7.1. To demonstrate the fulfillment of suspensive conditions, the applicant must submit the required documents to the General Secretariat of the CSBF before the deadline set by the approval decision expires.

7.2. The General Secretariat of the CSBF conducts a prior verification of the actual fulfillment of the requirements listed as suspensive conditions.

7.3. If the submitted documents and elements are satisfactory, the General Secretariat of the CSBF notifies the applicant, by any means leaving a written record, of the lifting of the suspensive conditions. The General Secretariat of the CSBF assigns the applicant a registration number on the list of approved electronic money institutions.

7.4. The approval becomes effective upon notification to the applicant of the lifting of the suspensive conditions.

7.5. The applicant may request, in writing, an extension of the deadline for fulfilling the suspensive conditions no later than one (1) month before the expiration of the deadline set in the approval decision. The President of the CSBF may grant a new, non-renewable deadline of three (3) months.

7.6. In the event of non-fulfillment of the suspensive conditions and where no extension request has been made, the General Secretariat of the CSBF informs the promoter that the approval decision has lapsed.

Article 8: Refusal of Approval

8.1. The CSBF refuses the approval application, in particular when:

• the governance and control structures, and the anti-money laundering framework, do not comply with the requirements of current legislation;
• the origin of the funds is not justified in accordance with anti-money laundering and counter-terrorism financing regulations;
• the information and management system does not meet the required control needs;
• the business plan does not demonstrate the viability, solidity, and sustainability of the institution;
• the projected financial statements are based on unjustified or unrealistic parameters;
• the proposed management is subject to a prohibition under Article 18 of the Electronic Money Law;
• the approval file contains gaps or inconsistencies indicating a lack of professionalism by the applicant.

8.2. The General Secretariat of the CSBF notifies the promoter of the duly reasoned refusal decision.

8.3. If the promoter intends to maintain the project, they must submit a new application with the new elements required by this instruction.

Article 9: Annexes

This instruction includes two (2) annexes that form an integral part of it.

Article 10: Entry into Force

This instruction enters into force upon its publication on the website of Banky Foiben'i Madagascar.

Done in Antananarivo, on 29 SEPT 2017
For the Banking and Financial Supervision Commission The President,

Alain H. RASOLOFONDRAIBE
Governor of Banky Foiben'i Madagascar

ANNEX 1

LIST OF DOCUMENTS AND INFORMATION TO BE PROVIDED REGARDING THE APPLICANT INSTITUTION

N.B.: All documents must be provided in French, presented in the order and according to the references below.

CATEGORIES	REQUIRED DOCUMENTS AND INFORMATION	Y/N	Observations (Reserved for SG-CSBF)
I. GENERAL PRESENTATION
1. Authorized Representative	1.1. Approval application duly signed by the authorized representative or corporate officer, conforming to the model in Annex 2, with proof of the signatory's authority (document 1.1)
	1.2. Certified copy of a valid ID card
	1.3. Updated, dated, and signed CV
	1.4. Criminal record extract dated less than 3 months ago
2. Applicant Institution
2.1. If the entity is not yet formed	2.1.1. Proposed name
	2.1.2. Draft articles of association
	2.1.3. Draft shareholders' agreement, if applicable
2.2. If the entity is already formed	2.2.1. Contact details and date of incorporation
	2.2.2. Commercial and companies register
	2.2.3. Certified financial statements for the last three fiscal years or since incorporation¹
	2.2.4. Articles of association
	2.2.5. Share capital amount and shareholding structure
	2.2.6. Shareholders' agreement, if applicable
2.3. If the entity belongs to a group	2.3.1. Group description
	2.3.2. Group organizational chart and capital links
	2.3.3. Description of activities and share capital amount of each group entity
	2.3.4. Consolidated financial statements and those of entities qualifying as credit institutions or electronic money institutions

¹ Incorporation date less than 3 years ago

CATEGORIES	REQUIRED DOCUMENTS AND INFORMATION	Y/N	Observations (Reserved for SG-CSBF)
3. Shareholding
3.1. Capital Structure	3.1.1. Summary table of shareholding indicating shareholders, number of shares, amounts, and voting rights
3.2. Information concerning shareholders expected to hold more than 5% of the share capital	If natural person 3.2.1. Letter conforming to the model in Annex 2 (document 3.2.1) 3.2.2. Certified copy of a valid ID card 3.2.3. Updated, dated, and signed CV 3.2.4. Criminal record extract dated less than three months ago or equivalent certificate issued by the competent judicial authority of the country of origin, accompanied by proof of the signing authority² 3.2.5. Percentage of capital and voting rights held, legal and financial terms of the participation 3.2.6. Asset situation justifying the origin of funds 3.2.7. Banking relationships in Madagascar: seniority and certificates issued by banks 3.2.8. Professional, collective, administrative, or judicial proceedings that have had or could have significant consequences over the past ten years
	If legal entity 3.2.9. Letter conforming to the model in Annex 2 (document 3.2.9) 3.2.10. Company name, legal form, registered office address, articles of association 3.2.11. Identity of members of governing and management bodies 3.2.12. Detailed description of activities 3.2.13. Certified financial statements for the last three fiscal years 3.2.14. Indication, if applicable, whether the operation is subject to specific formalities in the country of origin. Justification by the competent authority of the completion of these formalities 3.2.15. Authorization from the banking supervisory authority of the country of origin for credit institutions

² If other than a judicial authority

CATEGORIES	REQUIRED DOCUMENTS AND INFORMATION	Y/N	Observations (Reserved for SG-CSBF)
	3.2.16. Amount and distribution of share capital 3.2.17. Banking relationships in Madagascar: seniority and certificates issued by banks 3.2.18. Professional, collective, administrative, or judicial proceedings that have had or could have significant consequences over the past ten years
	In case of belonging to a group of the legal entity 3.2.19. Group description 3.2.20. Group organizational chart and capital links 3.2.21. Description of activities and share capital amount of each group entity 3.2.22. Consolidated financial statements and those of entities qualifying as credit institutions or electronic money institutions 3.2.23. Percentage of capital and voting rights held, legal and financial terms of the participation 3.2.24. Group control procedure by the parent company
4. Operational and Control Structures	4.1. Description of the organizational structure, including administration, management, and control bodies 4.2. Organizational chart and staffing 4.3. Description of the internal control framework provided for by the relevant CSBF instruction, and provision of the procedures manual including, in particular, the human resources and organization adopted for: - detecting, analyzing, and remedying fraud or attempted fraud, including internal fraud. The institution will indicate if it conducts monitoring in this area and if it has automatic detection solutions; - controlling the application of security measures; - tracing operations to be able to reconstruct the sequence for control purposes.
5. Corporate Officers	5.1. Letter conforming to the model in Annex 2 (document 5.1)

CATEGORIES	REQUIRED DOCUMENTS AND INFORMATION	Y/N	Observations (Reserved for SG-CSBF)
	5.2. Certified copy of a valid ID card for each proposed corporate officer 5.3. Updated, dated, and signed CV 5.4. Criminal record extract dated less than three months ago or equivalent certificate issued by the competent judicial authority of the country of origin, accompanied by proof of the signing authority³ 5.5. Certified copy of the corporate officer appointment document or document signed⁴ jointly by shareholders holding more than 5% of the share capital 5.6. Detailed description of the corporate officers' functions
6. Members of Governing Bodies
6.1. If natural person	6.1.1. Certified copy of a valid ID card 6.1.2. Updated, dated, and signed CV 6.1.3. Criminal record extract dated less than three months ago or equivalent certificate issued by the competent judicial authority of the country of origin, accompanied by proof of the signing authority⁵
6.2. If legal entity	6.2.1. Company name, legal form, registered office address, country of establishment 6.2.2. Articles of association 6.2.3. Composition of governing bodies 6.2.4. Identity of the representative within the applicant institution 6.2.5. Information on the representative as cited in point 6.1.
7. Statutory Auditor	7.1. Description of the statutory auditor's missions and obligations 7.2. Engagement letter defining the conditions (technical and financial) and terms of intervention of the statutory auditor 7.3. Sworn declaration regarding the non-existence of any incompatibilities provided for by the commercial companies law

³ If other than a judicial authority
⁴ Certified signatures
⁵ If other than a judicial authority