Regulation No. 2022-02 on the Extraordinary Fund for Protection Against Financial Fraud

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

HAVING REGARD to Delegated Decree 17 December 2018 n.168 and subsequent amendments (Extraordinary Fund for Protection Against Financial Fraud), and in particular Article 7 which attributes to the Central Bank of the Republic of San Marino the implementing regulation;

HAVING REGARD to Delegated Decree 24 January 2022 n. 9 (Methods for reimbursing sums to trustees of S.M.I. S.P.A.) and in particular Article 1, paragraph 2, which refers to the aforementioned regulation, and Article 7 which sets the deadline of 28 February 2022;

HAVING REGARD to Law 29 June 2005 n. 96 and subsequent amendments (Statute of the Central Bank of the Republic of San Marino) and in particular Article 30, paragraph 3, which attributes the issuance of acts of the Central Bank to 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 Supervision Coordination and the Board of Directors with which the text of Regulation No. 2022-02 named “Regulation on the Fund for Protection Against Financial Fraud” was approved;

ISSUES the attached Regulation No. 2022-02 which enters into force on 28 February 2022.

San Marino, 24 February 2022
Signed: THE DEPUTY DIRECTOR f.f.
Avv. Giuseppe Ucci

REGULATION
ON THE EXTRAORDINARY FUND FOR PROTECTION
AGAINST FINANCIAL FRAUD year 2022 / number 02

INDEX

PART I INTRODUCTION .......................................................................................................................................3
TITLE I PREMISE ................................................................................................................................................3
Article I.I.1 – Legislative Sources .................................................................................................................................... 3
Article I.I.2 – Definitions ............................................................................................................................................ 3
TITLE II CHARACTERISTICS OF THE DECISION .................................................................................4
Article I.II.1 – Subject Matter ................................................................................................................................................ 4
Article I.II.2 – Structure............................................................................................................................................... 4

PART II CHARACTERISTICS AND BODIES OF THE FUND ....................................................................................5
TITLE I CHARACTERISTICS ................................................................................................................................5
Article II.I.1 – Nature of the fund.................................................................................................................................. 5
Article II.I.2 – Financial Endowment .......................................................................................................................... 5
TITLE II MANAGEMENT BODY .......................................................................................................................5
Article II.II.1 – Appointment and Composition..................................................................................................................... 5
Article II.II.2 – Competences ....................................................................................................................................... 6

PART III OPERATING RULES OF THE FUND ..................................................................................7
TITLE I EXTENT OF PROTECTION .............................................................................................................7
Article III.I.1 – Scope of Intervention .......................................................................................................................... 7
Article III.I.2 – Entitled Subjects .................................................................................................................................... 7
Article III.I.3 – Excluded Subjects .................................................................................................................................. 7
Article III.I.4 – Time Limits on Protection .................................................................................................................... 8

TITLE II CLAIM FOR COMPENSATION ...............................................................................................................9
Article III.II.1 – Content and Form of the Claim .................................................................................................... 9
Article III.II.2 – Deadlines for Filing the Claim ........................................................................................... 10

TITLE III EXAMINATION AND RESOLUTION OF CLAIMS ................................................................... 10
Article III.III.1 – Examination of Claims .................................................................................................................... 10
Article III.III.2 – Support of Liquidation Commissioners ........................................................................................... 11
Article III.III.3 – Deadline for the Central Bank’s Decision ........................................................................ 11
Article III.III.4 – Administrative Judicial Appeal......................................................................................... 12

TITLE IV MEASURE OF COMPENSATION ........................................................................................................... 12
Article III.IV.1 – Maximum Limit of Compensation ................................................................................................... 12
Article III.IV.2 – Determination of the Measure of Compensation ............................................................................... 13

TITLE V DISTRIBUTION PLAN .............................................................................................................................. 13
Article III.V.1 – Preparation .............................................................................................................................. 13
Article III.V.2 – Financial Coverage ...................................................................................................................... 14

TITLE VI PAYMENT OF COMPENSATIONS ................................................................................................. 14
Article III.VI.1 – Payment Provisions ............................................................................................................ 14
Article III.VI.2 – Residual Compensations to be Paid ......................................................................................................... 15

PART IV FINAL AND TRANSITIONAL PROVISIONS .......................................................................................... 16
TITLE I TRANSITIONAL PROVISIONS ............................................................................................................ 16
Article IV.I.1 – Opening of Deadlines for Equal Access ............................................................................................. 16
Article IV.I.2 – Coordination with Delegated Decree n. 9/2022 ............................................................................. 16

TITLE II FINAL PROVISIONS ........................................................................................................................ 16
Article IV.II.1 – Entry into Force ............................................................................................................................. 16
Article IV.II.2 – Advance Claims ........................................................................................................................ 16

ANNEX A……………………………………………………………………………………………………………...18

PART I
INTRODUCTION
Title I
Premise

Article I.I.1 – Legislative Sources

1. This Regulation is issued in implementation of Article 7 of Delegated Decree 17 December 2018 n. 168, as modified by Article 4 of Law 3 October 2019 n. 154, in accordance with what is provided for by Delegated Decree 24 January 2022 n. 9.

Article I.I.2 – Definitions

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

• “T/Q check”: a check of transfer and receipt, i.e., a non-transferable check, attesting to a sum available to a beneficiary, payable on sight by the latter, after the beneficiary himself has affixed the signature for transfer on the front of the check and for receipt on the back of the same;

• “Central Bank”: Central Bank of the Republic of San Marino referred to in Law 29 June 2005 n. 96 and subsequent amendments;

• “fraudulent conduct”: frauds or swindles referred to in Article 3 of Delegated Decree 17 December 2018 n. 168 and subsequent amendments;

• “Decree”: Delegated Decree 17 December 2018 n. 168 and subsequent amendments;

• “claim”: request for reimbursement by way of compensation to the extraordinary fund for protection against financial fraud;

• “financial endowment”: total financial resources of the extraordinary fund for protection against financial fraud;

• “FSFF”: extraordinary fund for protection against financial fraud established at the Central Bank pursuant to Article 88 of Law 21 December 2017 n. 147 and regulated by Delegated Decree 17 December 2018 n. 168 and subsequent amendments;

• “LISF”: Law 17 November 2005 n. 165 and subsequent amendments;

• “compulsory administrative liquidation”: procedure referred to in Part II, Title II, Chapter II of Law 17 November 2005, n. 165 and subsequent amendments;

• “management body”: internal body of the Central Bank referred to in Article 6, paragraph 1 of Delegated Decree 17 December 2018 n. 168 and subsequent amendments;

• “financial loss”: unjust economic damage suffered by clients of a financial enterprise to which fraudulent conduct can be attributed;

• “financial ceiling”: aggregate of appropriations of resources in the public budget in favor of the extraordinary fund for protection against financial fraud, also pursuant to Article 6, paragraph 2, of Delegated Decree 17 December 2018 n. 168 and subsequent amendments, not yet transferred to the aforementioned fund;

• “jointly held legal relationship”: a legal relationship registered in the name of two or more clients, or on which two or more clients have rights, exercised through the signature of one or more of such clients;

• “authorized subjects”: financial enterprises established in San Marino territory authorized to exercise one or more reserved activities referred to in Annex 1 of the LISF;

• “passive state”: statement prepared by the Liquidation Commissioners within the framework of the compulsory administrative liquidation procedure referred to in Article 90, paragraph 6, of Law 17 November 2005, n. 165 and subsequent amendments, including the Separate Section for those entitled to the return of goods.

2. Unless otherwise specified, for the purposes of these provisions, the definitions contained in the LISF apply.
3. In the subsequent articles of this Regulation, the words referring to the definitions referred to in the previous paragraph 1 are reported in CAPITAL LETTERS.

Title II
Characteristics of the decision

Article I.II.1 – Subject Matter

1. This Regulation, in conformity with what is established by Article 7 of the DECREE, regulates:
   a) the methods of presenting the CLAIM and the conditions; b) the documentation necessary to attach to the CLAIM; c) the deadlines for filing the CLAIM; d) the response times of the CENTRAL BANK on the CLAIMS received; e) the cases of exclusion; f) the criteria for quantifying the compensation; g) the methods for presenting opposition in case of rejection, total or partial, of the CLAIM; h) the methods for demonstrating the absence of concrete possibilities of recovery.

Article I.II.2 – Structure

1. This Regulation is divided into IV Parts, each of which is divided into Titles. Each Title is divided into Articles.
2. The Article, which represents the basic normative unit, has a composed numbering, i.e., formed by three different sub-numberings, separated by a dot: the first indicates the Part, the second the Title, the third the Article.

PART II
CHARACTERISTICS AND BODIES OF THE FUND

Title I
Characteristics

Article II.I.1 – Nature of the fund

1. Pursuant to Article 6, paragraph 1, of the DECREE, the FSFF has the nature of an asset with an autonomous destination, i.e., it enjoys perfect patrimonial autonomy with respect to the CENTRAL BANK, responding within the limits of its FINANCIAL ENDOWMENT.
2. The FSFF does not have its own legal personality, distinct from that of the CENTRAL BANK entity, which, pursuant to the same Article 6, paragraph 1, of the DECREE, administers it through the MANAGEMENT BODY appointed internally pursuant to Article II.II.1 and within the framework of the norms on organization and personnel of the CENTRAL BANK referred to in Chapter I, Title V, of Law 29 June 2005 n.96 and subsequent amendments.

Article II.I.2 – Financial Endowment

1. The FINANCIAL ENDOWMENT is constituted through payments of financial resources by the Honorable Chamber of the Republic of San Marino, made within the limit of the FINANCIAL CEILING and the spending authorizations issued by the Congress of State based on distribution plans approved.
2. The FINANCIAL ENDOWMENT is held at the CENTRAL BANK for the strictly necessary time to execute the payment of recognized compensations.
3. By virtue of what is provided for in the previous paragraphs and in Article II.I.1, the FINANCIAL ENDOWMENT temporarily available at the CENTRAL BANK is held in demand deposits in a dedicated, interest-free account registered to the FSFF.
4. In the absence of actual management activity of the FINANCIAL ENDOWMENT, the preparation of an annual account of the FSFF is not required.

Title II
Management Body

Article II.II.1 – Appointment and Composition

1. The powers of administration of the FSFF belong to the CENTRAL BANK, for whose exercise it appoints internally an appropriate MANAGEMENT BODY, composed of at least 3 members, chosen among those executives or employees who collectively possess the necessary competencies and, for the functions performed, the information useful for carrying out the assignment.
2. The appointment and replacement of the members of the MANAGEMENT BODY belongs to the Board of Directors of the CENTRAL BANK, as well as the choice, among them, of who assumes the presidency.

Article II.II.2 – Competences

1. The MANAGEMENT BODY referred to in the previous article has the following competences:
   a) examines the CLAIMS received and manages their investigation using the executive structure of the CENTRAL BANK and in respect of its internal regulations; b) decides on the acceptance, partial or total, of the CLAIMS, or their rejection; c) determines, in case of acceptance, the measure of the recognized compensation; d) prepares annually the distribution plan of the FSFF for the payment of compensations; e) transmits the distribution plan to the State Secretariat for Finance and Budget and to the Public Finance Directorate for the release by the Congress of State of the spending authorization decision and for the consequent payment to the FSFF of the financial resources to be distributed; f) orders, based on the executive distribution plan, the payment of compensations in favor of entitled persons; g) prepares an information on the activities carried out which is inserted within the Annual Report to the Great and General Council referred to in Article 4, paragraph 2, of Law 29 June 2005 n. 96 and subsequent amendments; h) manages any further aspect related to the functioning of the FSFF; i) carries out the activities provided for by this Regulation and prepares the related external communications.
2. The determinations of the MANAGEMENT BODY are taken through resolutions, collected in an appropriate register with numbered loose leaves.

PART III
OPERATING RULES OF THE FUND

Title I
Extent of Protection

Article III.I.1 – Scope of Intervention

1. By virtue of what is provided for in Article 5, paragraph 2, of the DECREE, the FSFF compensation interventions are subordinate to the fact that the AUTHORIZED SUBJECT has been declared insolvent, pursuant to Article 98 of the LISF, within the framework of a COMPULSORY ADMINISTRATIVE LIQUIDATION.
2. The FSFF intervenes with reimbursements towards subjects who satisfy the conditions referred to in Article III.I.2 and who have presented a regular CLAIM.
3. The FSFF compensation interventions are disposed of following a specific resolution of the MANAGEMENT BODY.

Article III.I.2 – Entitled Subjects

1. Pursuant to what is established by the DECREE, the subjects, other than those referred to in Article III.I.3, for whom the following conditions are jointly satisfied, have the right to be compensated by the FSFF:
   a) they have employed or invested their own financial resources at an AUTHORIZED SUBJECT, even through the establishment of a fiduciary mandate; b) they have suffered, in light of the employment or investment referred to in letter a), a FINANCIAL LOSS deriving from the commission of FRAUDULENT CONDUCT that has been judicially established, even solely for the purpose of access to the FSFF, or, in the cases referred to in the following Article III.I.4 paragraph 3, at least formally reported to the Judicial Authority, with suitable documentation supporting the report, within one year from the date on which the PASSIVE STATE became executable; c) they have no concrete possibility of recovering the FINANCIAL LOSS due to the established insolvency of the AUTHORIZED SUBJECT; d) they are registered in the PASSIVE STATE of the AUTHORIZED SUBJECT referred to in the previous letter a); e) they waive, to the extent of the compensation received, any credit, reimbursement or further compensation connected with the damage suffered in favor of the Honorable Chamber of the Republic of San Marino, also through the subrogation of the latter, always within the limits of the compensation paid by the FSFF, in the rights deriving from the registration referred to in the previous letter d).
2. In the event of death of the subjects referred to in the previous paragraph, the heirs succeed to the right to compensation.

Article III.I.3 – Excluded Subjects

1. The following categories of subjects are excluded from the protection of the FSFF:

a) subjects other than natural persons; b) shareholders of the AUTHORIZED SUBJECT who held, on the date of the start of the COMPULSORY ADMINISTRATIVE LIQUIDATION, on their own behalf or on behalf of third parties, directly or indirectly, at least 5 percent of the capital; c) members of the board of directors and the general manager of the AUTHORIZED SUBJECT in the two years preceding the COMPULSORY ADMINISTRATIVE LIQUIDATION decision; d) subjects recipients of sanctioning measures by the CENTRAL BANK or the Financial Information Agency regarding violations that contributed to determining the COMPULSORY ADMINISTRATIVE LIQUIDATION of the AUTHORIZED SUBJECT; e) subjects against whom a final conviction has been issued for the crime of money laundering; f) subjects who contributed to determining the insolvency of the AUTHORIZED SUBJECT, as established by the COMPULSORY ADMINISTRATIVE LIQUIDATION Commissioners; g) subjects who have suffered final convictions following the exercise of liability actions or within the framework of proceedings connected to the COMPULSORY ADMINISTRATIVE LIQUIDATION of the AUTHORIZED SUBJECT, ordered by the competent San Marino or foreign Authorities; h) those who, on the date of the start of the COMPULSORY ADMINISTRATIVE LIQUIDATION, are the spouse, the subject linked by civil union and the cohabiting partner of the subjects referred to in the previous letters.

Article III.I.4 – Time Limits on Protection

1. In the case of a criminal judgment of conviction that has become final and establishes the commission of FRAUDULENT CONDUCT by an AUTHORIZED SUBJECT from which FINANCIAL LOSSES resulted for clients, the latter may present a CLAIM provided that the judgment has intervened subsequently to the date of entry into force of the DECREE, pursuant to the combined provisions of Article 2, paragraph 1, and Article 8, paragraph 4, of the aforementioned DECREE.
2. In cases where, although no criminal final judgment has been reached, indications and evidence regarding the criminal responsibility of the AUTHORIZED SUBJECT for FRAUDULENT CONDUCT from which FINANCIAL LOSSES resulted for clients have been acquired in judicial proceedings, the latter may present a CLAIM provided that a decision by the Judge has intervened establishing the conditions for access to the FSFF, pursuant to what is provided for in Article 2, paragraph 1 bis, of the DECREE, subsequently to the date of entry into force of the aforementioned DECREE.
3. Outside the cases referred to in the previous paragraphs, access to the FSFF for clients of insolvent AUTHORIZED SUBJECTS subject to COMPULSORY ADMINISTRATIVE LIQUIDATION, who have suffered FINANCIAL LOSSES, is permitted, pursuant to Article 2, paragraph 1 ter of the DECREE, solely if the MANAGEMENT BODY has established, following examination of the CLAIM pursuant to the following Article III.III.1, the correlation with the presumable commission of FRAUDULENT CONDUCT committed in the 10 years prior to the date of entry into force of Law 3 October 2019 n.154.

Title II
Claim for Compensation

Article III.II.1 – Content and Form of the Claim

1. The subjects referred to in Article III.I.2 or their attorneys, in order to have the right to compensation recognized, are required to present a CLAIM using the model referred to in Annex A and transmitting it by courier, registered mail with return receipt or T-NOTICE or PEC.
2. The CLAIM contains the following information and declarations:
   a) name and surname, place and date of birth, ISS code or equivalent foreign tax code, residence of the requesting subjects; b) in the case of requesting subjects who have succeeded mortis...