Rule No. 01/2007 on the Settlement of Large Value Transactions

GBR №. 13/2007 Page 1 of 9
Autoridade Bancária e de Pagamentos de Timor-Leste Banking and Payments Authority of Timor-Leste Ava Bispo Medeiros, PO Box 59, Dili, Timor-Leste Tel. № (670) 3 313 718, Fax. № (670) 3 313 716 GOVERNING BOARD RESOLUTION №. 13/2007 Concerning the Approval of the Rule №. 01/2007 On the Settlement of Large Value Transactions THE GOVERNING BOARD Pursuant to:

1. Article 17 point (b) of UNTAET Regulation 2001/30 that give the Governing
   Board of the BPA power to adopt Rules, Instructions and Guidelines;
2. Article 6 point (c) of the same Regulation which gives power to the BPA to
   formulate and implement measures for, and supervise and regulate, payments and settlement systems for transactions in domestic and foreign currency in Timor￾Leste;
3. Article 165 of the Constitution of the Democratic Republic of Timor-Leste
   concerning the continued applicability of laws in force at the date of the adoption of the Constitution. Taking into Account:
4. The need to manage and reduce the financial risks associated with the processing
   of large payments through the Clearing House and to protect the exposed of national payment system of Timor-Leste.
5. The desirability of establishing a system that will allow large or high priority
   interbank payments to be processed within the same business day. For the Purpose of:
   Providing legal certainty for the settlement of large value transactions system. HEREBY RESOLVES TO ADOPT THE FOLLOWING

GBR №. 13/2007 Page 2 of 9
Rule №. 01/2007
On the Settlement of Large Value Transactions
Article 1
Scope

1. A Large Value Transaction System (hereinafter "LVTS"), which shall apply to all
   Banks and Financial Institutions, which have settlement accounts with the Banking and Payments Authority (hereinafter "BPA") and which are duly registered in Timor-Leste.
2. The LVTS is intended for the manual processing and settlement of individual
   domestic large value interbank transactions, which are submitted to the BPA for payment.
   Article 2
   Role of BPA
3. The BPA shall be the manager and in charge on the performance of the execution
   of the transfer orders referred to in the present Rule.
4. The BPA shall be directly responsible in accordance with the provisions of this
   Rule for ensuring the infrastructures and procedures necessary for the execution of the transfer orders that sent to BPA by banks and other financial institutions.
5. The BPA shall send to banks and other financial institutions the communications
   confirming for the execution of transfer orders, or informing them of the rejection thereof.
   Article 3
   Operations subject to LVTS
6. The following transactions must be processed through LVTS, when the unit value
   thereof is equal to or more than US$ 200,000 (two hundred thousand US dollars):
   a) Interbank transfers between participants (including transfers on behalf of customers); and b) Cheques.
7. The following transactions shall obligatorily be effected through the LVTS:
   a) Settlement of Clearance House balances; b) Settlement of balances of other Clearance Systems designated by the BPA.
8. Payment orders with a value less than US$ 200,000 (two hundred thousand US
   dollars) may be effected through the LVTS, subject to the payment of the administrative charge envisaged in annex III of this Rule.
9. Cheques of bank customers subject to the above provision shall be replaced with
   an eligible payment instrument prior to submission to LVTS.

GBR №. 13/2007 Page 3 of 9
Article 4
Eligible payment instruments
The following payment instruments are eligible for presentation through LVTS:
a) Funds transfer orders as provided in annex I of this Rule; or b) BPA cheques. c) Such other form as the BPA may prescribe for a particular purpose.
Article 5
Fund transfer form

1. Fund transfers shall be processed by using the form in annex I of this Rule.
2. The BPA shall not be bound by any data, or specifications, which are not required
   or permitted in accordance with the Fund Transfer Form, or by any other transfer orders, which do not comply with the requirements referred to therein.
   Article 6
   LVTS sessions
3. The LVTS shall have the daily sessions except for Saturdays, Sundays and public
   holidays.
4. The operating calendar shall be fixed for one year periods by the Governing
   Board of the BPA and will be published on the BPA website.
5. The daily LVTS sessions shall commence at 9.00 hours and shall terminate at
   15.30 hours.
   Article 7
   Times of the LVTS sessions
6. The payment orders presented through the LVTS for settlement from 09.00 hours
   and 15.30 hours shall be processed with the value date on the same business day.
7. The payment orders presented through the LVTS after 15.30 hours shall be
   processed with the value date on the following business day.
   Article 8
   Presentation requirements
   LVTS payments submitted to the BPA shall comply with the following requirements:
   a). Payment Instruments shall be delivered to the Division of Banking Operations of BPA; b). Payment Instruments shall be stamped ‘LVTS’ by the bank when presented to BPA for the payment, which is for identify them as being subject to the provisions of the present Rule;

GBR №. 13/2007 Page 4 of 9 c). LVTS Payment Instruments shall be signed by authorised signatures of the submitting bank when presented to the BPA for the settlement which is in accordance with the operating mandate for its settlement account. d). Clearing House Settlement Statements shall be signed by persons to whom the banks have granted powers for the purposes of Clearing House settlement.
Article 9
Authentication of transfer orders

1. The BPA shall take the following identification and authentication measures in
   order to identify the orderer, to prevent unauthorised access to the LVTS and to protect the data transmitted through Secret Telegraphic Test Arrangement for the authentication of telecommunication.
2. The BPA shall in no circumstances be liable for any loss or damage arising from
   the execution of irregular transfer order, provided that the irregularity cannot be identified through the security procedures referred to in the preceding number.
   Article 10
   Settlement of transactions
3. Payment Instruments are presented that comply with the provisions of the
   preceding article, shall be processed individually on the basis of their gross value, by debiting the account of the payer bank and crediting the account of the payee bank.
4. Transactions shall only be effected when there are sufficient funds in the
   settlement account of the payer bank.
5. If a transfer order is not executed for lack of funds in the settlement account, the
   BPA shall be informed the order immediately.
6. Operations and transfers effected through the LVTS shall become final once the
   settlement account transactions have been completed.
7. Settled transactions shall be deemed to be final and irrevocable and cannot be
   cancelled.
   Article 11
   Confirmation of transactions
8. Transactions effected through the LVTS shall be confirmed to the payee bank by
   sending an authenticated facsimile or an authenticated copy of the original Fund Transfer Advice issued by the BPA.
9. When this form is used to confirm the execution of a transaction, the BPA shall
   send a copy of the original fund transfer notice to the payee bank on the same day, or on the following business day.
10. The original fund transfer notice shall be retained by the BPA.

GBR №. 13/2007 Page 5 of 9
Article 12
Correction of errors

1. Whenever errors occur in a transfer order, or in any other message, the party
   which detects in error shall immediately inform the other parties involved in the operation and the BPA.
2. Third parties, which improperly benefit as a consequence of an error shall issue an
   appropriate transfer order in order to correct the error as soon as they becomes aware thereof.
3. If the BPA executes a transfer order incorrectly for reasons imputable to it, it shall
   execute the appropriate correction operation and shall credit the account which should have been credited, or shall credit it with the correct amount.
4. The BPA shall debit the account of the party to which an amount has been
   wrongly credited, after having given prior written notice thereof.
   Article 13
   Transaction confirmation form
   Transfers of funds through the LVTS shall be confirmed by the BPA to the payee bank by using the form as established in annex II of this Rule.
   Article 14
   Crediting of Clients’ Accounts
   When the authenticated message referred to in paragraph 1 of Article 11 is received, the payee bank shall credit the amount of the fund transfer to its account of client with the same value date.
   Article 15
   Rejection of transactions
5. The BPA shall reject a payment order that does not comply with the requirements
   established in this Rule.
6. In the event that payment of a transaction subject to LVTS Payment cannot be
   made, the BPA shall notify the issuing bank and shall return the payment instrument presented, together with an explanation of the reasons why the transaction was not effected.
7. Payment orders rejected by the BPA shall be stamped "Rejected" and shall not be
   re-presented.
   Article 16
   Provision of liquidity
   In the event that the account of the issuer of a fund transfer order, which is subject to the LVTS, does not have sufficient funds for the execution of the transaction, the BPA shall not advance funds in order to ensure the execution thereof.

GBR №. 13/2007 Page 6 of 9
Article 17
Emergency situations

1. BPA may suspend or modify the provisions of this Rule, in the event of
   technical failure, force majeure, or in order to forestall emergency situations, which are likely to prejudice the normal operations of the LVTS.
2. In the cases referred to in paragraph 1 above, the BPA may derogate from this
   Rule, alter procedures and issue general or individual rules, which are binding and take effect immediately in relation to those addressed by them.
3. For the purposes of this Rule, force majeure shall be deemed to be an event
   external to the BPA, which is unforeseeable and inevitable and which prevents BPA from complying with the obligations to which it is subject.
4. The BPA shall, in any case, stipulate the period of time during which the
   alterations and rules referred to in paragraph 2 shall remain in force.
   Article 18
   Administrative Fees
5. The administrative fees prescribed in annex III of the present Rule shall be
   charged for the processing of transactions through the LVTS.
6. The administrative fees shall be deducted by the BPA from the settlement
   account of the issuer of the Payment Order.
7. The Governing Board of the BPA may, from time to time, alter the level of
   the administrative fees in annex III.
8. In the circumstances referred to in the paragraph 3, the BPA will inform the
   banks the updated administrative fees charged for the processing of transactions of the LVTS.
   Article 19
   Effective date
   This Rule shall enter into force from the date of its publication. Signed at Dili this 17th day of December 2007 Abraão de Vasconselos Chairman

GBR №. 13/2007 Page 7 of 9
Annex I of the Rule №. 01/2007

To: Department of Banking Operations and Payment Systems Banking and Payments Authority of Timor-Leste Dili, Timor-Leste Subject: Fund Transfer Order TRN/Test Key:
Please debit to the Account and pay in accordance with the following information:
Value Date:
Amount:
To (Bank):
Branch:
Swift Code/ BSB:
Account Name:
Account number:
Reference:
Signed: Signed:

GBR №. 13/2007 Page 8 of 9
Annex II of the Rule № 01/2007
Autoridade Bancária e de Pagamentos de Timor-Leste Banking and Payments Authority of Timor-Leste Ava Bispo Medeiros, PO Box 59, Dili, Timor-Leste Tel. № (670) 3 313 718, Fax. № (670) 3 313 716

Date
Reference:
To:
Subject: Fund Transfer Advice
TRN/Test Key:
We have credited the Account please make the payment in accordance with the following details:
Value Date:
Amount:
To (Bank):
Branch:
Swift Code/ BSB:
Ordering Institutions:
Account Name:
Account No:
Reference:
Signed: Signed:

GBR №. 13/2007 Page 9 of 9
Annex III of the Rule № 01/2007
Schedule on the Administrative Fees for transactions subject to the LVTS
No. Administrative Fees

1. The processing of transactions with a value of
   less than US$ 200,000
   US$ 10
2. The processing of transactions with a value of
   more than US$ 200,000
   Exempt
3. Fee for the processing of rejected transactions US$ 20