Local Payment Network Regulation

Local Payment Network Regulation

Local Payment Network Regulation

Local Payment Network Regulation

Table of Contents: Summary

Chapter One: Scope and Definitions of the Regulation

Chapter Two: Responsibilities and Delegations

Chapter One: Central Bank of Libya

Chapter Two: Local Payment Network Operator

Chapter Three: Members and Subscribers of the Local Payment Network

Chapter One: Nature of Institutions

Chapter Two: Participation System Licensing

Chapter Four: Joining the Local Payment Network

Chapter Five: Supervision of the Payment System

Local Payment Network Regulation

Chapter One Scope and Definitions

Article (1) General Scope This Regulation governs electronic payment systems and aims to regulate the legal relationships between the parties participating in the local payment network.

Article (2) Purpose of the Regulation This Regulation regulates the duties and powers of stakeholders regarding the local payment network, in accordance with the payment systems strategy determined by the Central Bank of Libya. In the context of this strategy: The Central Bank of Libya holds absolute authority in regulation, supervision, delegation, and arbitration among all stakeholders in the Libyan payment system. The local payment network is the central system that connects members of the payment network, including banks and independent electronic payment service providers, with each other and with other parties, to participate in completing electronic payment transactions. The local payment network operator is responsible for executing the services assigned to it, as well as managing, operating, organizing, and monitoring the local payment network, under the supervision and delegation of the Central Bank of Libya, and in accordance with the rules defined in this Regulation.

Article (3) Definitions For the purposes of this Regulation, the following terms have the meanings indicated: Participation System: The legal right to access payment systems. Member: An entity licensed by the Central Bank of Libya as a bank or an independent electronic payment service provider. Payment System Subscriber: A subscriber through a member of the system, or the entity operating the payment system, in accordance with established procedures. Payment System: An electronic money exchange system, which includes all tools, means, channels, and procedures related to the system. Regulation: Local Payment Network Regulation. Licensing Regulation of the Central Bank of Libya: The Electronic Payment Services Regulation issued in March 2020 and any amendments thereto. It is a regulation issued by the Central Bank of Libya that determines the conditions and procedures required to obtain licensing in the field of electronic payments. Regulatory Rules of the Local Payment Network: The rules proposed by the local payment network operator and approved by the Central Bank of Libya for operating the network, in accordance with Article 15. Payment Channels: Point of sale terminals, automated teller machines (ATMs), electronic wallets, electronic commerce gateways, bill payment platforms, money transfer systems, and other emerging channels. Local Payment Network: Refers to the national payment system "NUMO". Local Payment Network Operator: The entity authorized by the Central Bank of Libya to operate and manage the local payment network. Independent Payment Service Provider: Electronic payment companies that provide direct financial services to customers without a relationship with a commercial bank. Public Interest: As defined in Article (4).

Article (4) Public Interest The Central Bank of Libya shall ensure that the local payment network meets the following conditions: It must be safe, efficient, and competitive for use by members and subscribers. The network or associated procedures must not contribute to increasing risks to payment systems and other financial transactions, including money laundering and terrorist financing. The Central Bank of Libya may add other conditions as it deems appropriate, in line with public interest.

Chapter Two Responsibilities and Delegations

Chapter One Central Bank of Libya

Article (5) General Powers The Central Bank of Libya is the authority authorized to regulate and supervise the local payment network, which includes setting mandatory standards and controls for members and subscribers, and having the power of arbitration in operations related to electronic payment systems, and issuing necessary directives to members and subscribers.

Article (6) Imposition of the Participation System The Central Bank of Libya may impose the participation system and its related controls and mechanisms on members and subscribers of a specific payment system in accordance with the Bank's policies, provided that the participation system is consistent with public interest and the interests of members and subscribers in the system, and the interests of individuals and entities wishing to enter the system in the future, or any other matters determined by the Central Bank of the Central Bank of Libya. It must also announce the imposition of the participation system.

Article (7) Amendment of the Participation System The Central Bank of Libya may amend the participation system according to its discretion, while observing the controls set forth in the previous article, with the obligation to announce any amendments to the system.

Article (8) Suspension of Use of the Participation System The use of the participation system is suspended in the following cases: Expiration of the system's validity. Suspension of the participation system by the Central Bank of Libya based on the request of the member or subscriber, or in the event of force majeure. Suspension or termination of the payment system by the Central Bank of Libya based on the expiration or cancellation of its approval. The participation system is permanently suspended according to the discretion of the Central Bank of Libya, while observing the controls set forth in Article (6), with the requirement to announce the suspension of the system.

Article (9) Enforcement of Participation System Provisions If any member or subscriber is prevented from using a specific payment system, they have the right to appeal to the Central Bank of Libya to enable them to resume its use. If it becomes apparent that the prevention was caused by a member or subscriber of the system in violation of relevant provisions, the Central Bank of Libya may issue one or all of the following orders: Issuing an order to the member or subscriber to correct the situation and comply with the participation system. Issuing an order to the member or subscriber in the system to compensate any person who may have suffered loss or damage as a result of violating the legal provisions related to the participation system. Any other orders the Central Bank of Libya deems necessary. The Central Bank of Libya may forgive the member or subscriber of what is attributed to them, or modify any of the previous orders if necessary.

Article (10) Payment System Standards The Central Bank of Libya may impose standards on members and subscribers of the payment system according to its discretion, in line with public interest. The Central Bank of Libya must publicize the standards to members and subscribers if it amends or adds a standard, and the publication must confirm the date of its entry into force.

Article (11) Arbitration in Disputes The Central Bank of Libya may take the necessary arrangements and procedures to settle disputes between members and subscribers of the payment system, in all matters related to this system, as well as between a party and one of the members or subscribers of the payment system, if the dispute is related to: Compliance or non-compliance with the participation system. Financial matters of the payment system specific to members and subscribers. The efficiency of the payment system, or its competitiveness or the risks facing it. These disputes are settled through arbitration, according to the systems and procedures followed in Libyan law, with the Central Bank of Libya determining the authority that will undertake arbitration, and both parties to the dispute undertaking not to refer the dispute to the court.

Article (12) Directives In the event of non-compliance by members and subscribers with the determined standards, the Central Bank of Libya issues its binding directives to members and subscribers of the payment system, by notifying the member or subscriber in writing to take a specific action or refrain from taking a specific action, provided that the directives are consistent with the standards determined by the Central Bank of Libya. The member or subscriber is considered to have committed an violation if they commit an act, or fail to do so, or if their act or omission constitutes a violation of the Bank's directives, and the Central Bank of Libya has the authority to impose appropriate financial or administrative penalties for these violations according to the prevailing legislation.

Chapter Two Local Payment Network Operator

Article (13) Delegation of Powers of the Central Bank of Libya The Central Bank of Libya has full authority to delegate its administrative, regulatory, and supervisory powers set forth in the Regulation to entities it deems qualified for this purpose, and it may revoke the delegation at any time in accordance with public interest.

Article (14) Delegation to the Local Payment Network Operator The Central Bank of Libya may delegate a specific part of its powers to the local payment network operator for the purpose of regulating and monitoring the network, and the operator has the right to determine the operational rules and regulations of the network according to the delegation granted to it.

Article (15) Role of the Local Payment Network Operator The local payment network operator proposes the technical rules and requirements necessary for operating and managing the network, and publishes them as regulatory rules for the local payment network, after their approval by the Central Bank of Libya, and the operator bears the responsibility of ensuring that its rules do not conflict with the decisions of the Central Bank of Libya.

Article (16) Management of the Local Payment Network The local payment network operator directs electronic payment transactions securely between payment channels for electronic transactions and manages acceptance at point of sale terminals, and intermediates the electronic payment process to facilitate ordering, routing, and authorization through multiple payment channels such as ATMs, electronic wallets, electronic commerce gateways, bill payment platforms, money transfer systems, and any other emerging channels. Also, under the delegation of the Central Bank of Libya, it manages communications, settlement, and clearing, and is responsible for determining the standards and specifications for connecting banks and electronic payment service providers operating in Libya and connecting the local payment network with regional and international payment networks.

Article (17) Supervision of the Local Payment Network Operator The local payment network operator is subject to the supervision and control of the Central Bank of Libya.

Chapter Three Members and Subscribers of the Local Payment Network

Chapter One Nature of Institutions

Article (18) Nature of Members Banks and independent payment service providers are allowed to be members of the local payment network in accordance with the conditions determined by the Central Bank of Libya, in addition to: Obtaining a license or permit to practice from the Central Bank of Libya. Registering as a member with the local payment network operator, in accordance with the rules approved by the Central Bank of Libya.

Article (19) Nature of Subscribers Payment service providers affiliated with members are allowed to subscribe to the local payment network in accordance with the following conditions: Obtaining a permit to practice from the Central Bank of Libya. The subscriber contracts with a bank that is a member of the local payment network. Registering as a subscriber with the local payment network operator.

Chapter Two Participation System Licensing

Article (20) License Granted by the Central Bank of Libya Institutions wishing to join the local payment network must apply for a license and permit to practice from the the Central Bank of Libya, and the procedures for obtaining it are subject to the Licensing Regulation.

Article (21) Licensing License Conditions The license to operate on the local payment network is granted by the Central Bank of Libya, and the granting of the license is based on the institution proving the existence of the conditions mentioned in the Central Bank of Libya's licensing regulation.

Article (22) Membership and Subscription with the Local Payment Network Operator Licensed institutions by the Central Bank of Libya are not allowed to begin their transactions on the local payment network until they meet the conditions set forth in the regulatory rules of the local payment network.

Chapter Three Joining the Local Payment Network

Article (23) Conditions for Joining The conditions for joining the local payment network are determined by the network operator, under the supervision of the Central Bank of Libya, and are published in the regulatory rules of the local payment network approved by the Bank in accordance with Article (15).

Chapter Five Supervision of Payment Systems

Article (24) Supervision of the Payment Network The Central Bank of Libya supervises the proper functioning of all payment systems, and to achieve this goal, it determines the standards by which members, subscribers, and the local payment network operator must notify it of performance-related data, fraud, incidents, and compliance with regulatory principles. Reporting standards are sent to the local payment network operator to ensure their dissemination and correct application by members and subscribers.

Article (25) Supervision of Members and Subscribers in the Local Payment Network The specialized departments of the Central Bank of Libya supervise the implementation of prevailing controls and standards through direct supervision, such as field visits, and indirect supervision, namely remote supervision and through reports, and the supervision mechanism depends on the type and degree of risks. Reports are sent to the Central Bank of Libya regarding the policies and procedures for risk management and settlement of members and subscribers and their review.

Article (26) Supervision of Members and Subscribers in the Local Payment Network The Central Bank of Libya has the authority to access the system (viewing rights) to monitor balances on a daily basis, and daily settlement with a group of liquid assets, and the Bank may impose additional and intensive supervision on members and subscribers according to its discretion.

Article (27) Regulatory Rules of the Local Payment Network The local payment network operator may conduct direct and indirect review and verification to ensure that members and subscribers comply with the conditions stipulated for the local payment network, and the results of these reviews are reported to the Central Bank of Libya immediately.

These Regulations are applied in full with other related regulations regarding payment systems and in a manner that does not conflict with prevailing laws.

Issued by the National Payments Council on 10 Sha'ban 1444 AH corresponding to 02 March 2023 AD