Norm on Control, Security and Surveillance Measures for General Warehouses

Resolution No. CD-SIBOIF-675-1-MAY6-2011
Date: May 6, 2011

NORM ON CONTROL, SECURITY AND SURVEILLANCE MEASURES FOR GENERAL WAREHOUSES

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I
That with the purpose of strengthening the supervision of General Warehouses, it is necessary to issue general provisions that establish minimum control, security, and surveillance measures that said Warehouses must implement to guarantee the adequate administration, handling, conservation, and custody of goods or merchandise received in deposit.

II
That based on the authority conferred by articles 2 and 139 of Law 734, Law of General Warehouses; and article 2, fourth paragraph, article 3, numeral 13), and article 10, numeral 2) of Law 316, Law of the Superintendence of Banks and Other Financial Institutions, and its reforms.

In exercise of its powers,

HAS ISSUED

The following:

Resolution No. CD-SIBOIF-675-1-MAY6-2011
NORM ON CONTROL, SECURITY AND SURVEILLANCE MEASURES FOR GENERAL WAREHOUSES

CHAPTER I
GENERAL PROVISIONS

Article 1. Concepts.-1 For the purposes of this norm, the terms indicated in this article, both in uppercase and lowercase, singular or plural, shall have the following meanings:

a) Warehouse Operator: General Warehouse. b) Warehouse Keeper: Natural person hired by the Warehouse Operator for the administration, handling, conservation, control, and custody of the quantity, quality, conditions, and characteristics of goods or merchandise received in deposit in warehouses or premises owned or directly leased by the Warehouse Operator; as well as for the permanent review of storage conditions and changes in the facilities. c) Auditor: Natural person hired by the Warehouse Operator to supervise the storage conditions and changes in the facilities; as well as to supervise the handling, conservation, control, and custody of the quantity, quality, conditions, and characteristics of goods or merchandise received in deposit in authorized warehouses. d) Warehouse Law: Law 734, Law of General Warehouses, published in La Gaceta, Official Diary, Numbers 201 and 202, of October 21 and 22, 2010, respectively. e) Merchandise: Goods or merchandise received in deposit in the premises authorized by the Superintendence. f) Superintendence: Superintendence of Banks and Other Financial Institutions. g) Superintendent: Superintendent of Banks and Other Financial Institutions. h) Guard or surveillance services: Legal entities hired with the aim of protecting and safeguarding the premises of the Warehouse Operators under the terms of Chapter III of this norm.

Article 2. Object and Scope.-2 This norm aims to establish minimum guidelines for control, security, and surveillance that Warehouse Operators must implement to guarantee the adequate administration and/or supervision of storage conditions and changes in the facilities; as well as the handling, conservation, control, and custody of the quantity, quality, conditions, and characteristics of goods or merchandise received in deposit.

1 Art. 1, amended on September 30, 2014 - Resolution CD-SIBOIF-855-1-SEP30-2014 2 Art. 2, amended on September 30, 2014 - Resolution CD-SIBOIF-855-1-SEP30-2014

Article 3. Control, security, and surveillance measures for Warehouse Operators.-3 To fulfill the object of this Norm, Warehouse Operators must implement the following minimum measures:

a) Hire warehouse keepers or auditors, as appropriate, who will be governed by the provisions established in Chapter II of this Norm. b) Hire surveillance services in accordance with the minimum requirements provided in Chapter III of this Norm.

It is the obligation of Warehouse Operators, depending on the nature of the authorized premises, to have warehouse keepers or auditors during the applicable hours.

In the event of the absence of the warehouse keeper, auditor, or guard due to force majeure or unforeseen circumstances, it is the obligation of the Warehouse Operators to take the necessary measures to remedy them and must notify the Superintendent of General Warehouses of this, as soon as they become aware of it, by email and/or telephone. In their internal control manuals, they must designate the persons responsible for immediately informing the Warehouse Operator of such absences and the procedures to remedy these unforeseen events.

CHAPTER II
ON THE WAREHOUSE KEEPER AND AUDITOR

Article 4. Minimum required qualities.-4 Every Warehouse Operator must hire the services of warehouse keepers or auditors, as appropriate. To this effect, they may only hire persons who meet the following minimum qualities:

a) Be of legal age; b) Have a minimum education level of high school diploma; and c) Have at least one year of work experience in inventory handling, or at least three months of specific experience in the administrative handling of the merchandise or goods subject to the deposit.

Warehouse Operators may waive the requirement established in subsection c) of this article when the interested party holds a university degree or technical career degree, in which case, they must undergo an induction and training period of one month so that the Warehouse Operator can guide them in the knowledge of their policies, procedures, internal controls, and functions to be performed for the handling, control, and custody of the merchandise. The foregoing must be documented in the respective personnel file.

3 Art. 3, amended on September 30, 2014 - Resolution CD-SIBOIF-855-1-SEP30-2014 4 Art. 4, amended on April 10, 2013 - Resolution CD-SIBOIF-776-1-ABR10-2013

Article 5. Information requirements.- For the purposes of the provisions in the preceding article, Warehouse Operators will require the following minimum information:

a) Photocopy of the identity card on both sides; b) Documented curriculum vitae; c) Certificate of judicial and police records, issued by the corresponding national authorities; d) A minimum of two (2) personal references.

Warehouse operators are obligated to evaluate the necessary documentation for identification, verification of education level, experience, work and/or personal references, criminal records, among others. Likewise, Warehouse Operators must keep a copy of said documentation in the corresponding file, as well as the evaluation and verification performed on them.

Article 6. Minimum functions of the Warehouse Keeper and the Auditor.-5 Without prejudice to the corporate governance policies approved by the Warehouse Operator on internal control, risk management, information flows, assignment of responsibilities, among others, the warehouse keeper or the auditor, respectively, shall have the following minimum specific functions:

1) Warehouse Keeper
a. The precise administration, handling, and control of inventory of goods or merchandise under their responsibility and according to the assignments given by the Warehouse Operator. b. The permanent update of inventory controls, ensuring that the storage of merchandise is carried out in such a way as to facilitate its location, counting, and verification.
c. Supervision and management for the adequate conservation of the merchandise under their responsibility in terms of its characteristics, conditions, quantities, and qualities.
d. The taking of physical inventories selectively, at least once a month, leaving a record of said inventories and their results in the corresponding incident log.

5 Art. 6, amended on September 30, 2014 - Resolution CD-SIBOIF-855-1-SEP30-2014

e. Supervision and management for the conservation of adequate storage conditions for the merchandise, which implies, among other aspects, the permanent review of physical facilities, ventilation, water supply, electrical supply, and alternate means if necessary, changes in physical facilities, access and drainage, rounds as a means of mitigating fire risks, means for controlling the weight of merchandise, warehouse-merchandise or merchandise-merchandise compatibilities, internal and external contamination risks, security mechanisms in gates and doors or similar (locks, padlocks, chains, or similar). f. The review of compliance with the basic conditions established in the insurance policy that protects the merchandise regarding the safeguarding of controls, surveillance, poles, distances, extinguishers, among others, and in case of the physical facilities, and to immediately report any non-compliance, both to their hierarchical superior and to the management of the Warehouse Operator. g. Inform their hierarchical superior and the management of the Warehouse Operator about potential risks that could affect the merchandise or physical works, if any, which did not exist at the time of authorization and initial use of the premises. h. Coordination with the surveillance contracted by the Warehouse Operator for the purpose of controlling the exit of merchandise received in support of Deposit Certificates with or without Pawn Bonuses.
i. The periodic report or communication to the management, vice-management, or corresponding instance regarding the compliance of their functions and attributions, as demanded by this instance.
j. Timely attention to delegates of the Superintendence, to holders of Deposit Certificates with or without Pawn Bonuses, and to officials of Insurance Companies, all duly identified, providing them with the required support for the exercise of their functions. k. Control and supervision of the security agent contracted by the Warehouse Operator, who will be under their subordination and who must support them at all times.
l. Immediately inform their hierarchical superior and the management of the Warehouse Operator about any situation that could put the deposited merchandise at risk or affect it.

2) Auditor
a. The supervision of the precise alternate or cross-check handling and control of inventory of goods or merchandise under their supervision and according to the assignments given by the Warehouse Operator.

b. The permanent update of alternate or cross-check inventory controls, ensuring that the storage of merchandise is carried out in such a way as to facilitate its location, counting, and verification.
c. Supervision and management for the adequate conservation of the merchandise under their supervision in terms of its characteristics, conditions, quantities, and qualities.
d. In addition to the functions mentioned above, the functions established in numeral 1), letters d, e, f, g, h, i, j, k, l, of this article are applicable to the auditor.

Article 7. Identification badge.- It is the obligation of the Warehouse Operator to provide the warehouse keeper or auditor with an ID badge that identifies them as an employee of the company, which must be worn at all times during the fulfillment of their responsibilities.

Article 8. Documentation and means.- It is the obligation of the Warehouse Operator to provide the documents, means, and conditions necessary for the warehouse keeper or auditor to exercise their functions effectively. In particular, but not limited to, they must facilitate the following:

a) Warehouse receipt; b) Exit dispatch; c) Inventory control sheet (kardex); d) Incident log, which must be permanently updated; e) Warehouse Operator labels; f) Control manual; g) Preventive and conservation plans when the nature of the product requires it; h) Radio or telephone, furniture, stationery, security measures (padlocks, chains, etc.) and technological means that allow them to perform their functions more expeditiously. i) Any other document or means necessary for the warehouse keeper or auditor to perform their functions in the most effective and efficient manner.

It is the faculty of the warehouse operator to provide the auditors with the documentation established in letters a) and b) of this article, since these supervise warehouses or authorized premises, which are under the direct responsibility of the respective warehouse guards established in the Warehouse Law.

Article 9. Fidelity insurance.- It is the obligation of the Warehouse Operator to hire fidelity insurance for the warehouse keepers and auditors that responds to eventual failures on their part in the fulfillment of their responsibilities, whose minimum amount must be equivalent in córdobas to fifty thousand United States dollars (US$50,000.00).

Article 10. Monthly report.-6 Warehouse Operators are obligated to send to the Superintendent, by magnetic medium, in electronic spreadsheet format, within the first twelve (12) days of each month, the Report of Active and Terminated Warehouse Keepers and Auditors in accordance with the format established in Annex 1 of this norm, which is an integral part of it.

6 Art. 10, amended on September 30, 2014 - Resolution CD-SIBOIF-855-1-SEP30-2014

CHAPTER III
ON THE CONTRACTING OF SURVEILLANCE SERVICES

Article 11. Minimum requirements and limitations for contracting.-7 Warehouse Operators must contract surveillance services for their premises from legal entities that meet the minimum requirements and limitations established in this article:

1) Minimum requirements:
a) Be legally constituted and registered in the Public Mercantile Registry; b) Have at least three (3) years of experience in surveillance services; c) Have the adequate human and technical resources for the service they provide; d) Have a license to operate as a surveillance services company, issued by the National Police.

Warehouse Operators must keep in the file of the respective contract the technical-economic offer of the contracted company, as well as the rest of the documentation that supports compliance with the aforementioned requirements.

2) Limitation:
Warehouse Operators may not contract the surveillance services of companies that provide this service to the depositor of the merchandise in the same premises where the merchandise backing their operations is stored.

7 Art. 11, amended on May 16, 2012 - Resolution CD-SIBOIF-728-3-MAY16-2012

Article 12. Minimum conditions of service contracts.-8 In surveillance service contracts, the following minimum conditions must be incorporated:

a) The obligation of the surveillance company to comply, at least, with the following requirements:
1) Equip their personnel with uniform, personal identification, regulation firearm, communication medium, as well as with the necessary technical equipment for operation, depending on the specific requirements of the Warehouse Operator.
2) Guarantee that the security agent holds a License for Use of Firearm issued by the National Police.
3) Ensure that security agents comply with the measures, guidelines, or internal regulations oriented by the Warehouse Operator.
4) Conduct field visits at the place where the service will be provided in order to prepare the corresponding security plan and provide the Warehouse Operator with pertinent recommendations in matters of security.
5) Inform the Warehouse Operator, immediately and in writing, about any anomaly or incident related to the topic of surveillance and protection of the premises where the service is provided.
6) Conduct supervision visits agreed upon with the Warehouse Operator to verify the compliance of the functions of the assigned security agent(s).
7) Keep a log or memory record to systematically and chronologically register all daily incidents of the premises.
8) Guarantee the control of entry and exit of merchandise, requiring a dispatch or order authorized by the corresponding official.
9) Hire civil liability insurance for damages to themselves or third parties, caused to the detriment of persons, for a minimum amount of twenty-five thousand United States dollars (US$25,000.00) or its equivalent in córdobas, in which case the coverage for damages to goods or merchandise safeguarded cannot be less than twelve thousand five hundred United States dollars (US$12,500.00) or its equivalent in córdobas.

8 Art. 12, amended on September 30, 2014 - Resolution CD-SIBOIF-855-1-SEP30-2014

b) The obligation of the Warehouse Operator to comply, at least, with the following requirements:
1) Implement in the premises where the service will be provided the security recommendations provided by the surveillance company.
2) Make known to the contracted company the policies, norms, guidelines, and other internal regulations that must be complied with by the personnel working for the Warehouse Operator or its visitors, and that must be guaranteed by the assigned security agent.
3) Immediately communicate to the contracted company about damaged or stolen merchandise detected in order to adopt the corresponding measures.
4) Prohibit their personnel from assigning the security agent tasks other than those contemplated in the contract.

CHAPTER IV
FINAL PROVISIONS

Article 13. Modification of Annexes.- The Superintendent is authorized to make the necessary modifications to the annexes of this Norm, which are an integral part of it.

Article 14. Repeal.- The Norm on Control, Security and Surveillance Measures for General Warehouses contained in Resolution CD-SIBOIF-615-1-FEB17-2010, published in La Gaceta, Official Diary No. 75, of April 23, 2010, is hereby repealed.

Article 15. Effectiveness.- This Norm shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Diary.

9 Annexes 1 and 2 amended and unified on September 30, 2014 - Resolution CD-SIBOIF-855-1-SEP30-2014

ANNEX 1

Cut-off Date:
1 2 3 4 5 6
Warehouse
Initials of Warehouse
ID Number of Warehouse Keeper or Auditor
Full Name (according to ID card)
Assigned deposit place or where assigned according to case Address of the deposit place Reasons for termination

1 Warehouse Initials
2 ID Number of Warehouse Keeper or Auditor
3 Full Name of Warehouse Keeper or Auditor as it appears on the ID card 4 Name of the assigned deposit place or where assigned according to case 5 Address of the assigned deposit place or where assigned according to case 6 Reasons for termination: End of contract, Resignation, Dismissal, Change of Position.

ANNEX 1: REPORT OF ACTIVE OR TERMINATED WAREHOUSE KEEPERS OR AUDITORS

(f) J. Rojas R. (f) V. Urcuyo V. (f) illegible (Silvio Moises Casco Marenco) (f) Fausto Reyes (f) U. Cerna B.

URIEL CERNA BARQUERO
Secretary of the Board of Directors SIBOIF