Technical Standards for the Establishment of Electronic Money Provider Companies

NASF-04
ELECTRONIC MONEY PROVIDERS
Approval: 27/06/2016
Validity: 03/10/2016

THE COMMITTEE OF STANDARDS OF THE CENTRAL BANK OF RESERVE OF EL SALVADOR,

CONSIDERING:

I. That Article 2, paragraph 3 of the Law to Facilitate Financial Inclusion, establishes that the Superintendence of the Financial System will authorize the establishment of Electronic Money Provider Companies, in accordance with the requirements and procedures established in the technical standards issued for this purpose by the Central Bank of Reserve of El Salvador, through its Standards Committee.

II. That Article 3, letter b) of the Law on Supervision and Regulation of the Financial System, establishes that it is the competence of the Superintendence of the Financial System to authorize the establishment, operation, start of operations, suspension of operations, modification, revocation of authorization, closure, and other acts of the members of the financial system, in accordance with the applicable legal, regulatory, or technical standards.

III. That Article 1, paragraph 1 of the Special Law for the Prevention, Control, and Sanction of Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction establishes that the purpose of said law is to prevent, detect, monitor, investigate, and sanction money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction; as well as the identification and evaluation of related risks, in order to implement adequate policies and procedures for the application of a risk-based approach. (3)

IV. That it is necessary to regulate novel mechanisms for the provision of financial and payment services within the national territory, which allow facilitating the insertion of the traditionally excluded population into economic activity.

V. That by Legislative Decree No. 464 dated October 31, 2019, the Legislative Assembly approved reforms to the Law to Facilitate Financial Inclusion, in which the minimum social capital for the establishment of Electronic Money Provider Companies was modified, decreasing it from five hundred thousand to two hundred thousand United States Dollars, establishing furthermore that sixty percent of said minimum capital must be subscribed and paid in cash at the time of the company's establishment, and the remaining forty percent may be credited within the following three years of operation. (2)

THEREFORE,

NASF-04
ELECTRONIC MONEY PROVIDERS
Approval: 27/06/2016
Validity: 03/10/2016

by virtue of the regulatory powers conferred by Article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE ESTABLISHMENT OF ELECTRONIC MONEY PROVIDER COMPANIES

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to regulate the requirements and process for the authorization of the establishment of Electronic Money Provider Companies, in accordance with the provisions of the Law to Facilitate Financial Inclusion.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are those persons interested in establishing an Electronic Money Provider Company in accordance with the Law to Facilitate Financial Inclusion. (3)

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Central Bank: Central Bank of Reserve of El Salvador; b) Electronic Money: Monetary value registered in favor of a holder or client, which constitutes a payment obligation enforceable against its provider, which is accepted by other actors who have agreed to receive or provide this service, as a means of payment in an amount equivalent to the cash delivered, and is stored in an electronic medium; c) Inclusion Law: Law to Facilitate Financial Inclusion; d) Supervision Law: Law on Supervision and Regulation of the Financial System; e) Provider Company: Electronic Money Provider Company; and f) Superintendence: Superintendence of the Financial System.

CHAPTER II
ESTABLISHMENT OF ELECTRONIC MONEY PROVIDER COMPANIES

Nature and Establishment
Art. 4.- Electronic Money Provider Companies shall be established in accordance with what is established in Article 2 of the Inclusion Law and shall be governed by the provisions of said Law, by the technical standards issued by the Central Bank through its Standards Committee, as well as by the applicable current legislation.

Purpose
Art. 5.- The purpose of Electronic Money Provider Companies shall be to provide electronic money, but they may also administer or operate mobile payment systems, in accordance with what is established in Article 2 of the Inclusion Law. (1)

Social Capital
Art. 6.- The minimum amount of social capital for the establishment of a Provider Company shall be two hundred thousand United States Dollars, as established in Article 2 of the Inclusion Law. Sixty percent of this capital must be fully subscribed and paid in cash at the time of establishment, and must be credited through the deposit of the corresponding sum in the Central Bank. The origin of the funds with which the capital is subscribed and paid must be duly documented. The remaining forty percent may be completed within the following three years of operation; for this purpose, persons interested in the establishment of the Provider Company must present to the Superintendence a program reflecting how the minimum social capital will be fully paid. (2)

Application for Establishment Authorization
Art. 7.- Persons intending to establish a Provider Company must request in writing from the Superintendence the authorization for its establishment. The application must contain the following information:
a) Regarding the applicants: full name, age, profession or occupation, expression of the type and number of identity document, Tax Identification Number, domicile, and nationality; b) Regarding potential shareholders:
i. If a natural person: full name, age, profession or occupation, expression of the type and number of identity document, Tax Identification Number, domicile, and nationality, as well as the amount of their respective subscriptions and percentage of participation in the share capital; and
ii. If a legal entity: name of the company, Tax Identification Number, domicile, and Tax Registry Number, as well as the amount of their respective subscriptions and percentage of participation in the share capital;

c) In the case that the application is signed by the legal representative or attorney-in-fact of the potential shareholders, their full name, age, profession or occupation, expression of the type and number of identity document, Tax Identification Number, domicile, nationality, and a certified copy of the document accrediting them as such must be expressed; d) Indication of the amount of capital to be subscribed and paid, which may not be lower than that required in Article 2 of the Inclusion Law. In the event that the payment of the Capital is made partially, the entity must comply with what is established in Article 6 of these Standards, for the purposes of amortizing the subscribed but unpaid capital; (2) e) Full name, age, profession or occupation, domicile, nationality, expression of the type and number of personal identity document, of each of the potential managers, directors, and executive directors; f) The name of the Provider Company; g) The place to receive any kind of notifications and the designation of the persons commissioned for such effect and to initiate the application process for establishment authorization; and h) If potential shareholders belong to a business group or conglomerate, their name and composition must be indicated.

Documents to be attached to the application
Art. 8.- The application for establishment authorization must be accompanied by the following documentation:
a) Draft deed of establishment, whose purpose must be in accordance with what is established in Article 2 of the Inclusion Law; b) Draft statutes of the Provider Company; c) Legible copies of the personal identity document or valid passport for the case of foreigners, and the Tax Identification Number of each of the potential shareholders and their legal representatives, attorneys, and agents, if applicable; d) Sworn declaration made before a notary, by each of the potential shareholders holding more than twenty-five percent, managers, directors, and executive directors, in accordance with Annex No. 1 of these Standards, with the objective of evidencing that they do not fall within the circumstances detailed in Article 3 of the Inclusion Law; e) In the case of persons interested in being managers, directors, and executive directors, they must prove knowledge in financial and administrative matters that allow them to perform their positions in accordance with the nature of the operations of the Provider Companies, such as the Curriculum Vitae of each of the initial managers, directors, and executive directors, or any other kind of documentation that accredits their experience in the area related to the position they will hold; f) In the case that one or more shareholders are legal entities, they must additionally attach, insofar as applicable, the following documents:
i. Copy of the minutes of their establishment or current social pact, and of the latest credential of the election of their administration body;
ii. Certification of the list of shareholders holding twenty-five percent or more of their social capital. Such certification must be signed by whoever has legal representation of the applicant and must be authenticated by a notary;
iii. Certification of the point of the minutes of the General Shareholders' Meeting or General Assembly in which the agreement of authorization granted to the legal representative is recorded, if the current social pact or statutes, as applicable, establish that, to invest in the establishment of any kind of company, the legal representative of the applicant needs authorization from any superior body;
iv. Last audited financial information at the close of the exercise prior to the date of application. When the closing information corresponds to a date greater than six months prior to its presentation, un-audited financial information corresponding to at least three months prior must also be presented; and
v. When the potential shareholder is an entity supervised by the Superintendence by virtue of law and has presented the information requested in this letter in compliance with the corresponding regulations, it will not be necessary to present it again unless such information is not up to date;
g) Certification of the point of the minutes of the General Shareholders' Meeting or General Assembly in which the agreement of the superior administration body authorized to authorize the investment in any kind of company is recorded, in case the legal representative is not the one who has the faculty to do so; h) Legible copies of the personal identity document or valid passport for the case of foreigners, and the Tax Identification Number of each of the potential managers, directors, and executive directors; and i) Audited financial statements of the potential shareholders when applicable. For the case of foreign legal entities, the requirements of letter f) of this article must be accredited with duly authenticated documents. Public or authentic documents emanating from a foreign country and their photocopies must comply with what is established in the Civil and Commercial Procedural Code or the apostille procedure, in the case of countries signatories of the "Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents."

In case the documentation is not in the Castilian language, it must be translated in accordance with what is established in the Law on the Practice of Notarial Law of Voluntary Jurisdiction and Other Proceedings.
Any copy presented to the Superintendence in compliance with what is provided in these Standards, when applicable, must be certified by an authorized notary in El Salvador. Likewise, the signatures that match in all types of documentation must be authenticated by an authorized notary in El Salvador. The Superintendence will verify compliance with the requirements related to the credit situation of shareholders, executives, or administrators through the information systems it has available.

Art. 8-A.- Upon receiving the documentation in proper form and verifying by the Superintendence that the previous requirements have been met, the Superintendent will communicate the authorization of establishment of the Provider Company or deny it, within a maximum period of thirty business days. Upon expiration of this period, and if the Superintendence does not rule, it will be understood that the authorization is favorable to the interested parties. (2)

If the application is not accompanied by the complete information as established in Articles 7 and 8 of these Standards, the Superintendence may require the interested parties, within a period of ten business days counted from the day following the notification, to present the missing documents. (2) The Superintendence in the same notice will indicate to the interested parties that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the application, leaving them free to present a new application. (2)

Analysis of the application (2)
Art. 8-B.- The Superintendence, after analyzing the documentation established in Articles 7 and 8 of these Standards, may notify the interested parties to remedy the deficiencies found. (2) The interested parties will have a period of ten business days, counted from the day following the notification of the notice, to remedy the observations or to present the documentation and information required by the Superintendence. (2) The Superintendence, through a reasoned resolution, will extend by up to another ten business days the period indicated in the previous paragraph, when the nature of the observations or deficiencies notified so requires. (2)

Extension Period (2)
Art. 8-C.- The interested parties may submit to the Superintendence a request for extension of the periods indicated in Articles 8-A and 8-B of these Standards, expressing the grounds on which it is based and proposing, if applicable, the pertinent evidence. (2) The extension period may not exceed ten business days and will begin from the business day following the expiration date of the original period. (2)

Suspension of the Period (2)
Art. 8-D.- The thirty business day period indicated in Article 8-A of these Standards will be suspended for the days that elapse between the notification of the request to complete information or overcome observations referred to in Article 8-B of these Standards, until the interested parties remedy the observations indicated by the Superintendence. (2)

Regarding the Resolution (2)
Art. 8-E.- Once the required documents are presented in proper form, the Superintendence will proceed to respond to the application for authorization of establishment of the Provider Company. (2) Once the aforementioned authorization is issued, the interested parties will be responsible for ensuring compliance with these Standards and the applicable regulatory framework for the Provider Companies, for their proper operation. (2)

Publication of Application
Art. 9.- Once the application is admitted, the Superintendence, within a period that must not exceed fifteen business days, will publish on its website and in a newspaper of national circulation, only once and at the expense of the applicants, a notice that includes the name of the Provider Company to be established, the list of shareholders holding more than twenty-five percent of the Provider Company, and the list of initial managers, directors, and executive directors. The publication will have the purpose that any person who has knowledge that any of the disqualifications contained in Article 3 of the Inclusion Law applies to the managers, directors, and executive directors or shareholders who will form part of the Provider Company, may object to them. Objections must be submitted in writing to the Superintendence within a period of fifteen days counted from the day following the publication, attaching pertinent evidence. The information will have a confidential character. The Superintendence will notify such circumstance to the objected person, who must appear within a period of eight business days counted from the respective notification, and must rule on the opposition raised, being able to attach any kind of evidence tending to support their arguments. Upon conclusion of the aforementioned period, the Superintendence will rule within ten business days on the alleged disqualifications, notifying such circumstance in the manner previously provided. If any shareholder, manager, director, or executive director is declared disqualified according to what is established in the Inclusion Law to hold such quality, the applicants must submit to the Superintendence a new list in which the corresponding shareholder, manager, director, or executive director has been excluded, attaching all documentation concerning the person who replaces them. Notwithstanding the foregoing, at any time during the authorization process, the Superintendence may declare the disqualification ex officio or at the request of a party, after hearing the objected person within a period of eight business days counted from the day following the notification, to exercise their right of defense. Upon conclusion of the aforementioned period, the Superintendence will rule within ten business days on the alleged disqualifications, notifying such circumstance in the manner previously provided. Once the period has elapsed without objections being presented or having been resolved, the Superintendence must issue a resolution authorizing or denying the application for the establishment of a Provider Company, within a period not greater than thirty days. When the Superintendence denies or authorizes the application for the establishment of a Provider Company, the Superintendence will publish such resolution on its website and in a newspaper of national circulation, with the Provider Company assuming the costs thereof.

Granting of Deed of Establishment
Art. 10.- Upon receiving the communication of establishment authorization, the interested parties must proceed to grant the constitutive deed within a period of thirty days counted from the date of notification of the Superintendence's resolution. Upon expiration of said period without the deed being granted, the authorization agreement will become void. If for any circumstance, the persons interested in establishing a Provider Company decide at this stage not to continue with the process, they must notify the Superintendence, who in this case will publish it on its website and in a newspaper of national circulation at the expense of the applicants.

Modifications
Art. 11.- If during the period referred to in Article 10 of these Standards, any change occurs in the information or documentation presented to the Superintendence in accordance with Articles 7 and 8 of these Standards, the Provider Company must submit to the Superintendence the updated information or documentation, within five days following the change. Additionally, when a change occurs in the information published in the notice referred to in Article 9 of these Standards, this fact must be published in the terms and periods established in said article. Once the Superintendence has verified the modifications to the information or documentation presented, it will issue a new resolution authorizing or denying the application for the establishment of the Provider Company, within a period not greater than thirty days. From the notification of this resolution, the period of thirty days referred to in Article 10 of these Standards will begin to run.

Review of Testimony
Art. 12.- Prior to the presentation of the testimony of the deed of establishment in the Commercial Registry, the applicants must send it to the Superintendence within a period of fifteen business days following its granting, so that it verifies that it has been drafted in accordance with the project presented referred to in letter a) of Article 8 of these Standards, which has been previously authorized, having the Superintendence a period of ten business days for such verification. Likewise, they must attach the proof accrediting the deposit in the Central Bank of the sum corresponding to the minimum social capital. If there are differences between the public deed of establishment and the project of the same authorized by the Superintendence, it must notify the applicant within the period indicated in the previous paragraph, so that the authorizing notary proceeds to make the respective adjustments, and the testimony of the public deed must be presented again before the Superintendence, within a period of five business days from the date of communication of the inconsistencies or differences for verification.

Art. 13.- If it is determined that there are no inconsistencies between the public deed of establishment and the reviewed deed project, or in the case that the inconsistencies communicated according to the established article have been overcome, the Superintendence will proceed within a period of five business days counted from the receipt of the duly remedied documentation, to place a reason signed by the Superintendent of the Financial System, in which it is recorded that the...

NASF-04
ELECTRONIC MONEY PROVIDERS
Approval: 27/06/2016
Validity: 03/10/2016

favorable qualification of said deed, in order for it to be presented to the Commercial Registry for the corresponding inscription and without which it cannot be inscribed in said registry.

Procedure in case the Commercial Registry makes observations to the Testimony of the Public Deed of Constitution of the Company, or denies its inscription Art. 14.- When the Commercial Registry notifies the authorizing notary or any other interested person, the denial of the testimony of the public deed of constitution of an Electronic Money Provider Company, that person or persons must, in turn, notify such circumstance to the Superintendence in writing and no later than the next business day after receiving the respective notification. In the case that the subsanation of observations is notified, they will be notified in the manner and deadline previously indicated, only those observations that affect the purpose or object and the nature of the Electronic Money Provider Company being constituted. If for the inscription of the instrument in question, it were necessary to modify the conditions under which the Superintendence ordered its favorable qualification, it may, at the written request of the potential shareholders or their representatives, proceed to issue a new reason in the terms established in article 13 of these Standards.

Art. 15.- Once the testimony is inscribed and the bylaws deposited in the Commercial Registry, within a period of five business days following the inscription, the Electronic Money Provider Company will send a certified copy of said instruments to the Superintendence.

CHAPTER III
OTHER PROVISIONS AND VALIDITY

Sanctions
Art. 16.- Non-compliance with the provisions contained in these Standards, will be sanctioned by the Superintendence in accordance with what is established in the Supervision Law.
Unforeseen Aspects
Art. 17.- Aspects not provided for in regulatory matters in these Standards, will be resolved by the Central Bank of El Salvador through its Standards Committee. (3) Validity Art. 18.- These Standards will enter into force from October 3, two thousand sixteen.

NASF-04
ELECTRONIC MONEY PROVIDERS
Approval: 27/06/2016
Validity: 03/10/2016
MODIFICATIONS:

(1) Modifications approved by the Central Bank through its Standards Committee, in Session No. CN-03/2017, dated May 23, two thousand seventeen, with validity from May 26, two thousand seventeen.
(2) Modifications approved by the Central Bank through its Standards Committee, in Session No. CN-13/2020, dated August 19, two thousand twenty, with validity from September 7, two thousand twenty.
(3) Modifications in Consideration III, in articles 2 and 17, and in Annex No. 1, approved by the Central Bank through its Standards Committee, in Session No.
CN-02/2026, of February 26, two thousand twenty-six, with validity from the day thirteen of March two thousand twenty-six.

NASF-04
ELECTRONIC MONEY PROVIDERS
Approval: 27/06/2016
Validity: 03/10/2016
Annex No. 1

ELECTRONIC MONEY PROVIDER COMPANY
MODEL OF SWORN DECLARATION FOR DIRECTORS, MANAGERS AND SHAREHOLDERS OF THE ELECTRONIC MONEY PROVIDER COMPANY

In the city of San Salvador, at the _______ hours of the day ________ of _______ of two thousand __.
Before me, _______notary of the domicile of ______appears the gentleman_________of ________________years, (profession or trade) _______, from the domicile_____________whom I know (or do not know), holder of (or I identify by) Unique Identity Document number (or passport number), with Tax Identification Number _______who acts in his own name (or on behalf of, in this case indicate if it is a legal representative or attorney and relate the representation according to the case, at this moment or at the end) and I SAY: That in his capacity as future director or administrator of the company ________________________, UNDER OATH MAKES THE FOLLOWING DECLARATIONS: A) That I am not under twenty-five years of age (except if it is a shareholder); B) That I am not a debtor to the treasury and the Salvadoran financial system classified in any of the highest credit risk categories; C) That I have not been convicted by a final judgment in the country or abroad, for having committed or participated fraudulently in the commission of any crime; D) That I am not in a state of bankruptcy or suspension of payments, and that I have not been judicially qualified as responsible for a negligent or fraudulent bankruptcy; E) That it has not been judicially proven my participation in activities related to drug trafficking and conex crimes, and with money laundering, terrorism financing and financing of the proliferation of weapons of mass destruction, in the country or abroad; F) That I have not been declared ineligible in the country or abroad, for this type of position nor have I been sanctioned administratively or judicially for my participation in infractions to the laws and norms of financial nature, especially the collection of funds from the public without authorization and in the financial crimes. The undersigned notary certifies: That I explained to the declarant about what is established in the Penal Code, regarding the crime of ideological falsity, regulated in
article two hundred and eighty-four of said legal body. Thus the declarant expressed to
whom I explained the legal effects of this notarial act, which consists of _____ sheet(s) front and back; and read to him by me in a single act without interruption and entirely, ratifies its content and we sign. I CERTIFY. (3) The Sworn Declaration must comply with what is established in the Notary Law.