Instruction No. 24 on the Issuance of Electronic Money and Electronic Money Institutions

1

INSTRUCTION NO. 24 ON THE ISSUANCE OF ELECTRONIC MONEY AND ELECTRONIC MONEY INSTITUTIONS

The Central Bank of Congo:

• Having regard to Law No. 005/2002 of May 7, 2002, on the constitution, organization, and functioning of the Central Bank of Congo;
• Having regard to Law No. 003/2002 of February 2, 2002, on the activity and supervision of Credit Institutions;
• Having regard to Instruction No. 14 to banks, as amended to date;
• Having regard to Instructions No. 15, 17, 18, 19, 21, 22, and 23 to Credit Institutions;

Decrees the following provisions relating to the issuance of electronic money and electronic money institutions.

Title I: GENERAL PROVISIONS

CHAPTER I: DEFINITIONS

Article 1:

For the purposes of this Instruction, the following terms are understood as:

1. Acceptor: a merchant or service provider contractually linked to the electronic money issuer, for the purpose of receiving payments by the electronic money issued by the latter;

2. Agents: persons recruited by an issuer or distributor of electronic money to form a distribution network and who, within the limits of the contract binding them, carry out electronic money distribution operations;

3. Central Bank: the Central Bank of Congo;

4. Prudential provisions: the set of rules defined within the framework of the prudential supervision of legal entities authorized to issue electronic money as a regular profession;

5. Electronic money institution: a legal entity falling within the category of financial institution as defined in Articles 2 and 3 of Law No. 003/2002 of February 2, 2002, on the activity and supervision of Credit Institutions, which has obtained, in accordance with this Instruction, an approval authorizing it to issue payment instruments in the form of electronic money and which is the debtor of the claim incorporated in the electronic payment instrument. Its activities are limited to:

• the issuance of electronic money;
• making electronic money available to the public;
• the management of electronic money;

6. Electronic money issuing institution: the institutions referred to in Article 3 authorized to carry out electronic money issuance activities and which are the debtor of the claim incorporated in the electronic payment instrument;

7. Electronic money distributing institution: a legal entity offering, in execution of a contract concluded with an electronic money issuing institution, a service of loading, reloading, or cashing in of electronic money;

3

8. Electronic money: any monetary value representing a claim on the issuer, which is:

• loaded onto an electronic support, including magnetic;
• issued against the handing over of funds whose value is equal to the monetary value issued;
• accepted as a means of payment by a natural or legal person other than the issuer.

9. Refund of electronic money: conversion of electronic money into cash or book money at its nominal value followed by its restitution to the holder at their request;

10. Holder: the person who, by virtue of a contract concluded with an issuer, holds electronic money for their own account.

CHAPTER II: OBJECT - SCOPE OF APPLICATION

Article 2:

This Instruction sets the conditions for access and exercise of the electronic money issuance activity by the institutions subject to it as listed in Article 3 below.

Article 3:

This Instruction applies to:

• Credit institutions approved within the meaning of Articles 2 and 3 of Law No. 003/2002 of February 2, 2002, on the activity and supervision of Credit Institutions, the bodies referred to in Article 4 of the aforementioned law, as well as Microfinance Institutions authorized by the Central Bank to issue electronic money;

4

• electronic money institutions as defined in Article 1 point 5 of this instruction.

Article 4:

This Instruction does not apply to:

• monetary value stored on specific prepaid instruments, designed to meet specific needs and whose use is limited, either because the holder of electronic money can only purchase goods or services in the premises of the issuer or within a network of service providers linked by a contract to a professional issuer, or because they can only be used to acquire a limited range of goods or services. The exemption from this provision should cease if such a limited-scope instrument becomes a general-scope instrument;

• monetary value used for the purchase of digital goods or services when, due to the nature of the good or service, the operator adds value to it, provided that the good or service in question can only be used with a digital device and provided that the operator of the digital telecommunications or computer system does not act solely as an intermediary between the user of payment services and the supplier of goods and services.

Title II: CONDITIONS FOR ACCESS AND EXERCISE OF THE ELECTRONIC MONEY ISSUANCE ACTIVITY

CHAPTER I: ACCESS CONDITIONS

Article 5:

Before exercising electronic money activities, electronic money institutions as defined by this instruction must obtain approval from the Central Bank.

To this end, they must provide, in three (3) copies, the following documents, necessary for the assessment of their application:

• a written and signed request by the representative of the institution, duly authorized for this purpose, addressed to the Governor of the Central Bank;
• documents establishing the qualities and powers of the legal representatives;
• a information sheet on the main shareholders, executives, and partners of the institution, model in annex;
• the decision of the Board of Directors or the managing partner authorizing the electronic money activity;
• the statutes of the applicant institution and proof that the institution has the initial capital provided for in Article 6;
• the identity of persons holding directly or indirectly shares in the capital, the size of their share, proof of their status, as well as the annual financial statements for the last three (3) financial years for legal entities, certified by an approved Statutory Auditor, of the shareholders or partners;
• the identity of the executives and persons responsible for the management of electronic money issuance and distribution activities;
• a detailed presentation of the electronic money activity through a business plan containing in particular:

• activity, deployment, and organization forecasts;
• details of the technical, material, and financial means whose implementation is planned for the realization of this activity;
• projected financial statements and compliance with prudential standards for at least three (3) years;

6

Article 6:

Electronic money institutions must have a minimum paid-up share capital equivalent in Congolese Francs (CDF) to USD 2,500,000 (two million five hundred thousand US dollars).

Article 7:

The day-to-day management of an electronic money institution must be entrusted to at least two natural persons, justifying the honorability, competence, and professional experience necessary for the exercise of this function.

Article 8:

Without prejudice to the legal provisions relating to commercial companies, no one may directly or indirectly:

• offer the public the creation of an electronic money institution;
• administer, direct, or manage an electronic money institution.

1. if they have been convicted of an offense against this Law or exchange regulations;

2. if they have been declared bankrupt and have not been rehabilitated, even when the bankruptcy was opened in a foreign country;

3. if they have been convicted in the Democratic Republic of Congo or abroad as a perpetrator, accomplice, or for attempted commission of any of the following offenses: a. counterfeiting; b. counterfeiting or falsification of banknotes, public securities, shares, bonds, interest coupons; c. counterfeiting or falsification of seals, stamps, punches, and marks; d. forgery and use of forgery in writing; e. corruption of a public official or extortion;

7

CENTRAL BANK OF CONGO CONTINUED FROM PAGE 7

Article 6:

Electronic money institutions must have a minimum paid-up share capital equivalent in Congolese Francs (CDF) to USD 2,500,000 (two million five hundred thousand US dollars).

Article 7:

The day-to-day management of an electronic money institution must be entrusted to at least two natural persons, justifying the honorability, competence, and professional experience necessary for the exercise of this function.

Article 8:

Without prejudice to the legal provisions relating to commercial companies, no one may directly or indirectly:

• offer the public the creation of an electronic money institution;
• administer, direct, or manage an electronic money institution.

1. if they have been convicted of an offense against this Law or exchange regulations;

2. if they have been declared bankrupt and have not been rehabilitated, even when the bankruptcy was opened in a foreign country;

3. if they have been convicted in the Democratic Republic of Congo or abroad as a perpetrator, accomplice, or for attempted commission of any of the following offenses: a. counterfeiting; b. counterfeiting or falsification of banknotes, public securities, shares, bonds, interest coupons; c. counterfeiting or falsification of seals, stamps, punches, and marks; d. forgery and use of forgery in writing; e. corruption of a public official or extortion;

8

f. theft, extortion, misappropriation or abuse of confidence, fraud or handling stolen goods; g. bankruptcy, fictitious circulation of commercial instruments; h. issuance of a check without funds; i. money laundering and financing of terrorism;

4. if they have been convicted of a common law crime and for an offense assimilated by law to any of those listed above;

5. if they have participated in the administration, direction, and day-to-day management of a Credit Institution whose forced dissolution has been ordered or whose bankruptcy has been declared.

When the decision resulting in one of the prohibitions provided for in this article is subsequently revoked or overturned in the final instance, the prohibition ceases by operation of law.

Article 9:

The approval is notified by decision of the Central Bank, within a period of ninety (90) days from the date of receipt of the complete file by the latter or, where applicable, of additional information.

The approval is recorded by the inscription of the institution on the list of electronic money institutions kept by the Central Bank.

Article 10:

No institution not approved by the Central Bank may exercise the activities of electronic money issuance.

No one may exercise the activity of electronic money issuance as a regular profession under the name of electronic money institution or under any other identical or analogous denomination in another language, if they do not meet the conditions set by the provisions of Title II, Chapter 1 on access conditions.

9

Article 11:

The provisions cited above in Chapter 1 on access conditions apply only to electronic money institutions as defined by Article 1 point 5 of this instruction.

Article 12:

The exercise of electronic money issuance activity by the Institutions referred to in Article 3 paragraph 1 of this Instruction is subject to prior authorization from the Central Bank.

Electronic money distributing institutions are not subject to the approval procedure but to the information procedure in accordance with the criteria fixed by the Central Bank.

Persons subject to this Instruction must satisfy at all times the conditions for approval and prior authorization.

Article 13:

The withdrawal of approval of electronic money institutions is carried out in accordance with Articles 22, 23, and 77 of Law No. 003/2002 of February 2 relating to the activity and supervision of Credit Institutions.

CHAPTER II: PRUDENTIAL REGIME OF ELECTRONIC MONEY INSTITUTIONS

Article 14:

The commercial activities of electronic money institutions are limited to the provision of services related to the issuance, management, and making available of electronic money as well as the storage of data on electronic support for the account of other legal entities.

Article 15:

Electronic money institutions inform the Central Bank in advance of any significant change affecting the measures taken to protect the funds that have been received in exchange for the electronic money issued.

Article 16:

The own funds of electronic money institutions must remain equal to or greater than the highest of the following three amounts:

• the daily amount of financial commitments corresponding to the debts representing the electronic money of their issuance;

• the arithmetic average of the daily amounts of the six (6) last months preceding the total of financial commitments corresponding to the debts representing the electronic money;

• the amount of the minimum paid-up capital.

Article 17:

The value of electronic money incorporated in an instrument issued by electronic money issuing institutions may not exceed at any time the equivalent of USD 3,000 (three thousand US dollars), unless explicit authorization from the Central Bank.

The daily payment limit may not exceed USD 500 (five hundred US dollars) and the monthly payment limit may not exceed USD 2,500 (two thousand five hundred US dollars).

Article 18:

Electronic money institutions are not authorized to receive deposits from the public within the meaning of Article 6 of the Banking Law.

The funds received by electronic money issuing institutions do not constitute deposits or other refundable funds within the meaning of Article 6 of the Banking Law if they are immediately exchanged for electronic money.

11

They cannot be subject to the granting of interest and any other benefit during the period for which the holder holds the electronic money.

The funds received in exchange for the issuance of electronic money constitute the exclusive pledge of the holders. They are subject to the trust regime and cannot, wherever they are located, be subject to sequestration, seizure, or any other enforcement action aimed at removing them from said pledge.

Article 19:

Electronic money issuing institutions are not authorized to grant credit based on the funds received or held for the purpose of issuing or distributing electronic money.

Article 20:

The financial commitments of electronic money institutions corresponding to the debts representing the electronic money must be fully covered by liquid assets.

CHAPTER III: REDEEMABILITY OF ELECTRONIC MONEY

Article 21:

Electronic money institutions issue electronic money at nominal value against the handing over of funds. The holder of electronic money may, during the validity period of the electronic payment instrument, demand that the issuing institution refund them, under the conditions provided for in the contract binding them, at the nominal value of the electronic money.

The contract concluded between the issuer and the holder must clearly establish the conditions for the refund of unused electronic money, including any associated fees, of which the holder of electronic money is informed before being bound by a contract or an offer.

Article 22:

Within a maximum period of three (3) months, from the notification of the withdrawal of approval pronounced by the Central Bank in the cases specified by the Banking Law, the electronic money issuing institution is required to refund without charge, to any holder of electronic money, the unused electronic money held by them. It ensures information regarding the withdrawal of its approval to holders by means adapted to the nature of its clientele.

At the expiration of this period, the issuing institution is required to transfer the unclaimed funds, received in exchange for the electronic money, intended for unreimbursed holders and communicated by the issuing institution to the Central Bank.

Article 23:

The refunds provided for are carried out in cash, by check, or by transfer to an account, according to the wishes expressed by the holder.

Article 24:

The refund may give rise to the deduction of fees only if the contract provides for it in accordance with Article 21 and subject to at least one of the following conditions applying:

• the refund is requested before the termination of the contract;
• the refund is requested more than six (6) months after the date of contract termination;
• the holder of electronic money has terminated the contract before the expiration date.

The amount of the fees must be proportional and related to the actual costs borne by the electronic money issuer.

CHAPTER IV: INTERNAL CONTROL AND ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM

Article 25:

Electronic money may only be incorporated in an instrument that allows the identification of the holder.

13

Article 26:

The electronic money institution ensures the traceability for ten (10) years of the loading and cashing in of electronic money and keeps it at the disposal of the Central Bank if necessary. It ensures it has means allowing it to ensure, in the event of a breach of the security of all or part of its information system, the traceability of transactions.

When the electronic support integrates at least two (2) applications (notably those of the banking type for mobile phone loading, for Internet payment, or for money transfer) and allows the holder of electronic money to carry out distinct transactions, the issuer is required to ensure the traceability of all transactions carried out.

Distributing institutions provide the necessary assistance to the issuing institution to ensure this traceability.

Article 27:

Electronic money issuing institutions must set up an automated system for monitoring unusual transactions involving electronic money as a support. The issuing institution must take measures to ensure that distributing institutions and other agents apply the security and vigilance standards defined.

Article 28:

Electronic money institutions must be managed in a sound and prudent manner. To this end, they must in particular have accounting, administrative, and financial procedure manuals as well as adequate internal control procedures.

The management and procedures implemented must allow for the evaluation and monitoring of financial and non-financial risks to which they are exposed, including technical risks, risks related to procedures, and risks related to activities carried out in cooperation with any company performing operational functions or other ancillary functions related to their activities.

The procedure manuals provide for the diligence to be carried out when anomalies detected may be of interest with regard to the prevention of money laundering and the financing of terrorism, taking into account the knowledge each institution has of its clientele.

The anomalies observed, in application of the preceding paragraph, are declared to the National Financial Intelligence Unit (CENAREF) referred to in Articles 17 and following of the Law relating to the fight against money laundering and the financing of terrorism.

CHAPTER V: PERIODIC INFORMATION OBLIGATIONS

Article 29:

Electronic money issuing institutions provide the Central Bank with a monthly report on their activities. This report is signed by at least two (2) persons having the power to validly commit the institution.

Article 30:

The periodic report provides in particular the following elements:

• the monthly ceiling of limits determined by the CBC;
• the total monthly amount of financial commitments related to issued electronic money as well as their distribution by location and distributors;
• the number of breaches recorded during the month;
• any suspension measures of the issuance or distribution of electronic money that the institution has taken in case of exceeding the aforementioned limits;
• provisions on making available to clients the contract governing the issuance or distribution of electronic money as well as those taken to ensure respect for the terms and conditions provided for in terms of redeemability;

15

• the number of refund requests received and the total value of refunds made during the month;
• the amount of maximum storage capacity limits of the electronic support and the measures taken by the institution to ensure respect for these limits;
• sufficiently detailed information concerning the results of the aforementioned measures;
• the number of complaints made by clients.

Article 31:

In the framework of the prevention of money laundering and the financing of terrorism, the periodic report must in particular contain the following:

• the measures taken by the institution to comply with the legal and regulatory framework in this matter;
• a structured overview of the nature, number, and amount of suspicious operations identified;
• the reasons for their transmission to the head of the prevention of money laundering and the financing of terrorism; the actions taken, notably in the form of a transmission to the National Financial Intelligence Unit (CENAREF).

TITLE III: REGIME FOR THE ISSUANCE OR DISTRIBUTION OF ELECTRONIC MONEY AND AGENTS

Article 32:

Electronic money issuers are authorized to distribute or redeem electronic money through physical or legal persons. They may use the services of one or more Agents to carry out, on their behalf and within the limits of their approval and authorization, electronic money activities if the conditions set by the Central Bank are met.

16

Article 33:

Contracts concluded between electronic money issuers and other parties must, in particular, indicate the list of entities forming part of the network, as well as the elements enabling the identification and recognition of distributors or agents, including their brand, logo, window signage, and trade name or corporate name.

The electronic money issuer updates the list of entities forming part of its network. This updated list is communicated to the Central Bank on a monthly basis.

Article 34:

Electronic money issuers communicate information to the Central Bank regarding the Agents they engage.

An agent may receive mandates from multiple electronic money issuers.

Article 35:

Electronic money issuers who mandate agents remain fully liable to third parties for the acts of any Agent they have mandated concerning actions related to the provision of financial services contained in the contract between the Issuer/Distributor and the Agent.

Electronic money issuers ensure that their agents comply with their internal control framework, including that related to anti-money laundering and counter-terrorism financing.

17

TITLE IV: SANCTIONS

Article 36:

Any breach of the provisions of this Instruction shall result in the application of the sanctions provided for in Articles 77 and following of Law n°003/2002 of February 2, 2002, relating to the activity and supervision of Credit Institutions.

TITLE V: FINAL PROVISIONS

Article 37:

This Instruction enters into force on the date of its signature.

Done in Kinshasa, on

J-C. MASANGU MULONGO Governor