Regulation No. 2018-02 - Amending Regulations No. 2006-03, No. 2007-07, No. 2011-03, No. 2014-04, and No. 2016-02

THE DEPUTY DIRECTOR
OF THE CENTRAL BANK OF THE REPUBLIC OF SAN MARINO

HAVING REGARD to Law No. 165 of 17 November 2005 (Law on Banking, Financial and Insurance Enterprises and Services), and in particular Article 39, which grants the Central Bank of the Republic of San Marino the power to issue measures containing binding and general provisions;

HAVING REGARD to the Statute of the Central Bank of the Republic of San Marino approved by Law No. 96 of 29 June 2005, and in particular Article 30, paragraph 3, according to which acts of the Central Bank in matters of supervision, deliberated by the Supervisory Coordination, are issued by the General Director, and Article 14, paragraph 5, which regulates the case of absence or impediment of the General Director;

HAVING REGARD to the resolutions of the Supervisory Coordination and the Board of Directors by which the text of Regulation No. 2018-02, named "Amending Regulation of Regulations No. 2006-03, No. 2007-07, No. 2011-03, No. 2014-04, No. 2016-02", was approved;

ISSUES the attached Regulation No. 2018-02 which enters into force on 31 August 2018.

San Marino, 28 August 2018
Signed: THE DEPUTY DIRECTOR
Dr. Raffaele Mazzeo

AMENDING REGULATION OF
REGULATIONS NO. 2006-03, NO. 2007-07, NO. 2011-03, NO. 2014-04, NO. 2016-02 Year 2018 / Number 02

Central Bank of the Republic of San Marino
Regulation No. 2018-02 - Amending Regulation of Regulations No. 2006-03, No. 2007-07, No. 2011-03, No. 2014-04, No. 2016-02 3

Article 1 - Amendments to Regulation No. 2006-03

1. The following definition has been inserted into Article 1, paragraph 1:
   aa.bis) "branch": definition described in paragraph 1 of Article 1 of Law 165 of 17 November 2005;

Article 2 - Amendments to Regulation No. 2007-07
1. Definition No. 88 of Regulation No. 2007-07 is integrated as follows:
88. "branch": subject to the definition in paragraph 1 of Article 1 of Law 165 of 17 November 2005, for the purposes of this Regulation, it is understood as the location of a bank's activity mainly dedicated to direct relations with the public.
As a permanent operational point, even if not operating continuously, which directly with the public, in whole or in part, carries out the bank's activity, the definition of branch includes special operational counters (for example, seasonal or occasional), while the following are not included:
a) home banking equipment as well as automatic teller machines (ATMs and POS) where bank staff is not present; b) administrative offices even when clients have access to them; c) temporary operational points at fairs, markets, exhibitions, and occasional events.

Article 3 - Amendments to Regulation No. 2011-03
1. Definition No. 82 of Regulation No. 2011-03 is integrated as follows:
82. "branch": subject to the definition in paragraph 1 of Article 1 of Law 165 of 17 November 2005, for the purposes of this Regulation, it is understood as the location of a financial company's activity mainly dedicated to direct relations with the public;

Article 4 - Amendments to Regulation No. 2014-04
1. Definition No. 75 of Regulation No. 2014-04 is integrated as follows:
75. "branch": subject to the definition in paragraph 1 of Article 1 of Law 165 of 17 November 2005, for the purposes of this Regulation, it is understood as the location of activity, distinct from the administrative headquarters, that directly carries out some operations or the set of operations pertaining to the institute's activity;

Article 5 - Amendments to Regulation No. 2016-02

1. The following definition has been inserted into Article I.I.2, paragraph 1:
   39.bis) "branch": definition described in paragraph 1 of Article 1 of Law 165 of 17 November 2005;

Central Bank of the Republic of San Marino
Regulation No. 2018-02 - Amending Regulation of Regulations No. 2006-03, No. 2007-07, No. 2011-03, No. 2014-04, No. 2016-02 4
2. Article I.II.1, paragraph 2 is modified as follows:
2. These regulatory provisions, which harmonize the methods of representing balance sheet elements for enterprises subject to this Regulation, are formulated in transposition of European Union Directives 86/635/EEC and 89/117/EEC and subsequent amendments, also with the aim of progressively preparing the financial system for the application of IAS-IFRS principles.
3. To Part IX "Publicity" – Title 1 – Publicity of the balance sheet and consolidated balance sheet, the following new article and related paragraphs have been inserted:
IX.I.2. Accounting documents of branches of foreign entities.

1. The SAN MARINO BRANCHES of foreign entities established in EU countries publish in the Republic of San Marino:

• the annual balance sheet and, if prepared, the consolidated balance sheet of their parent company, both compiled and audited according to the methods and international accounting principles provided by the legislation of the country where the parent company is headquartered. The aforementioned balance sheets are accompanied by management and audit reports;
• the following supplementary information regarding the activity of the branches themselves:
  o asset items: "Treasury bills and other financial instruments eligible for refinancing at central banks", "Loans to credit institutions", "Loans to customers", "Bonds and other debt financial instruments", "Shares, quotas and other equity financial instruments" and "Total assets"; o liability items: "Debts to credit institutions", "Debts to customers", "Debts represented by financial instruments"; o income statement items: "Interest income and assimilated income", "Active commissions", "Profits (losses) from financial operations", "Other management income", "Administrative expenses", "Taxes for the year"; o guarantees and commitments: items "Guarantees issued" and "Commitments"; o number of people employed on average by the BRANCH; o allocation for the following items "Treasury bills and other financial instruments eligible for refinancing at central banks", "Bonds and other debt financial instruments", "Shares, quotas and other equity financial instruments" depending on whether they are considered or not FINANCIAL FIXED ASSETS. The accounting items mentioned above are recorded and valued according to what is provided by this Regulation and the implementing Circular, and audited according to the legislation in force in the Republic of San Marino.

2. The SAN MARINO BRANCHES of foreign entities established in countries not part of the European Union are required to publish in the Republic of San Marino the annual balance sheet and, if prepared, the consolidated balance sheet of their parent company, both compiled and audited according to the methods and international accounting principles provided by the legislation of the country where the parent company is headquartered; the aforementioned balance sheets are accompanied by management and audit reports.
   Subject to what is provided in Article 75 of Law 165 of 17 November 2005, the publication of accounting information concerning the activity of SAN MARINO BRANCHES of foreign entities established in countries not part of the European Union is provided for in the following cases, with the indicated methods:

• if the parent company's balance sheet documents have been prepared in conformity with or equivalent to European Union Directive No. 86/635/EEC and subsequent amendments, the BRANCHES publish the supplementary information referred to in the previous paragraph 1, recorded and valued according to what is provided by this Regulation and the implementing Circular, and audited according to the legislation in force in the Republic of San Marino;
• in cases other than the previous paragraph, the BRANCHES publish the annual accounts concerning their own activity (balance sheet, income statement, and notes) compiled according to what is provided by this Regulation and the implementing Circular, and audited according to the legislation in force in the Republic of San Marino.

3. The balance sheets, reports, and supplementary information are translated into Italian. The conformity of the translation to the original language version is certified, with a specific written declaration to be published together with the balance sheet.

Article 6 – Entry into force

1. This Regulation enters into force on 31 August 2018.

Article 7 – Consolidated texts

1. The consolidated texts with the modifications introduced by this Regulation will be made available on the website of the Central Bank of the Republic of San Marino (www.bcsm.sm).