Resolution Reforming Articles 9 and 11 of the General Standard on Imposition of Fines Applicable to General Warehouses

Resolution No. CD-SIBOIF-855-2-SEP30-2014
Dated September 30, 2014

NORM REFORMING ARTICLES 9 AND 11 OF THE GENERAL STANDARD ON IMPOSITION OF FINES APPLICABLE TO GENERAL WAREHOUSES

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I
That on May 11, 2011, the General Standard on Imposition of Fines applicable to General Warehouses was approved, contained in Resolution No. CD-SIBOIF-676-1-MAY11-2011, published in La Gaceta, Official Journal No. 107, on June 10, 2011.

II
That it is necessary to reform Articles 9 and 11 of the aforementioned standard to align the infractions and sanctions contained therein with the recent updates made to the regulatory framework applicable to General Warehouses.

III
That in accordance with the considerations set forth above, and based on what is established in the second paragraph of Article 152 of Law 734, General Warehouse Law, published in La Gaceta, Official Journal, Numbers 201 and 202, on October 21 and 22, 2010, respectively, which empowers this Board of Directors to establish, through general standards, the amounts of fines within the ranges indicated in the aforementioned Law, adapted to the gravity of the offense, as well as their recurrence cycles.

In exercise of its powers,

HAS ISSUED

The following:

Resolution No. CD-SIBOIF-855-2-SEP30-2014
NORM REFORMING ARTICLES 9 AND 11 OF THE GENERAL STANDARD ON IMPOSITION OF FINES APPLICABLE TO GENERAL WAREHOUSES

FIRST: Articles 9 and 11 of the General Standard on Imposition of Fines applicable to General Warehouses, contained in Resolution No. CD-SIBOIF-676-1-MAY11-2011, published in La Gaceta, Official Journal No. 107, on June 10, 2011, are hereby reformed, to read as follows:

"Art. 9.- Imposition of fines for the increase in risks.- As indicated in Article 146 of the Warehouse Law, with respect to the prevention of money laundering or SIPAR LD/FT in accordance with the PLD/FT Standard, warehouses shall be sanctioned by the Superintendent as follows:

a. Range:
2,500 to 6,600 fine units.

b. Infractions and applicable amount.

1. When the warehouse does not have a Money Laundering Prevention Program (SIPAR LD/FT) in accordance with the relevant laws and the PLD/FT Standard.
   Amount: 6,600 fine units.

2. When the Money Laundering Prevention Program (SIPAR LD/FT) presents material or significant deficiencies, both in its content and in its execution, the sanction will be applied within a range of 2,500 to 6,600 fine units, as determined by said deficiencies, including:

i. When its implementation or execution is deficient, increasing the risk profile of the warehouse.
ii. When the warehouse does not have an Internal Policies and Procedures Manual or Compliance Manual for Money Laundering Prevention.
iii. When, despite having an Internal Policies and Procedures Manual or Compliance Manual for Money Laundering Prevention, it is inadequate or incongruent with the complexity of its products and services, volume, or risk profile of the warehouse or the market in which it operates; does not have specific procedures or is not duly updated in accordance with the relevant norm and law, duly approved by the warehouse's Board of Directors;

iv. When the documentation regarding customer identification, verification measures, and due diligence in the files is incomplete or inappropriate in accordance with the minimum requirements of the relevant regulations and/or with respect to the warehouse's own "Customer Due Diligence" (CDD) policies, indicating inadequate or deficient execution.
v. When the warehouse does not have a Prevention Administrator duly appointed by its Board of Directors and invested with the due authority and organizational, administrative, and functional autonomy, dedicated to the implementation and monitoring of the SIPAR LD/FT.
vi. When the financial, human, technological, and material resources assigned by the warehouse's Board of Directors to carry out the execution of the money laundering prevention program are not commensurate with the volume, complexity of its financial products and services, service and business technology, or risk profile of the institution or the market in which it operates.
vii. When it does not have and/or does not execute a Training Program on the SIPAR LD/FT with its due budgetary allocation for execution; or, if it exists, it is deficient, inadequate, or incongruent in relation to the complexity, size, or risk profile of the warehouse, or if this Program is executed in a deficient manner.
viii. Lack of a Code of Conduct that incorporates the policies adopted by the warehouse's Board of Directors for the prevention of money laundering and other assets, or when it exists, it is inadequate or insufficient.
ix. When the internal audit function is insufficient or deficient in the permanent review of the SIPAR LD/FT in accordance with the relevant regulations or with respect to the warehouse's own audit program.
x. For the non-execution or late execution of the external audit for the verification of the efficacy and quality of the SIPAR LD/FT, in accordance with the relevant regulations, or that, having been carried out, the results thereof were deficient and inadequate with respect to the results of inspections carried out by the Superintendence.
xi. For other circumstances, in which, due to the deficient implementation of a SIPAR LD/FT, the risk profile of the warehouse is negatively affected.

3. When the warehouse fails to comply with the obligation to report to the competent authority, according to the relevant law, unusual operations or transactions that are suspected of constituting the crime of Money Laundering.
   Amount: 2,500 to 6,600 fine units.

4. The person holding any of the following categories: manager, official, Prevention Administrator, or any other employee of the warehouse who discloses or informs the client that their transaction is being analyzed or considered for a possible Suspicious Transaction Report or who informs them that such a report has been filed.
   Amount: between four and eight monthly salaries of the person involved in the infidelity according to the categories cited above. The Superintendent may also order their removal from office.

5. When it concerns the person occupying the position of director who discloses or informs the client that their transaction is being analyzed or considered for a possible Suspicious Transaction Report or who informs them that such a report has been filed. The amount of this fine must under no circumstances come from the funds and assets of the warehouse. The Superintendent may also order their removal from office.
   Amount: 5,500 to 10,000 fine units.

Art. 11.- Imposition of fine for infractions to laws, regulations, and resolutions of the Superintendence.- In accordance with what is indicated in Article 150 of the Warehouse Law, when Warehouses infringe any of the provisions contained in the Warehouse Law; in the regulations issued by the Board of Directors of the Superintendence; in the orders, resolutions, or instructions issued by the Superintendent; as well as in other laws and norms of a warehouse, or if documents or reports received do not correspond to their true situation, the Superintendent may impose fines in accordance with the following:

Gravity of Infractions:
For the purposes of this article, infractions are classified as minor, moderate, and grave.

1. Minor Infractions: The following constitute minor infractions, among others:

a) When interest and commissions corresponding to pending payments are not paid in advance at the time of renewal of commercial credits with certificate of deposit and pledge bond. b) That provisions for accounts receivable are not made in accordance with the regulations governing the matter on the evaluation of balances in accounts receivable and goods acquired in recovery by general warehouses. c) That in the case of adjudication of goods received in recovery of accounts receivable, provisions are not implemented in the amounts, percentages, and times established in the regulations governing the matter on the evaluation of balances in accounts receivable and goods acquired in recovery by general warehouses. d) When in the sale of merchandise operations on behalf of third parties, the sale conditions are not clearly established, such as prices, currency, maximum and minimum quantities of merchandise to be sold, place of delivery of the merchandise, handling of funds, commissions, and other requirements that must be observed in the operation. e) When the warehouse issues an invoice for the sale of merchandise received in deposit. f) When in the purchase of merchandise operations on behalf of third parties, in the corresponding agreement or contract, the purchase conditions are not clearly established, such as prices, currency, quantities, class, and qualities of the merchandise, place where they will be stored, storage costs, surveillance, insurance, and transport, if applicable, of the merchandise, handling of funds, commissions, and other requirements that must be observed in the operation. g) When in the purchase of merchandise operations on behalf of third parties, the warehouse's own funds are used, except for import product purchase operations, which shall be governed by the regulations governing the matter on financing granted by general warehouses and goods acquired in recovery. h) When in the purchase of merchandise operations on behalf of third parties, such merchandise is not delivered to its owner within the period established in the corresponding agreement or contract, after covering expenses, commissions, and other services provided by the warehouse or within the period and conditions established in the deposit titles or contracts, if they have been issued or signed. i) When in the sale of merchandise operations on behalf of third parties, the proceeds of the sale are not delivered to the owner of the merchandise within the period established in the corresponding agreement or contract, after covering the warehouse's expenses, commissions, and advances, without prejudice to the priority of payment of obligations referred to in Article 77 of the Warehouse Law, as applicable. However, this offense will be considered grave if it violates the payment priority and harms state institutions and municipal governments. j) When the weighing services provided by warehouses are carried out using scales that are not calibrated and certified by
experts in the matter and whose calibrations and certifications are older than one year at the time of the corresponding weighings. k) When the storage premises, where required, are not equipped with precise scales certified by specialists in the matter and whose certification age exceeds one year at the time of the corresponding weighings; however, the warehouse must periodically review the proper functioning of said scales. l) The lack of signs with the warehouse's distinctive mark, placed in visible places in the authorized premises. m) When inspections are not carried out monthly, selectively, and with the minimum scope established in the operational and financial regulations of general warehouses. n) The lack of updated documentation in insurance files. o) Regarding auctions:

i. The lack of written communication to the Superintendent, with at least three days' advance notice, of the auction or auctions to be held in accordance with Article 74 of the Warehouse Law.
ii. The publication of incomplete information in auction notices.
iii. Preventing or limiting interested public from physically observing the merchandise within the three-day period prior to the auction.

p) That valid and/or unpaid Deposit Certificates with Pledge Bonds taken by the warehouse, and/or blank forms, are not kept in secure places under the control of officials appointed by the Board of Directors or by the General Management of the warehouse. q) That the originals of the Deposit Certificates and Pledge Bonds that are returned by their holders for substitution, or because the merchandise has been released and/or removed and/or all obligations derived from these documents have been canceled, are not invalidated with a date and "canceled" stamp and/or that titles that are invalidated are not invalidated with the "void" stamp and their originals and copies are not archived chronologically. r) That the Unique Control File for each Deposit Certificate issued and Pledge Bonds, if applicable, is not updated and/or immediately available to the Superintendence personnel. s) When they do not keep complete and/or permanently updated records of merchandise inventory in deposit, Deposit Certificates, and, if applicable, Pledge Bonds issued, canceled, unpaid, and voided. t) Any other infractions of equal or similar gravity committed against legal, regulatory, and other applicable provisions, as well as instructions of the Superintendent. For this type of infractions, the Superintendent will apply a sanction of 250 to 1,000 fine units.

2. Moderate Infractions: The following constitute moderate infractions, among others:

a) Not provisioning 100% of documented credits (commercial credits without Pledge Bonds), which have not been converted to credits backed by Deposit Certificates and Pledge Bonds within thirty (30) days of maturity. b) That in the case of adjudication of goods received in recovery of credits, provisions are not implemented in the amounts, percentages, and times established in the regulations governing the matter on financing granted by general warehouses and goods acquired in recovery. c) That there is no or the fidelity insurance of warehouse keepers and inspectors is not in force, which responds to eventual failures of the same in the fulfillment of their responsibilities, or that the insured amount is less than fifty thousand United States dollars (US$50,000.00) or its equivalent in cordobas. d) When the existing inventory control is not carried out individually and by product, by physical or electronic means, and/or under the perpetual inventory system. e) When in the storage of merchandise, its ordering is not maintained to facilitate location, counting, and verification thereof and/or when applicable, a uniform system of pallets, units of measurement (boxes and/or packages and/or bales, etc., of the same characteristics and content) and/or equal weights, and if applicable, labels and/or control cards is not used. f) The lack of indication in the deposit certificate and pledge bond or on an attached sheet, of the risks covered by the corresponding insurance policy. g) The lack of annotation and/or countersigning of merchandise deliveries in the copies of the control file of the Unique Deposit Certificate file and the releases in the copy of the Pledge Bond. h) Issuing deposit certificates and pledge bonds with empty spaces, smudges, stains, amendments, or alterations of any type and/or not indicating whether the merchandise is subject to the payment of taxes, as well as that any other special condition or observation regarding the merchandise and/or that the general terms and conditions specifying the rights and obligations of the parties are not on the reverse of these documents and are not printed in easily legible lettering. i) When the minimum five-year (5) period for the conservation of documents, accounting records, and instruments containing figures, and any other pertinent information supporting financial operations, is not complied with, and/or this documentation is not archived in places with adequate security levels and with due protection, so as to avoid damage from humidity, pests, fungi, solar rays, and/or internal or external contamination and any other circumstance detrimental to its good condition. j) Any other infractions of equal or similar gravity committed against legal, regulatory, and other applicable provisions, as well as instructions of the Superintendent. For this type of infractions, the Superintendent will apply a sanction of 1,001 to 3,000 fine units according to materiality.

3. Grave Infractions: The following constitute grave infractions, among others:

a) Granting documented credits (commercial credits without Pledge Bonds) violating any of the following conditions:

i. That said credits are to finance operations not linked to goods or merchandise deposited in the warehouse's warehouses or whose import destination and/or export origin is the same warehouse.
ii. That they are granted for terms greater than sixty (60) calendar days.
iii. That they are granted for amounts greater than seventy-five percent (75%) of the estimated value of the total merchandise.
b) Granting commercial credits with deposit certificates and pledge bonds that violate any of the following conditions:

i. That their amount exceeds seventy-five percent (75%) of the estimated value of the merchandise or goods consigned in said titles.
ii. That their sole renewal exceeds the period of 180 days after the expiration of the title that gave rise to the renewal and/or that it does not incorporate in the observations section the legend "Renewal of the title", including in it the number of the title being renewed.
iii. That they are renewed more than once.
c) When there is no updated analysis of the characteristics of the merchandise, with the scope indicated in the regulations governing the operational and financial matter of general warehouses and/or of an updated acceptable valuation of the goods or merchandise backing the deposit certificate and pledge bond corresponding. d) When commercial credits with deposit certificates and pledge bonds, which have not been paid at maturity, are not transferred to overdue commercial credits at sixty-one (61) days from maturity and/or that once classified as overdue, they are not provisioned at one hundred percent (100%). e) When the value of all Deposit Certificates issued by a warehouse exceeds 30 times the amount of its capital calculation base. f) That the value of all deposit certificates issued by a warehouse for the same client, natural or legal person, in authorized premises, exceeds 15 times its capital calculation base. g) When the value of all merchandise received in deposit exceeds the limit established in Article 96 of the Warehouse Law. h) Storing merchandise in premises not authorized by this Superintendence and/or when the requirements and conditions authorized by the Superintendent for the use of these premises have not been met and maintained. i) Providing inventory administration services in foreign premises, constituting themselves as depositors of the merchandise. j) When it is not stated in the Deposit Certificate issued with or without Pledge Bond, that the merchandise may be subject to incorporation of value-added processes and transformation, repair, and assembly, in accordance with letters e) and f) of Art. 57 of the Warehouse Law. k) That the sale of merchandise is carried out when pledge bonds have been issued on them. l) When the certification of the qualities of the merchandise and its valuation are carried out with merchandise that is not in deposit quality under the responsibility of the warehouse keeper and in premises authorized by the Superintendence, whether own, rented, or enabled. m) Inexistence or unjustified absence of the warehouse keeper or inspector as the case may be and/or of permanent surveillance by the warehouse 24 hours a day, as established in the regulations governing the matter on control, surveillance, and inspection of general warehouses. n) When polyethylene liners are not used to palletize merchandise that may suffer damage from humidity or when this is not complied with in this sense, with what is established in the corresponding insurance policy and if the policy indicates special particularities, these and their effects are not stated in the respective Deposit Certificate and Pledge Bond, or on a sheet attached to both titles. o) When merchandise that may suffer damage from being exposed to the elements is stored in plots and yards or in warehouses that are only roofed, unless its nature and process allow it. p) When the corresponding habilitation contract and appointment of warehouse keeper are not
signed in enabled warehouses. q) When there are shortages of merchandise, the warehouse: 1) does not take, at minimum and immediately, the necessary provisions to guarantee its interests and those of third parties and/or does not notify the Superintendent of said shortage immediately and/or, 2) does not carry out the pertinent investigation to know the final detail of the shortage in physical units and values within 15 days following its discovery and does not notify the Superintendent within the following 3 days the actions taken before the corresponding authorities and the respective insurance company. r) When the validity of the Superintendence's authorization and the lease or loan agreement, as applicable, is not maintained while titles issued and unpaid exist whose merchandise is deposited in the corresponding premises. s) When there is no written and documented pronouncement derived from the review and analysis process of storage requests, evaluating, at least, the substantive aspects established by the operational and financial regulations of general warehouses. t) When there is no written approval by the General Management of the warehouse or by another instance duly authorized for this purpose, of the merchandise deposits. u) When there is no type of inventory control whatsoever. v) The inexistence of insurance and/or the lack of validity thereof that protects:

i. The merchandise in deposit and the warehouse's own warehouses or deposits,
ii. Rented real estate belonging to third parties, unless these were insured by their owner, or if this exempts the warehouse from all responsibility in case of a disaster affecting them.

w) The acceptance