NBB_2015_12 / Exemption Policy of the National Bank of Belgium under Article 48 of the Law of 21 December 2009 (Payment Services)

NBB_2015_12 – 2 March 2015 Circular – Page 1/4 14 Berlaimont Boulevard – BE-1000 Brussels tel. +32 2 221 38 12 – fax +32 2 221 31 04 company number: 0203.201.340 RPM Brussels www.bnb.be Circular Brussels, 2 March 2015 Reference: NBB_2015_12 your contact:
Kurt Van Raemdonck tel. +32 2 221 53 39 – fax +32 2 221 31 04 kurt.vanraemdonck@nbb.be Exemption Policy of the Bank based on Article 48 of the Law of 21 December 2009 (payment services) Scope Legal persons exempted based on Article 48 of the Law of 21 December 2009 on the status of payment institutions and electronic money institutions, on access to the activity of payment service providers, on the activity of issuing electronic money and on access to payment systems (hereinafter "the Law"). Summary/Objectives This circular aims to clarify the framework governing the exemption policy of the National Bank of Belgium (hereinafter "the Bank") based on Article 48 of the Law. Structure

1. Introduction of an exemption file
2. Scope of the exemption
3. Consequences of the exemption
4. Role of the approved auditor

Madam,
Sir,
Based on Article 48 of the Law, legal persons offering payment services in Belgium may be exempted from the application of all or part of the provisions of Book 2 of the Law and its implementing decrees.
Under Article 48 of the Law, the exemption may indeed be granted to legal persons:
1° whose total average amount, for the preceding twelve months, of payment transactions executed by them, or by any agent for whom they assume full responsibility, does not exceed 3,000,000 euros in a month. This criterion is assessed with regard to the total amount planned for payment transactions in their business plan, and subject to any adjustment of this plan required by the Bank; and 2° whose any of the natural persons responsible for the management or exercise of the activity have not been convicted of offences related to money laundering, terrorist financing or referred to in Article 20, § 1, 1°, 2° and 3°, of the Banking Law.

Circular – Page 2/4 NBB_2015_12 – 2 March 2015 This circular aims to clarify the framework governing the exemption policy of the Bank based on Article 48 of the Law. It replaces with immediate effect the communication NBB_2013_05 of 24 June 2013 on the same subject.

1. Introduction of the exemption file
   The following information must be provided by the applicant to allow the Bank to form an opinion on the applicant and to verify that the two legal conditions for exemption are met:
   1) a programme of the envisaged activities;
   2) a business plan, including a financial plan for the first three financial years;
   3) proof that the applicant has the initial capital referred to in Article 11;
   4) a description of the measures for the protection of the funds of payment service users;
   5) a description of the internal control mechanisms adopted to satisfy the obligations set out in Regulation (EC) No 1781/20061 and the Law of 11 January 1993;
   6) a description of the organisational structure of the applicant;
   7) the identity of the shareholders;
   8) the identity of the persons taking part in the administration or management of the applicant, as well as of the persons who participate in the effective management of the payment services activity;
   9) the identity of the auditor(s);
   10) the legal form and the statutes of the applicant;
   11) the address of the registered office of the applicant.
2. Scope of the exemption
   Upon acceptance of the exemption file, the Bank grants an exemption from all the provisions of Book 2 of the Law, with the exception of the following provisions:

• Article 10, which requires that the exempted legal person be constituted in the form of a commercial company, with the exception of the form of private limited liability company constituted by a single person;
• Article 11, which concerns the minimum initial capital;
• Article 13, §§ 1 and 3, which concern the requirements of professional honourability and adequate expertise. Exempted legal persons are required to comply with Circular NBB_2013_022 in this regard. This circular specifies the manner in which the Bank proceeds with the "fit & proper" assessments, with regard to both the content and the process of the assessments;
• Article 16bis, which concerns the information obligation that exempted legal persons must respect towards the Bank in the context of "fit & proper" assessments, as well as the prior approval of the Bank in case of appointment. The circular mentioned in the previous point also applies;
• Article 17, §§ 1 and 2, paragraphs 2 to 5, concerning the solvency obligations that must be respected by the exempted legal person3;
  1 Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the orderer accompanying transfers of funds.
  2 Circular NBB_2013_02 of 17 June 2013 on standards regarding expertise and professional honourability for members of the Management Committee, directors, heads of independent control functions and effective managers of financial institutions. 3 Article 17, § 2, paragraph 1, and the Decree of 5 February 2010 concerning the own funds of payment institutions are not applicable, however.

NBB_2015_12 – 2 March 2015 Circular – Page 3/4

• Article 20, relating to the execution of payment services through an agent;
• Article 21, relating to the exercise of activities other than payment services, where applicable subject to the prior authorisation of the Bank;
• Article 22, which imposes on the exempted legal person to take measures to protect the funds received from payment service users for the execution of payment transactions;
• Title 2, Chapter 1, Sections 4 and 5 (Articles 25 to 38), which concern the control and exceptional measures and sanctions against exempted legal persons.
  By way of derogation from Article 28, paragraph 1, of the Law, the exempted legal person which mainly exercises commercial activities unrelated to the provision of payment services may, subject to the prior approval of the Bank, entrust the functions of auditor to one or more auditors who have not been approved for this purpose by the Bank in accordance with Article 222 of the Banking Law4. This auditor is required to comply with the obligations imposed by the Law and by this circular on the approved auditor towards the Bank (cf. in particular below, point 4. "Role of the approved auditor").

3. Consequences of the exemption
   Exempted legal persons, and, where applicable, their agents, are entered in a register kept for this purpose by the Bank. The website indicates that these legal persons are exempted.
   Furthermore, Article 48, § 3, of the Law provides that legal persons:
   1° have their registered office in Belgium, and effectively exercise their payment services activities on Belgian territory; 2° do not benefit from the mutual recognition regime provided for in Article 91 of the Law (no European passport); 3° inform the Bank of any change in their situation having an impact on the conditions set out in § 1 and report periodically to the Bank on the total average amount, for the preceding twelve months, of payment transactions executed by them, or by any agent for whom they assume full responsibility; 4° apply the provisions of the Law of 11 January 1993 on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing which are applicable to payment institutions, and the decrees and regulations adopted for its implementation. Periodic reports to be made by exempted legal persons With regard to point 3 above, the legal person reports every six months to the Bank on the total average amount, for the preceding twelve months, of payment transactions executed by it, or by any agent for whom it assumes full responsibility. The reporting mentioned above must be carried out by sending an Excel file via the application made available for this purpose by the Bank. The data must be communicated to the Bank no later than the first working day of the second calendar month following the end of the financial year. This transmission is repeated no later than the first working day of the second calendar month following the six calendar months after the previous reporting. 4 In its assessment, the Bank will take into account in particular the degree of specialisation of the respective activities and the risks associated with them, as well as the relative importance of payment services in the balance sheet and in the income statement.

Circular – Page 4/4 NBB_2015_12 – 2 March 2015 With regard to point 4 above, the exempted legal person is required to complete each year the abbreviated periodic questionnaire on the fight against money laundering and terrorist financing, in accordance with the procedures specified in Circular NBB_2014_125. Furthermore, the persons in charge of effective management are required, in accordance with Article 22, § 4, paragraph 3, of the Law, to submit an annual report to the Bank, in particular on the measures taken in implementation of Article 22, §§ 1 and 2, of the Law, in order to protect the funds received from payment service users for the execution of payment transactions, via the application made available for this purpose by the Bank.
4. Role of the approved auditor
Based on Article 28 of the Law, the exempted legal person must appoint an auditor approved by the Bank6.
The approved auditor must comply with its legal obligations regarding control, insofar as they are applicable based on the Bank's exemption policy7.
In addition to its usual mission of verifying annual accounts, it must also, by virtue of Article 33, 5°, of the Law, report at least once a year to the Bank on the adequacy of the measures that the exempted legal person has taken to preserve the funds received from payment service users, in application of Article 22, §§ 1 and 2. Finally, the Bank additionally requires that the approved auditor declare every six months that the total average amount, for the preceding twelve months, of payment transactions executed by the exempted legal person, or by any agent for whom it assumes full responsibility, does not exceed the ceiling of 3,000,000 euros per month. This is intended to guarantee the accuracy and authenticity of the declaration of the exempted legal person regarding non-exceedance of this ceiling. A copy of this circular is sent to the auditor(s), reviewer(s) (approved), of the exempted legal person. Please accept, Madam, Sir, the expression of my distinguished sentiments. Mathias Dewatripont Vice-Governor 5 Circular NBB_2014_12 of 22 October 2014 concerning the abbreviated periodic questionnaire on the fight against money laundering and terrorist financing. 6 Cf. however supra, point 2. "Scope of the exemption", fifth bullet, for the exception to this principle. 7 It should not, for example, evaluate internal control measures, given the exemption provided for in Article 14 of the Law, which imposes adequate internal control.