INSTRUCTION OF CENTRAL BANK OF THE RUSSIAN FEDERATION

of September 12, 2018 No. 4904-U

About requirements to procedure central depositary of internal control and internal audit, to rules of internal audit of the central depositary and work plan of service of internal audit of the central depositary

This Instruction according to part 4 Articles 7, Items 1 and 3 of article 32 of the Federal Law of December 7, 2011 No. 414-FZ "About the central depositary" (The Russian Federation Code, 2011, No. 50, Art. 7356; 2012, No. 31, Art. 4334; No. 53, Art. 7607; 2013, No. 27, Art. 3477; No. 30, Art. 4084; 2015, No. 27, Art. 4001; No. 29, Art. 4357; 2018, No. 17, the Art. 2429) (further - the Federal Law "About the Central Depositary") establishes requirements to procedure the central depositary of internal control and internal audit, to rules of internal audit of the central depositary and the work plan of service of internal audit of the central depositary.

Chapter 1. General provisions

1.1. The central depositary shall exercise internal control and internal audit according to this Instruction, and also the Provision of the Bank of Russia of December 16, 2003 No. 242-P "About the organization of internal control in credit institutions and banking groups", the registered Ministry of Justice of the Russian Federation on January 27, 2004 No. 5489, on December 22, 2004 No. 6222, on March 20, 2009 No. 13547, on June 30, 2014 No. 32913, on October 25, 2017 No. 48670 (further - the Provision of the Bank of Russia No. 242-P).

1.2. Implementation by the central depositary of internal control and internal audit shall be directed on:

control of implementation of transactions of the central depositary;

control of the organization of risk management, connected with implementation of activities of the central depositary, and also risks assessment, connected with implementation of activities of the central depositary;

observation of procedure of internal control for the purpose of assessment of degree of its compliance to nature and scales of activities of the central depositary;

observation of identification and remedial action in work of executive bodies of the central depositary, structural divisions of the central depositary and their workers regarding implementation of internal control;

control of implementation of decisions of governing bodies of the central depositary on enhancement of internal control (in case of their acceptance).

1.3. In case of appointment of the controller of the central depositary of its function as the central depositary shall be assigned to the head of internal control performing the activities according to requirements of Chapter 4 (1) Provisions of the Bank of Russia No. 242-P.

In case of forming of service of internal control of the central depositary of its function by the central depositary shall be assigned to the service of internal control performing the activities according to requirements of Chapter 4 (1) Provisions of the Bank of Russia No. 242-P.

1.4. In case of appointment of the internal auditor of the central depositary of its function as the central depositary shall be assigned to the head of service of the internal audit performing the activities according to requirements of Chapter 4 of the Provision of the Bank of Russia No. 242-P.

In case of forming of service of internal audit of the central depositary of its function by the central depositary shall be assigned to the service of internal audit performing the activities according to requirements of Chapter 4 of the Provision of the Bank of Russia No. 242-P.

1.5. The central depositary shall provide independence of the controller (employees of service of internal control) and the internal auditor (employees of service of internal audit) from other employees of the central depositary whose activities are directly connected with emergence of risks of the central depositary, including by means of establishment of wages system and structure of remuneration.

1.6. The central depositary shall store the documents confirming its compliance to requirements of this Instruction, at least five years from the date of their creation.

Chapter 2. Requirements to procedure central depositary of internal control

2.1. Within implementation of internal control the central depositary shall:

carry out identification, the analysis, assessment and monitoring of risk of origin at the central depositary of expenses (losses) and (or) other adverse effects as a result of its discrepancy or discrepancy of its activities to requirements of the legislation of the Russian Federation on the central depositary, the legislation of the Russian Federation on the security market, basic and internal standards of self-regulatory organization in the sphere of the financial market which member is the central depositary, the constituent and internal documents connected with implementation of activities of the central depositary and (or) as a result of application of measures by the Bank of Russia to the central depositary (further - regulatory risk of the central depositary), and also to organize management of such risk;

appoint (to create) the controller (service of internal control) taking into account requirements of Item 1.3 of this Instruction;

develop the document determining procedure the central depositary of internal control (further - rules of internal control of the central depositary), procedure and frequency of review (at least once a year) rules of internal control of the central depositary regarding compliance to requirements of the legislation of the Russian Federation on the central depositary and the legislation of the Russian Federation on the security market, basic and internal standards of self-regulatory organization in the sphere of the financial market which member is the central depositary, and also to constituent and internal documents of the central depositary.

2.2. Within implementation of internal control the controller (service of internal control) shall perform the following functions:

2.2.1. The organization of the processes directed to identification, the analysis, assessment, monitoring of regulatory risk of the central depositary and management to them including development of the actions directed to the prevention and prevention of consequences of realization of regulatory risk of the central depositary, and also control of accomplishment of these actions.

Within management of regulatory risk of the central depositary the controller (service of internal control) shall (shall) perform monitoring of activities of structural divisions (employees of structural divisions) of the central depositary regarding adherence to deadlines of submission of the reporting to the Bank of Russia, procedure and terms of disclosure of information, requirements to the size of own means of the central depositary for the purpose of identification of the specified risk and determination of sources of its origin.

2.2.2. Accounting of the events connected with regulatory risk of the central depositary.

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