Regulation No. 2013-04 on Euro Banknotes and Coins

REGULATION
ON EURO BANKNOTES AND COINS
Year 2013 / Number 04
(Consolidated text as of 31/03/2023 – Update VI)

PART I
INTRODUCTION

Article 1 - Legislative Sources

1. This Regulation implements Law No. 101 of 29 July 2013, and is therefore issued in the exercise of the regulatory powers provided for in Article 38 of Law No. 96 of 29 June 2005 and subsequent amendments.

Article 2 - Definitions

1. For the purposes of this Regulation, the terms used shall be understood with the following meaning:

2. "Compliant Equipment": equipment for the authentication or authentication and sorting of euro banknotes that is included in the ECB list or equipment for the processing of coins that is included in the CTSE list;

3. "Cash Management Activities": activities aimed at preserving the integrity and condition of cash through:
   a) identification of euro banknotes suspected of being counterfeit, by verifying their distinctive and security features (authenticity checks); b) identification of euro banknotes that, due to their condition, are unsuitable for re-entry into circulation, either in counter operations or by feeding automatic cash dispensing devices (fitness checks); c) authentication of euro coins to identify those suspected of being counterfeit or unsuitable for circulation;

4. "Central Bank or BCSM": the Central Bank of the Republic of San Marino;

5. "System Data": information on the technological resources used by the cash handler for cash processing, for each counting location, including the number of distinct equipment models identified based on a code made available by the Central Bank, which identifies the equipment based on its hardware and software configuration. In the case of TARM and TAM equipment, the predominant mode of use (by customers or by management staff) is also indicated. Included in system data, without the need to be distinguished by installation location, are the total number of cash withdrawal dispensers, distinguished by type of equipment (ATM, SCoTS...), and the total number, broken down by model, of automatic deposit equipment available to customers that are not used for recycling purposes (e.g., CIM...);

6. "Operational Data": information on the number of banknotes and coins (flow data) processed during the reporting period;

7. "Sanctions Decree": Delegated Decree No. 116 of 8 August 2013 and subsequent amendments;

8. "ECB List": list of compliant equipment published on the website of the European Central Bank and reported, with a hyperlink, on the specific page of the website www.bcsm.sm;

9. "CTSE List": list of compliant equipment published on the website of the European Commission - Anti-Fraud Organisation (OLAF) and reported, with a hyperlink, on the specific page of the website www.bcsm.sm;

10. "Reporting Entities": cash handlers that participate in the recycling activity;

11. "GS1": integrated system of standards that assigns unique codes at the international level to products, services, and locations. These codes are distributed by the GS1 institute, an international non-profit organization, through its national representatives. The GS1 system includes the following codes:
    a) GLN – Global Location Number: uniquely identifies a physical location belonging to a specific subject (e.g., counting room); b) GTIN – Global Trade Item Number: uniquely identifies the products subject to reporting (e.g., denomination of banknotes or coins);

12. "Eurosystem": the ECB and the National Central Banks of the Member States of the European Union whose currency is the euro;

13. "Help desk": Payment System Department of the Central Bank, as referred to in Article 26, paragraph 3 of Law No. 96 of 29 June 2005 and subsequent amendments;

14. "Law": Law No. 101 of 29 July 2013 and subsequent amendments;

15. "LISF": Law No. 165 of 17 November 2005 and subsequent amendments;

16. "Counting Locations": premises where the cash handler has installed compliant equipment (whether reserved for staff or usable autonomously by customers) used for cash processing for recycling purposes, including counting rooms and counters. Each counting location is identified by a GLN code;

17. "Trained Staff": employees of cash handlers who have:
    a) knowledge of the different public security features of cash, as specified and published by the Eurosystem, and the ability to check them; b) knowledge of the selection criteria listed in Annex III of Law No. 101 of 29 July 2013 and the ability to check cash based on these criteria;

18. "Counting Room": counting location where cash processing relies exclusively on equipment reserved for staff (Staff Operated Machines - SOMs);

19. "Counter": counting location where cash handlers have installed recycling devices usable autonomously by customers (Cash Out Machines - COMs), excluding CIMs as they are not recycling equipment, or TARMs equipment used to feed automatic recycling devices (ATMs);

20. "BCSM Statute": Law No. 96 of 29 June 2005 and subsequent amendments;

21. "UCFM": the Central Office for Counterfeiting established within the Central National Interpol Office of the Republic of San Marino;

22. "BS Form": standardized form for the withdrawal of Suspicious Banknotes, in the version (layout) published on the website of the Central Bank of the Republic of San Marino (www.bcsm.sm);

23. "MS Form": standardized form for the withdrawal of Suspicious Coins, in the version (layout) published on the website of the Central Bank of the Republic of San Marino (www.bcsm.sm).

24. In the remainder of the text, the use of defined terms is highlighted in UPPERCASE.

25. For all terms not defined in paragraph 1, reference is made to the definitions and concepts contained in the articles of the LAW and in the legislative sources indicated in the definitions.

Article 3 - Objectives

1. This Regulation aims to integrate the legislation on euro banknotes and coins, as set out in the LAW, with further detailed and operational provisions recalled by the same LAW and addressed to cash handlers, so that they have the models and procedural indications necessary to implement the legislative provisions introduced for the full transposition of the EU acquis on authenticity and fitness checks of euro banknotes and coins.

Article 4 - Preparation

1. The Regulation, consistent with what is provided for in Article 38, paragraph 5 of LISF and the implementing Regulation No. 2006-02, was subject to prior public consultation.

Article 5 - Structure

1. The Regulation is divided into 5 Parts: the first introductory, the second concerning common provisions for euro banknotes and coins, the third concerning only banknotes, the fourth concerning only coins, and the last concerning final and transitional provisions.
2. This Regulation consists of an annex that forms an integral part of it.

PART II
Common Provisions for Euro Banknotes and Coins

Article 6 – Cash Management Activities

1. Subjects wishing to exercise CASH MANAGEMENT ACTIVITIES must inform BCSM and UCFM at least fifteen days in advance of the start of the activity, using the models indicated in Annex 1.
2. The same form as in the first paragraph must also be sent in the event of changes to the information contained therein within fifteen days of the change in information.
3. The cash handler must also communicate to BCSM and UCFM the cessation of the exercise of the relevant activity within thirty days of the cessation.

Article 7 - Authenticity and Fitness Checks via Compliant Equipment

1. The cash handler, except as provided in the following article, performs authenticity and fitness checks using COMPLIANT EQUIPMENT.
2. The ECB LIST and CTSE LIST are made available to cash handlers through further publication on the BCSM website.

Article 8 - Manual Authenticity and Fitness Checks

1. The cash handler may perform authenticity and fitness checks on banknotes and coins manually, i.e., without using COMPLIANT EQUIPMENT, only if the following conditions are met:
   a) manual checks are performed by TRAINED STAFF; b) banknotes are re-entered into circulation by staff at the COUNTER exclusively within the scope of public operations (e.g., payments, etc.).

Article 9 - Organizational Requirements

1. Cash handlers must have adequate technological resources and rely exclusively on COMPLIANT EQUIPMENT in compliance with the hardware and software standards published on the website of the ECB and the European Commission. Such equipment must be used according to factory settings, including any updates, subject to more restrictive settings agreed between BCSM and the cash handler. Contracts for the supply of equipment must expressly attest that the installation and operation methods comply with the standards published on the website of the ECB and the European Commission, and that maintaining these standards is subject to control within the periodic maintenance activity. The contract must also provide for the supplier's commitment to promptly inform the cash handler of changes to the software of the COMPLIANT EQUIPMENT and the deletion of the equipment from the ECB LIST or CTSE LIST.
2. Personnel employed by cash handlers must possess professional skills adequate to the activities performed and be constantly trained through appropriate training activities. In particular, cash handlers must have knowledge of the different public security features of cash, as specified and published by the EUROSYSTEM, and the ability to check them. For cases of manual checks permitted, personnel must also have knowledge of the selection criteria indicated in the Annexes of the LAW and the ability to verify cash according to these criteria.
3. The methods for carrying out the different phases of the cash processing process must be carried out according to documented procedures, indicating the responsibilities of the staff. In particular:
   a) procedures are defined for the prompt completion of the BS FORM and MS FORM for the withdrawal of banknotes and coins suspected of being counterfeit and their transmission to BCSM and UCFM; b) procedures are established to prevent cash belonging to each depositing subject from being improperly used.
4. The cash handler must set up internal information flows to ensure that personnel are aware of their role and the procedures to follow for the correct performance of their activities, having access to the relevant documentation, including operational manuals for each piece of equipment.
5. Internal controls must guarantee compliance with company procedures, prompt detection of deficiencies and anomalies, reporting thereof, and verification of subsequent corrective actions.
6. The cash handler must also set up measures for the correct and timely recording of management events and for sending to BCSM the information flows requested by it, with particular regard to the detection of cash processing phases to enable traceability along the cash processing chain, and also set up measures to protect the security of cash at all stages of processing.
7. BCSM verifies the implementation of what is provided for in the preceding paragraphs applying the principle of proportionality to take into account the size, complexity, and operations of the cash handler.
8. At least annually, the compliance function of the cash handler (or the function otherwise responsible for internal controls) must verify that the equipment for cash processing is periodically updated to maintain their detection capability, taking into account the changes introduced in the ECB LIST and CTSE LIST.

Article 10 - Outsourcing of Cash Processing

1. Cash handlers who outsource, in whole or in part, cash processing must provide in the relevant outsourcing contract at least:
   a) the obligation of the entrusted subject to adhere to legal and supervisory provisions on the authentication and sorting of cash for recycling purposes; b) the possibility for the client to verify the performance of the service rendered, also by accessing the premises of the entrusted subject and to request corrective measures, if necessary; c) the right of the client to withdraw without penalty, at least in the event that the counterparty repeatedly violates contractual obligations; d) procedures for the exchange of information and data; e) the indication of the subject responsible for sending statistical reports to BCSM.
2. At least annually, the compliance function of the cash handler (or the function otherwise responsible for internal controls) must evaluate and verify for outsourced activities the adequacy of the procedures and control systems put in place by the entrusted subject and the service levels ensured by them.
3. For cash handlers referred to in letters a), b), c), f) of Article 2, paragraph 1, point 13, of the LAW, the current supervisory provisions on outsourcing apply regardless.

Article 11 - Checks and Methods of Execution

1. BCSM, in order to verify compliance with provisions on cash management, pursuant to Articles 12 and 25 of the LAW, may acquire information, acts, and documents and carry out inspections.
2. Inspections are carried out by BCSM personnel equipped with a letter of appointment signed by the General Director or their substitute.
3. The appointees may request the presentation of any document or act they deem necessary, perform checks on the cash processed by the cash handler, and withdraw - after drawing up a specific delivery report - samples of banknotes and coins in order to subject them to authenticity and fitness checks at BCSM. In such cases, the inspected subject has the right to have their representative present at the verification.
4. Within 90 days from the conclusion of the investigations, the inspection results are made known through a written communication to the cash handler, which may also be delivered during a specific meeting with the inspected subject, in the presence of the legal representative of the handler. The term may be interrupted if there is a need to acquire new information elements.
5. Within 30 days from the delivery of the communication referred to in the previous paragraph, the cash handler communicates to BCSM its considerations regarding the findings and observations made, also giving notice of measures already taken or intended to be taken to remove the alleged irregularities.
6. For the execution of checks against cash handlers, BCSM may avail itself of the collaboration of UCFM, based on the Memorandum of Understanding referred to in Article 3 of the LAW, without prejudice to the autonomous power of control of UCFM pursuant to Article 12, paragraph 3 of the LAW.
7. During the inspections referred to in this article, cash handlers must provide maximum cooperation in the execution of the investigations, the lack of which constitutes in itself a sanctionable non-compliance.

Article 12 - Corrective Interventions

1. BCSM, subject to what is provided for by the SANCTIONS DECREE, may request the cash handler to adopt corrective measures, indicating the timeframes for their adoption. Until the alleged non-compliance has been remedied, BCSM may, within 120 days from the detection of irregularities, on behalf of the ECB, adopt the measure prohibiting the re-entry into circulation of the denomination or denominations of banknotes or coins of the series concerned.
2. The prohibition measure assumed by BCSM against the cash handler is published on the BCSM website.

Article 13 - Statistical Reporting

1. Cash handlers qualifying as REPORTING ENTITIES send periodic information to BCSM which is used to monitor the cash recycling activity and the developments of its cycle. BCSM may publish reports and statistics using the acquired data, aggregating them so that they cannot be attributed to individual REPORTING ENTITIES.
2. The REPORTING ENTITY, even when relying on subjects external to its organization for the submission of reports, is responsible for the correctness of the information sent to BCSM and for compliance with the submission deadlines.
3. The technical instructions on the methods for submitting reports are contained in the "Operational Manual for Statistical Reporting by Cash Handlers" which will be made available to REPORTING ENTITIES, in its first version, on the BCSM website (www.bcsm.sm) at least 60 days in advance of the expiry of the statistical monitoring obligations referred to in the following Article 32, paragraph 1.
4. REPORTING ENTITIES continue to send reports according to the Manual referred to in the previous paragraph until its subsequent modification, published by BCSM in the same manner but with an express indication of the start date.

Article 14 - Coding System

1. The monitoring of the recycling activity carried out by REPORTING ENTITIES presupposes registries that allow for the unique identification of subjects and locations where the activity is carried out: for this purpose, GS1 coding is adopted.
2. Each REPORTING ENTITY must be equipped with its own GS1 code. The REPORTING ENTITY provides GLN codes to its legal seat and COUNTING LOCATIONS. The REPORTING ENTITY is responsible for the correct use of the codes assigned, with particular regard to safeguarding the requirement of uniqueness - even historical - of the registered COUNTING LOCATIONS.
3. Within the reports, different denominations of banknotes and coins are identified through GTIN codes provided by BCSM.

Article 15 - Content of Statistical Reports

1. Statistical reports concern:
   a) COUNTING LOCATIONS, except for REPORTING ENTITIES that participate in the recycling activity exclusively through their own cash withdrawal dispensers, for which this information is not due; b) SYSTEM DATA; c) OPERATIONAL DATA concerning, distinctly by GTIN, the number of:

1. banknotes and coins processed using COMPLIANT EQUIPMENT, indicating the quantities withdrawn from circulation and those recycled. The data must be distinguished by COUNTING LOCATION and, within this, by the entity owning the cash processed. By owning entity is meant, in the case of a REPORTING ENTITY that directly processes cash deposited by customers, the entity itself, while in the case of a REPORTING ENTITY that processes cash on behalf of third parties, the subjects on whose behalf the service is performed. The data must be reported by the REPORTING ENTITY that processed the cash. In the case of cash processing carried out under outsourcing, the parties (client and outsourcer) identify, notifying BCSM promptly, the subject responsible for sending the data. If the processing process adopted by the REPORTING ENTITY provides for a first part of counting and authenticity verification and a second phase of fitness selection, associated or not with new authenticity verification, the processing is to be considered unitarily for the calculation of quantities to be reported;

2. cash distributed overall through cash withdrawal dispensers.

2. The data referred to in the preceding paragraph, letters b) and c), are provided by completing the forms attached to the Manual referred to in the previous Article 13, paragraph 3.
3. Automatic coin dispensers (CDM) are exempt from reporting obligations.

Article 16 - Frequency of Reports

1. Reports regarding SYSTEM DATA and OPERATIONAL DATA are sent semi-annually within the following timeframes:
   a) Reference Period: First semester of the year Submission Period: 1 July - 31 July b) Reference Period: Second semester of the year Submission Period: 1 January - 31 January of the following year.
2. Reporting of COUNTING LOCATIONS is carried out upon their opening. Furthermore, REPORTING ENTITIES promptly communicate to BCSM any cessation or change of address, in order to keep the cash processing points constantly updated.

Article 17 – Correction of Reports

1. Without prejudice to the obligation of REPORTING ENTITIES to adhere to the technical instructions contained in the Manual referred to in the previous Article 13, paragraph 3:
   a) the submission of a corrective report always determines the cancellation of the previous one with reference to the reports of SYSTEM DATA...