BOARD RESOLUTION NO. 071/2012

SUBJECT: FINANCIAL ENTITIES MANAGEMENT – APPROVES REGULATION FOR INTERNATIONAL REMITTANCE TRANSFERS.

VISTOS:

The Political Constitution of the State approved by referendum on January 25, 2009, and promulgated on February 7, 2009.

Law No. 1670 of October 31, 1995, of the Central Bank of Bolivia (BCB).

Law No. 1488 of May 5, 2004, on Banks and Financial Entities and its subsequent modifications.

The BCB Statute approved by Board Resolution No. 128/2005 of October 21, 2005, and its subsequent modifications.

The Payment Services Regulation approved by Board Resolution No. 121/2011 of September 27, 2011, modified by Board Resolution No. 059/2012 of May 22, 2012.

The Report from the Financial Entities Management BCB-GEF-SANA-DSP-INF-2012-154 of June 14, 2012.

The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2012-179 of June 15, 2012.

CONSIDERING:

That the Political Constitution of the State establishes in its article 328 that it is an attribution of the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by Law, to regulate the payment system.

That according to article 331 of the Political Constitution of the State, financial intermediation activities, the provision of financial services, and any other activity related to the handling, use, and investment of savings are of public interest and can only be exercised with prior authorization from the State, in accordance with the Law.

That Law No. 1670 provides in its articles 2, 3, and 30 that the BCB's objective is to ensure the stability of the internal purchasing power of the national currency, for whose compliance it formulates policies of general application in monetary and payment system matters, being subject to its regulatory competence all entities of

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financial intermediation and financial services authorized by the Superintendence of Banks and Financial Entities, currently named the Financial System Supervisory Authority (ASFI).

That Law No. 1488 in its articles 4 and 154, items 4 and 6, determines that financial intermediation activities and auxiliary financial services will be carried out by financial entities authorized by the ASFI, an Institution that has as an attribution, among others, to supervise natural or legal persons carrying out auxiliary financial intermediation activities, as well as, to incorporate into its scope of competence, in accordance with the BCB, other persons or entities that carry out financial intermediation activities.

That the Payment Services Regulation in its article 10, item e), indicates among the permitted payment services the payment of international remittances under contract with international remittance entities authorized for their operation by the authorities of the sending or beneficiary country.

That the Financial Entities Management through Report BCB-GEF-SANA-DSP-INF-2012-154 establishes that international remittance transfers are a regular and significant source of income for Bolivian families and constitute an important factor for the socio-economic and financial development of the country, so it is important to have specific regulations to promote their proper functioning.

That according to Report BCB-GAL-SANO-INF-2012-179, the Legal Affairs Management concludes that the proposal for the Regulation for International Remittance Transfers is legally appropriate, as it does not contravene the current legal framework, being the competence of the BCB Board to consider its approval.

That, the BCB Board in its capacity as the highest authority of the Institution, is responsible for defining its policies, specialized regulations of general application, and internal norms, being empowered to issue norms and adopt general decisions that may be necessary for the fulfillment of the functions, competencies, and powers assigned by Law to the Issuing Entity, as established in articles 44 and 54, item o) of Law No. 1670 and articles 9, 11, and 24 of the BCB Statute.

THEREFORE,

THE BOARD OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the Regulation for International Remittance Transfers, in its IV chapters and 14 articles, which in the annex, forms an integral part of this Resolution.

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Article 2.- This Regulation will enter into force from its approval.

Article 3. The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, June 19, 2012

Marcelo Zabalaga Estrada
Rafael Boyán Téllez
Hugo Dorado Araníbar
Rolando Marín Ibáñez
Ernesto Yáñez Aguilar

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ANNEX

REGULATION FOR INTERNATIONAL REMITTANCE TRANSFERS

CHAPTER I

PRELIMINARY PROVISIONS

Article 1.- (Object). The object of this regulation is to regulate International Remittance Transfer (IRT) operations that enter or leave Bolivian territory.

Article 2.- (Scope). This regulation is applicable to Financial Intermediation Entities (FIE) that have authorization and operating license from the Financial System Supervisory Authority (ASFI) and to Payment Service Providers (PSP) that have an operating license from the ASFI.

Article 3.- (Definitions). For the purposes of interpretation and application of this Regulation, the following definitions are established:

1. Exigible. Characteristic by which payment orders originating from IRTs accepted by a payment system are susceptible to settlement and execution.

2. Irrevocable or definitive: Characteristic by which payment orders originating from IRTs and accepted by a payment system cannot be denied, rejected, reversed, or annulled by the party that generated them or by the party that received them.

3. Payment order: Instruction or message by which the assignment and/or transfer of funds in favor of the beneficiary is requested. Includes electronic transfers.

4. International Remittance Transfers: Cross-border payments through which resident natural persons send/receive monetary resources to/from abroad through authorized FIEs or PSPs.

5. Validity: Characteristic by which payment orders originating from IRTs accepted by a payment system produce full legal effects between the issuer and the recipient.

6. Oversight: Function by which the BCB monitors, promotes changes in payment infrastructure (communication channels, operational schemes, instruments, and payment means), regulates tariffs, and issues regulations for the security and efficiency of payment systems.

Article 4.- (Validity and irrevocability of payment orders originating from IRTs). Payment orders originating from IRTs, their processing, and settlement are irrevocable,

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valid, and exigible. No norm or practice may challenge, annul, or reverse them. In the event of a need for amendment, correction, or rectification due to disagreements or errors regarding a payment order, it may be amended only with a new payment order.

CHAPTER II

ENTITIES PROVIDING THE IRT SERVICE

Article 5.- (Payment service and requirements). The payment of IRTs is a payment service and may be provided prior to compliance with what is defined in the Payment Services Regulation (PSR).

Article 6.- (Authorization for FIEs). The ASFI will determine the requirements to authorize FIEs to provide the IRT service in specific regulation and will verify compliance considering that the entity presents at least the following:

a) The stages and procedures inherent to IRT operations; b) The contracts signed with international IRT networks; c) Procedures and tasks for risk management.

Article 7.- (Obtaining operating license for PSPs)

I. PSPs must have an operating license granted by the ASFI to provide the IRT service. The ASFI will determine the requirements for the constitution and obtaining of operating licenses for PSPs and verify compliance, as well as what is stated in articles 5 and 8.

II. The ASFI will periodically publish a list of entities authorized to carry out IRT operations for public knowledge.

Article 8.- (Internal Operations Regulation - IOR). The IOR of PSPs providing the IRT service must contemplate at least the following:

a) Detailed description of the stages and procedures inherent to IRT operations; b) The contracts signed with international IRT networks; c) Procedures and tasks carried out for risk management; d) Identification of conditions and characteristics of IRT payments;

CHAPTER III

INSTITUTIONAL RESPONSIBILITIES AND COMPETENCIES

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Article 9.- (Oversight and supervision)

I. The BCB, within the framework of its attributions granted by Article 328 (item 3) of the Political Constitution of the State and Articles 3° and 20° of Law No. 1670, constitutes itself as the oversight authority for IRTs.

II. The ASFI, within the framework of the attributions granted by Law No. 1488, constitutes itself as the supervisory authority for IRTs.

Article 10.- (Audit on the origin of resources). Entities providing the IRT service must comply with the audit and control mechanisms on the legitimacy of resources defined by the ASFI through the Financial Investigations Unit.

Article 11.- (Consumer protection)

I. Entities providing the IRT service must adopt user protection measures and guarantee the fulfillment of the offered service.

II. The ASFI will determine the specific instances and procedures for public protection that use the IRT service and will verify compliance with established tariffs and/or commissions.

Article 12.- (Exchange rate, tariffs, and commissions applicable to IRTs). The BCB will define and periodically review the minimum and maximum exchange rates that companies providing the IRT service will apply to their clients and users. The tariffs and commissions applicable to IRTs will be subject to what is established in the Payment Services Regulation.

CHAPTER IV

COMPLEMENTARY CONDITIONS RELATED TO IRT OPERATIONS

Article 13.- (Information to the public). Entities providing the IRT service are obligated to inform the public about:

a) The detail of costs, tariffs, and other charges associated with IRT processing, which must be expressed in bolivianos; b) The currency in which the IRT will be effective; c) The delay time between the receipt and delivery of IRT resources within the framework of what is established in the PSR; and d) Other terms considered pertinent.

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Article 14.- (Publication of information). Entities providing the IRT service must obligatorily expose to the public the charges associated with IRT payment, as well as the exchange rate used for IRT operations on boards located in visible places. The BCB and ASFI will publish this information on their websites.

FINAL PART

FINAL PROVISION

Only.- (Adaptation period). PSPs and FIEs providing the IRT service must adapt to what is provided in this regulation and obtain an operating license or authorization complying with the specific regulation issued by the ASFI within a period of 360 calendar days from the approval of this regulation.