Regulation No. 2025-01 - Miscellany of Targeted Review Interventions to Current Supervisory Provisions

THE GENERAL MANAGER
OF THE CENTRAL BANK OF THE REPUBLIC OF SAN MARINO HAVING REGARD TO Law 17 November 2005, No. 165 (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 with Law 29 June 2005, No. 96 and in particular Article 30, paragraph 3, pursuant to which the acts of the Central Bank in matters of supervision, deliberated by the Supervisory Coordination, are issued by the General Manager; CONSIDERING the needs to:

• update the text of regulations and circulars to subsequent variations and integrations of the regulatory framework;
• consolidate on a normative basis the interpretative and applicative orientations already expressed by the Supervisory Authority;
• harmonize the homogeneous disciplines contained in sector regulations and separate the attached forms when for self-declaration or otherwise for supervision;
• strengthen in clarity, completeness and effectiveness the text of certain provisions, based on application feedback;
• introduce norms of cross-cutting scope and/or interpretative nature applicable to the supervisory regulation;
  HAVING REGARD TO the deliberations of the Supervisory Coordination and the Board of Directors with which the text of Regulation No. 2025-01 named “Miscellany of targeted review interventions to current supervisory provisions” was approved; ISSUES the attached Regulation No. 2025-01 which enters into force on 28 January 2025. San Marino, 27 January 2025 THE GENERAL MANAGER (Signed) Dr. Andrea Vivoli

MISCELLANY
OF TARGETED REVIEW INTERVENTIONS
TO CURRENT SUPERVISORY PROVISIONS year 2025 / number 01

INDEX
Article 1 - Amendments to Circular No. 2017-03 “information obligations regarding corporate and consolidated financial statements” ....................................................................................................................................................1
Article 2 - Amendments to Circular No. 2017-04 “information obligations – accounting status”......................2
Article 3 - Amendments to Regulation No. 2022-04 “securitizations and servicers” .............................................3
Article 4 - Amendments to Circular No. 2023-01 “minimum coverage of deteriorated credit exposures of banks”.......................................................................................................................................................................3
Article 5 - Amendments to Regulation No. 2007-07 “banking activities” ................................................................4
Article 6 - Amendments to Regulation No. 2015-01 “informational supervision” .......................................................6
Article 7 - Amendments to Regulation No. 2024-02 “insurance and reinsurance distribution”.....................6
Article 8 - Amendments to Regulation No. 2008-01 “insurance activities – life branches”.......................................8
Article 9 - Amendments to Regulation No. 2021-02 “rigor procedures” ....................................................... 13
Article 10 - Amendments to Regulation No. 2014-01 “financial promotion and off-site offers”........... 14
Article 11 - Amendments to Regulation No. 2020-03 “independent financial consultants”............................ 15
Article 12 - Amendments to Regulation No. 2010-01 “professional trustees” ................................................... 16
Article 13 – Final provisions........................................................................................................................................16
Article 14 – Transitional provisions and entry into force ...........................................................................................18
Article 15 – Consolidated texts .................................................................................................................................19

Article 1 - Amendments to Circular No. 2017-03 “information obligations regarding corporate and consolidated financial statements”

1. In Chapter 9, paragraph 9.2, Table 16.2 “Liabilities for electronic money” is transferred from “Other liabilities” to “Liabilities to customers” assuming the numbering 14.2.

2. In Chapter 9, paragraph 9.5, Table 24.1 “Detail of item 40 Active Commissions” is added, before the residual item “Other services”, which therefore assumes letter r), the following item:
   “q) Commissions related to servicing activities”.

3. In Chapter 9, paragraph 9.6, the new section 38 and Table 38.1 are added as reported below:
   “38. Securitization
   Table 38.1: Summary statement of securitized assets and issued securities
   In the following table, companies performing servicing activities record the ceded credits, the issued securities and the further information relating to securitization operations, distinguished by single operation.
   A. Securitized assets
   A1) credits
   A2) securities
   A3) other
   B. Use of funds arising from credit management B1) debt securities B2) equity securities B3) other
   C. Issued securities
   C1) category A securities
   C2) category B securities
   C3) ......................
   (to be specified for all classes of securities) D. Loans received E. Other liabilities F. Interest expenses on issued securities () G. Commissions and fees charged to the operation () G1) for servicing service G2) for other services H. Other charges
   I. Interest generated by securitized assets ()
   L. Other revenues ()
   (*) items to be completed according to the economic accrual principle”

4. In Chapter 11, paragraph 11.3, Table 18.2 “Liabilities for electronic money” is transferred from “Other liabilities” to “Liabilities to customers” assuming the numbering 16.2.

5. In Chapter 11, paragraph 11.6, Table 27.1 “Detail of item 40 Active Commissions” is added, before the residual item “Other services”, which therefore assumes letter r), the following item:
   “q) Commissions related to servicing activities”.

6. In Chapter 11, paragraph 11.7, the new section 45 and Table 45.1 are added as reported below:
   “45. Securitization
   Table 45.1: Summary statement of securitized assets and issued securities
   In the following table, companies performing servicing activities record the ceded credits, the issued securities and the further information relating to securitization operations, distinguished by single operation.
   A. Securitized assets
   A1) credits
   A2) securities
   A3) other
   B. Use of funds arising from credit management B1) debt securities B2) equity securities B3) other
   C. Issued securities
   C1) category A securities
   C2) category B securities
   C3) ......................
   (to be specified for all classes of securities) D. Loans received E. Other liabilities F. Interest expenses on issued securities () G. Commissions and fees charged to the operation () G1) for servicing service G2) for other services H. Other charges
   I. Interest generated by securitized assets ()
   L. Other revenues ()
   (*) items to be completed according to the economic accrual principle”
   Article 2 - Amendments to Circular No. 2017-04 “information obligations – accounting status”

7. In Chapter 16, paragraph 8 is modified as follows:
   “8. Pursuant to paragraph 7 of Article 142 of the LISF, the SUPERVISORY AUTHORITY may, by its own measure, also during the maintenance period, modify the ROB rate applied, equal, upon entry into force of this CIRCULAR, to 5%, the components of the aggregate subject to reserve, the composition of the BLOCKED DEPOSIT, the duration of the reference and maintenance periods, the STATEMENT for the calculation of the reserve due, the remuneration rate, as well as provide for forms of mobilization of the reserve.”.

8. In Chapter 24, after paragraph 2 the following paragraph is added:
   “3. PAYMENT INSTITUTIONS and IMEL classify payment accounts in the ITEM “Liabilities to customers.”.”.
   Article 3 - Amendments to Regulation No. 2022-04 “securitizations and servicers”

9. In Article 33, paragraph 2 is modified as follows:
   “2. IGRC also applies the provisions contained in:

• Regulation No. 2016-02;
• Circular No. 2017-03 (excluding paragraphs 4.1, paragraph 3, 4.2 and 4.3);
• Regulation No. 2015-01, Part II (excluding Article II.III.3) and Part III, Title II.”.
  Article 4 - Amendments to Circular No. 2023-01 “minimum coverage of deteriorated credit exposures of banks”

1. In Chapter 1, the following definitions are modified as follows:

• “age: number of days (converted into years) elapsed between the date on which the exposure was last classified as deteriorated and the reference date, regardless of the event that determined the classification as NPE. Age is computed in the same way for all categories of deteriorated credit exposures (including therefore “probable defaults” and “overdue exposures”), with consequent continuation of the count, without restart, for exposures that are reclassified into a different category within the deteriorated credit exposures;”;
• “accounting coverage: partial write-offs, analytical and lump-sum impairments and provisions for guarantees and commitments, pursuant to BCSM Regulation No. 2016-02;”;
• “prudential coverage”: capital coverage, additional to those referred to in Article VII.II.6 of BCSM Regulation No. 2007-07, equal to any gap between the supervisory expectation on deteriorated credit exposures and the related accounting coverage;
• “NPE ratio: ratio between the gross accounting value of deteriorated credit exposures, as defined above, and the total gross accounting value of credit exposures, excluding from the ratio calculation any deposits with central banks and sight deposits with other credit institutions.”.

2. In Chapter 1, the definitions are reordered alphabetically and marked with the symbol ■ instead of the letter of the alphabet.
3. In Chapter 4, paragraph 2 is modified as follows:
   “2. If the ACCOUNTING COVERAGE with reference to each DETERIORATED CREDIT EXPOSURE were lower than the related SUPERVISORY EXPECTATIONS, the bank is required to cover the negative deviation with PRUDENTIAL COVERAGE of equal amount.”.
4. Chapter 6 is modified as follows:
   “6. REVISION OF SUPERVISORY EXPECTATIONS
5. If the COVERAGE is lower than the SUPERVISORY EXPECTATIONS, the bank has the burden to document in advance to the CENTRAL BANK, with at least 30 days' notice prior to the deadline for forwarding the relevant prudential supervision report, the reasons supporting such deviation for each of the DETERIORATED CREDIT EXPOSURES that contribute to determining it.
6. In cases where the CENTRAL BANK does not consider the reasons adduced acceptable based on the elements acquired via paper and/or inspection, it proceeds to the adoption of specific measures against the bank pursuant to Article 10 of Delegated Decree 26 March 2019 No. 50 or Article 44 of the LISF, unless alignment is achieved by the bank following the adversarial proceedings initiated.”.

Article 5 - Amendments to Regulation No. 2007-07 “banking activities”

1. In Article I.I.2, paragraph 1, the definition of “private economic interests” is eliminated.
2. In Article II.III.3, paragraph 1 is modified as follows:
   “1. The sums credited to savings deposits, unlike those deposited on passive current accounts, cannot be the subject of payment operations as the relationship, lacking an IBAN, as defined in Article 3 of Regulation No. 2024-04, cannot be qualified as a payment account pursuant to the same Regulation.”.
3. In paragraph 1 of Article II.II.4, after letter g) the following letter is added:
   “h) trade in investment precious metals pursuant to Delegated Decree No. 134/2023 and subsequent modifications, unless expressly provided for in the corporate object and registration in the appropriate Register of Professional Operators.”.
4. In Part IV, Title II, Chapter IV is titled as follows: “Time availability”.
5. Article IV.II.11 is modified as follows:
   “Article IV.II.11 – Time availability for the performance of duties
6. Each MANAGEMENT EXECUTIVE dedicates adequate time to the performance of the duty. Upon appointment and promptly in case of subsequent events, they communicate to the COMPETENT BODY the duties held in other companies, enterprises or entities, the other work and professional activities carried out and the other situations or facts relating to the professional sphere capable of significantly impacting their time availability.
7. The bank ensures that the MANAGEMENT EXECUTIVE is aware of the time it has estimated as necessary for the effective performance of the duty.
8. Based on the information obtained pursuant to paragraph 1, the COMPETENT BODY evaluates whether the time each MANAGEMENT EXECUTIVE can dedicate is suitable for the effective performance of the duty. If the MANAGEMENT EXECUTIVE is the HEAD OF THE EXECUTIVE STRUCTURE of the bank, the evaluation may yield a positive outcome only where any additional duties at other companies are functional to the bank's activity.
9. The COMPETENT BODY continuously verifies the actual time availability of MANAGEMENT EXECUTIVES, also in light of their attendance at their own meetings and those of committees (Executive Committee or Technical Committees internal to the bank).
10. If time availability is insufficient, the COMPETENT BODY may:
    a) request the MANAGEMENT EXECUTIVE to renounce one or more duties or activities or to formally commit to dedicating more time to the exercise of their duty; b) adopt measures useful to reduce the time required for the duty, including the revocation of delegations or specific tasks or the exclusion of the MANAGEMENT EXECUTIVE from the committees referred to in the previous paragraph 4.
11. The compliance with the commitments assumed by the MANAGEMENT EXECUTIVE is verified pursuant to the previous paragraph 4. The evaluation regarding time availability does not have autonomous relevance for the pronouncement of the dismissal of the MANAGEMENT EXECUTIVE but contributes to the evaluation of the other requirements and criteria of the MANAGEMENT EXECUTIVE.”.
12. Articles IV.II.12 and IV.II.13 are repealed.
13. In Article IV.III.3, paragraph 1, letter c) is modified as follows:
    “c) to the evaluation of the suitability of the interested party with respect to the requirements and criteria provided for in the previous Title II together with the overall adequacy of the COMPETENT BODY and the time availability of its members.”.
14. In Article IV.III.3, paragraph 4 is modified as follows:

“4. In case of specific and limited deficiencies referred to the criteria of competence and adequate collective composition of the COMPETENT BODY and of time availability, the BODY itself may adopt necessary measures to fill them or to address them as provided for in Articles IV.II.6 bis, IV.II.6 quinquies and IV.II.11, such as, by way of example: preparation of a specific training program; provision of a probationary period; renunciation of external duties; adoption of specific internal policies that ensure the identification, management and prevention of conflicts of interest.”.
9. In Article IV.III.4, paragraph 1, letters d) and e) are modified as follows:
“d) specify the evaluations carried out on the adequacy of the collective composition of the body; e) indicate, in case of specific and limited deficiencies referred to the criteria of competence, adequate collective composition of the COMPETENT BODY and time availability, what measures have been adopted to fill them or address them, pursuant to the previous Article IV.III.3, paragraph 4, as well as specify the reasons why, in the opinion of the COMPETENT BODY, they are considered sufficient to ensure compliance with such criteria or to eliminate the criticalities found.”.
10. In Article IV.III.6, paragraph 3 is modified as follows:
“3. If the CENTRAL BANK finds specific and limited deficiencies referred to the criteria of competence and adequate collective composition of the BODY and of time availability, it may impose conditions for the overcoming of the deficiencies or criticalities found, also ordering the summoning of the MANAGEMENT EXECUTIVE and the respective COMPETENT BODY, to acquire further information regarding the position of the MANAGEMENT EXECUTIVE and of the COMPETENT BODY as a whole.”.
11. In Article VII.III.4, paragraph 3 is modified as follows:
“3. The weighting system referred to in the previous paragraphs is applied to the values recorded in accounting pursuant to Regulation No. 2016-02, reduced by the amount of the related deductions from supervisory capital pursuant to Article VII.II.4, paragraph 1, letter d) as well as by the prudential coverages referred to in Circular No. 2023-01.”.
12. In letter b), of paragraph 2 of Article VII.III.11, point I) is modified as follows:
“I) partial write-offs and analytical and lump-sum impairments referred to in Article III.II.6 of Regulation No. 2016-02;”.
13. In Article VII.III.12, paragraph 6 is modified as follows:
“6. Paragraphs 4 and 5 apply only in relation to the first concession measure that has been granted since the exposure was last classified as a deteriorated credit exposure.”.
14. In Article VII.III.13, paragraph 1 is modified as follows:
“1. For the purposes of Article VII.III.11, paragraph 2, letter a), the value of the deteriorated credit exposure is equal to the value recorded in accounting pursuant to Regulation 2016-02, increased by the partial write-offs and analytical and lump-sum impairments referred to in Article III.II.6 of Regulation No. 2016-02.”.
15. In Article VII.IV.5, paragraph 1 is modified as follows:
“1. The assumption of a risk position falling within the definition of LARGE RISK, pursuant to Article VII.IV.1, must be previously approved by the Board of Directors with a specific resolution.”.
16. In Title XI of Part VII, after Article VII.XI.5 the following Article is inserted:
“Article VII.XI.6 - Variation of the corporate object

1. In cases where the statutory modification concerns one or more variations of the corporate object, the authorization request referred to in Article VII.XI.1 must also contain all the information necessary to describe, in cases of reduction of the corporate object, the neutrality of the intervention with respect to existing positions, while, in cases of expansion of the corporate object:
   a) the methods of carrying out the new activities; b) investments in human capital, tangible assets and technology that are deemed necessary; c) the impacts on organizational adequacy profiles referred to in the previous Title IX; d) the expected results from the carrying out of the new activities.
2. The authorization for the statutory modification for the variation of the corporate object is also valid for the purposes of the previous Articles II.II.3, II.II.4 and II.II.5, as well as for those of Title VII of Part III.”.
   Article 6 - Amendments to Regulation No. 2015-01 “informational supervision”
3. In Article II.III.2, paragraph 9 is modified as follows:
   “9. The REPORTING ENTITY, if it intends to disable a specific user code (username) for access to the reserved area of the website and/or request the issuance of a new password or otherwise modify the list of subjects authorized to access the information systems made available by the Supervisory Authority, must make the subject of a specific communication to the CENTRAL BANK, signed in conformity with what provided for in the previous paragraph 7, second sentence.”.
4. By virtue of Article 15 paragraph 7 of Regulation No. 2024-01, paragraphs 4 of Articles II.II.1 and II.II.2 are modified in order as follows:
   “4. The REPORTING MODELS are adopted by deliberation of the Supervisory Coordination of the CENTRAL BANK, updated to conform them to any modifications of their respective OPERATIONAL MANUALS, and brought to the knowledge of the REPORTING ENTITIES in advance of their effective date proportional to the different relevance and different operational impacts of each REPORTING MODEL and of each of its updates.”; “4. The OPERATIONAL MANUAL and its updates are adopted by deliberation of the Supervisory Coordination and communicated with methods analogous to those described above for the REPORTING MODELS.”.
   Article 7 - Amendments to Regulation No. 2024-02 “insurance and reinsurance distribution”
5. In Article 1, paragraph 1, the definitions of “off-site staff” and “Heads of distribution activities” are modified as follows:
   “off-site staff”: those who, although not responsible for distribution activities (RAD), such as legal representatives, directors or employees of the insurance or reinsurance intermediary registered in the Register, carry out their distribution activity also outside the premises where the intermediary has its headquarters (off-site) as well as economic operators commissioned by them (so-called sub-intermediaries, such as collaborators or producers), provided they are different from insurance or reinsurance intermediaries, who carry out insurance and reinsurance distribution activity, on behalf and under the responsibility of the aforementioned intermediary (vertical collaboration); “Heads of distribution activities” or “RAD”: natural persons who, within the insurance or reinsurance company or the insurance or reinsurance intermediary, operate exclusively, have directive functions and/or decision-making powers with related responsibilities and exercise functions of direction and/or coordination or control of insurance and reinsurance distribution. In the case of intermediaries having the form of a sole proprietorship, the RAD coincides with the natural person who is the owner;
6. In Article 5, paragraph 1 is modified as follows:

B