Technical Standards for the Registration, Obligations and Operation of Entities Conducting Money Transfer or Receipt Operations Through Subagents or Subagent Administrators

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

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

CONSIDERING:
I. That by Legislative Decree No. 65, dated July 23, 2015, published in the Official Journal No. 146 Volume No. 408 of August 14 of the same year, the Reform to the Law on Supervision and Regulation of the Financial System was approved, in Article 7 letter t), establishing that legal entities that conduct money transfer or receipt operations, systematically or substantially, by any means, at the national and international levels, are subject to the supervision of the Superintendence of the Financial System.
II. That in Article 3 of the Law on Supervision and Regulation of the Financial System, it is established that the Superintendence of the Financial System is responsible for supervising the individual and consolidated activity of the members of the financial system, and other persons, operations, and entities mandated by the laws.
III. That in Article 35 of the Law on Supervision and Regulation of the Financial System, obligations are established for officials holding management or administrative positions in the members of the financial system, such as the adoption of policies and mechanisms for risk management and ethical standards of conduct.
IV. That in Article 78 of the Law on Supervision and Regulation of the Financial System, it is established that the Superintendence of the Financial System will organize and keep updated the records that the laws entrust to it, among which are those related to the members of the Financial System, their shareholders, and administrators.
V. That it is necessary to maintain an updated regulatory framework that establishes the conditions under which money transfer or receipt operations are carried out, as well as facilitating access for a larger number of the population, especially in places where the presence of entities conducting this type of operation is scarce or non-existent, maintaining a focus on the prevention of money laundering and asset laundering and terrorist financing in particular.

THEREFORE, 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:

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

TECHNICAL STANDARDS FOR THE REGISTRATION, OBLIGATIONS AND OPERATION OF ENTITIES CONDUCTING MONEY TRANSFER OR RECEIPT OPERATIONS THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

CHAPTER I
OBJECT, SUBJECTS AND TERMS

Object
Art. 1.- These Standards aim to regulate the registration, obligations, and operation of entities that conduct money transfer or receipt operations systematically or substantially, by any means, at the national and international levels.

Subjects
Art. 2.- The subjects obligated to comply with these Standards are legal persons in El Salvador that conduct money transfer or receipt operations in a systematic or substantial manner, by any means, own or third-party, and at the national and international levels. For the purposes of these Standards, it will be understood that money transfer or receipt operations are conducted systematically or substantially when such activity is carried out habitually or constitutes an important activity within the business operations of the entity.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Subagent Administrator or Administrator: A Legal Person, with domicile in the Republic of El Salvador, whose legal regime or corporate purpose includes affiliating and administering natural or legal persons who act as subagents, through the signing of a contract without an employment relationship, so that they act on behalf of and under the responsibility of the Agents; b) Agent: A legal person with domicile in the Republic of El Salvador that establishes a contractual relationship with one or more Money Transfer Companies, which conduct money transfer or receipt operations, systematically or substantially, by any means, at the national and international levels; c) Central Bank: Central Reserve Bank of El Salvador; d) Beneficiary or Recipient: A natural or legal person in whose favor the funds sent by the sender or remitter are remitted; e) Money Transfer Company or MTC: A national or foreign legal person that, meeting the requirements of its country of origin, provides the service of sending or receiving money, systematically or substantially, by any means, whether own or third-party;

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

f) Entity: The subjects obligated to comply with the provisions of these Standards, described in Article 2 of the same, are all those legal persons that operate in the Republic of El Salvador conducting money transfer or receipt operations in a systematic or substantial manner, by any means, own or third-party, and at the national and international levels; g) Sender or Remitter: A natural or legal person who remits funds through an MTC or an Agent to a beneficiary or recipient; h) AML/CFT: Money Laundering and Asset Laundering and Terrorist Financing; i) Subagent: A natural or legal person that has a contractual relationship with one or more agents or administrators to make available to senders and beneficiaries the infrastructure and means necessary to provide the money transfer or receipt service, referring to the establishment or main office, agencies, and service points of the Subagent; ATMs, financial kiosks, financial services provided via internet or mobile devices, and other applicable means or infrastructure in accordance with the applicable regulatory framework are also included; and j) Superintendence: Superintendence of the Financial System.

CHAPTER II
REGISTRATION

Registration
Art. 4.- The Superintendence will maintain a public registry in accordance with Article 78 of the Law on Supervision and Regulation of the Financial System, in which MTCs whose country of origin is El Salvador and Agents operating in the Republic of El Salvador must be registered. Excluding those entities that already possess a registry as Members of the Financial System and whose special laws authorize them to conduct money transfer and receipt operations.

Registration Application
Art. 5.- For the purposes of registration of MTCs whose country of origin is El Salvador and Agents, their Legal Representative or Attorney-in-Fact must present to the Superintendence an application containing at minimum the following documentation:
a) Regarding shareholders: full name, age, nationality, profession or occupation, domicile, legible and notarially certified copy of the Unique Identity Document or Passport and copy of the Tax Identification Number or its graphic representation, percentage of shareholding held and Taxpayer Registry Number, in case they are registered as such in the corresponding registry. In case the shareholders are legal persons, the same information cited in this letter must be provided regarding their shareholders who hold more than 10% of participation; when these latter are legal persons, credentials of the Board of Directors must be sent, the name of the Legal Representative or Attorney-in-Fact, evidence of their registration in accordance with the applicable legislations in their country of origin, and a shareholder list with their participation. In the case of Associations or Cooperative Societies, the aforementioned requirements will apply to the members or partners who hold more than 10% of participation in the Social Capital; b) Regarding directors and managers: full name, position, age, nationality, profession or occupation, domicile, legible and notarially certified copy of the Unique Identity Document or Passport and copy of the Tax Identification Number or its graphic representation. This will also apply to the sole owner and substitute Administrator; c) The amount of subscribed and paid-up social capital; and d) Address, telephone, and email of the MTC whose country of origin is El Salvador or Agent, as well as the name and position of the persons commissioned to receive notifications or any other documentation.

Registration Requirements
Art. 6.- For the purposes of registration of MTCs whose country of origin is El Salvador or Agents, their Legal Representative or Attorney-in-Fact must present to the Superintendence, accompanying the application described in Article 5 of these Standards, the following minimum documentation:
a) Legible and notarially certified copy of the testimony of the Public Deed of Constitution duly registered in the Commerce Registry or Act of Constitution of the Association duly registered in the Salvadoran Institute of Cooperative Promotion; b) Legible and notarially certified copy of the Credential of the Legal Representative of the Agent or Power of Attorney by which they act, duly registered in the Commerce Registry; c) Legible and notarially certified copy of the Credential of the Board of Directors, Sole Administrator, or Board of Administration, duly registered in the Commerce Registry or in the Salvadoran Institute of Cooperative Promotion, as applicable; d) Copy of the Agreement of the corresponding Administrative Body, notarially certified, in which the Representative or Legal Attorney-in-Fact is authorized to carry out the procedures for registration in the registry; e) Legible copy of the Tax Identification Number or its Graphic Representation and legible and notarially certified copy of the Taxpayer Registry Number of the Agent or MTC whose country of origin is El Salvador; f) Notarially certified sworn statement by the shareholders, directors, and managers of the entity stating that their participation in activities related to AML/CFT has not been judicially proven in the country or abroad; g) Organizational chart of the MTC whose country of origin is El Salvador or Agent, indicating the names of administrators and directors, with expression of their positions and support staff;

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

h) Legible and notarially certified copy of the agreement appointing the external auditor registered in the Superintendence, in case it has not been appointed in the constitutive act, which must have been previously registered in the Commerce Registry; i) Business Operational Model, as specified in Articles 14 and 15 of these Standards; j) Copy of Contracts entered into with MTCs, in the case of Agent registration applications; k) Copy of Contracts agreed upon with Subagents, Subagent Administrators, or both, according to the Agent's operational model; l) Copy of the Internal Control Procedures Manual for the operational functioning and liquidity of the legal person to be registered; m) Description of the Computer System to be used, which includes software, hardware, communication elements, and backup mechanisms, activity recovery, and operational continuity; n) Description of the accounting mechanism for recording the operation; o) Training policy or manual and requirements requested from Subagents, Subagent Administrators, or both, in the case of operating through them; p) Policies and procedures for handling complaints and claims from senders and beneficiaries of the money transfer or receipt service; q) Copy of the AML/CFT Prevention Manual, which must comply with the regulatory framework on AML/CFT prevention approved by the Board of Directors, Sole Administrator, or Board of Administration; r) Copy of audited Financial Statements, as of the latest available date in the case of an ongoing entity; s) Detail of tariffs or commissions charged for the provision of services; t) Specification of public service hours; and u) Appointment of Compliance Officer in accordance with Article 14 of the Law Against Money Laundering and Asset Laundering.

Upon receipt of the documentation in proper form, the Superintendence will proceed to its analysis, verification of the entity's systems, internal controls, and procedures, and may request missing information or pertinent clarifications, having a maximum period of sixty business days for the foregoing.

Art. 7.- Upon receiving the information, the Superintendence will proceed to review whether the documents established in Article 6 of these Standards have been presented.
If the review of the documentation reveals that it is incomplete, the Superintendence may require the Agent or MTC to present the missing documents within a period of ten business days, counted from the day following the notification.

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

The Superintendence, in the same notice, will indicate to the Agent or MTC that if the information is not completed within the aforementioned period, it will proceed without further procedure to archive the application, reserving its right to present a new application.

Analysis of Information
Art. 8.- The Superintendence, after analyzing the documentation established in Article 6 of these Standards, may notify the Agent or MTC to remedy the deficiencies found.
The Agent or MTC will have a period of ten business days counted from the day following the notification to remedy the deficiencies or to present the documentation and information required by the Superintendence.
The Superintendence may, through a reasoned resolution, extend the period indicated in the previous paragraph by up to another ten business days, when the nature of the observations or deficiencies notified so requires.

Extension Period
Art. 9.- The Agent or MTC may present to the Superintendence a request for extension of the periods indicated in Articles 7 and 8, stating the grounds on which it is based and proposing, if applicable, the pertinent proof.
The extension period may not exceed ten business days and will begin from the business day following the expiration date of the original period.

Suspension of Period
Art. 10.- The period of sixty business days indicated in Article 6 of these Standards will be suspended for the days that elapse between the notification of the request under Articles 7 and 8 of these Standards, until the MTC or Agent remedies the observations required by the Superintendence.

Of the Registry Entry
Art. 11.- Once the documents required by Article 6 of these Standards have been presented in due form, and there are no objections to the information submitted, the Board of Directors of the Superintendence will approve the Registry Entry in the corresponding records and notify the entity of the respective agreement. The Agent or MTC requesting registration must send to the Central Bank the agreement on the Registry Entry issued by the Superintendence. Only entities duly registered in the Superintendence in accordance with the provisions of these Standards may offer the money transfer or receipt service.

Communication to the Superintendence on Money Transfer or Receipt Operations Art. 12.- Banks, cooperative banks, savings and credit societies, federations, and other institutions regulated by their special laws, supervised by the Superintendence, that are already legally authorized to conduct money transfer and receipt operations and that, on a date subsequent to the validity of the reforms to Article 7 of the Law on Supervision and Regulation of the Financial System, are interested in providing the money transfer or receipt service as an Agent or MTC, must inform the Superintendence within a period of thirty business days prior to the start of such operations, sending a communication signed by their Legal Representative or Attorney-in-Fact. The aforementioned communication must be accompanied by the following documents:
a) Copy of the agreement of the corresponding Administrative Body to provide the money transfer or receipt service; b) Description of the business operational model, specifically the aspects contemplated in Articles 14 and 15 of these Standards, which must have the approval of the corresponding Administrative Body; c) Description of the technological platform of the computer system to be used to provide the money transfer or receipt service systematically or substantially; d) Detail of tariffs or commissions charged for the provision of services; and e) Copy of the contracts signed with the MTCs.

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

Upon receipt of the documentation in proper form, the Superintendence will proceed to its analysis, verification of the entity's systems, internal controls, and procedures, and may request missing information or pertinent clarifications.
If during the analysis and corresponding verifications the Superintendence determines observations that could affect the proper start of money transfer and receipt operations, it will proceed to communicate this to the corresponding entity, which must overcome such observations prior to making the referred operations available to the public. Those regulated entities interested in providing the money transfer or receipt operation service must present to the Central Bank a copy of the communication delivered to the Superintendence.

Modification of Information
Art. 13.- The MTC or Agent registered in the Superintendence will be responsible for communicating to it any modification of the information affecting that contained in Article 6 of these Standards, within a maximum period of thirty business days following the event that motivates it.

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

In case of modifications of address, telephone, email, as well as the name and position of the persons designated to receive notifications or designated to receive documentation related to the entity, this must inform the Superintendence and the Central Bank within a maximum period of ten business days.

CHAPTER III
OPERATIONAL MODEL

Operational Business Model with Subagents
Art. 14.- For the purposes of registration of MTCs and Agents that provide money transfer or receipt services through Subagents; the business operational model they present must contain at minimum the following:
a) Description of the accounting recording mechanism for transactions and operations, including the frequency of settlements between the MTC and the Agent and the Subagents; b) Description of the management of risks associated with the provision of services or the conduct of operations, especially financial and operational risks, which include technological, legal, AML/CFT, and reputational risks approved by the Administrative Body; c) Description of maximum amount limits per operation and number of transactions that senders or beneficiaries can conduct with the MTC, Agent, or through the Subagents, taking into account the expected business volume, location, and risks associated with the type of Subagent in question; d) Detail of the natural or legal persons who serve as Subagents. In the case that the Subagent is a Legal Person, a certified copy of the Deed of Constitution of these and their modifications, if any, or, as applicable, Act of Constitution and their modifications, if any, must be presented, as well as a certified copy of the Credential registered in the corresponding Registry of the Administrative Body of the Subagent; e) Internal Policies that include the requirements applicable to Subagents, which must include at minimum: types of business to be linked by the Agent and those that cannot be considered, size and track record of the business, infrastructure and security of the establishment, geographic environment, economic solvency, and proof of the lawful origin of the funds that will be used for the development of the operations, among others that guarantee adequate user attention; f) Indication of the address, telephone, email, as well as the persons commissioned

MONEY TRANSFER OR RECEIPT OPERATIONS
THROUGH SUBAGENTS OR SUBAGENT ADMINISTRATORS

Approval:
05/09/2019
Validity: 20/09/2019

to receive notifications or receive documentation related to the entity, this must inform the Superintendence and the Central Bank within a maximum period of ten business days.