RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of October 24, 2018 No. 2018-P-12/44-3

About modification and amendments in the Resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About Licensing of Activities of Banks" of June 8, 2017 No. 2017-P-12/23-1

According to articles 20 and 68 of the Law "About National Bank of the Kyrgyz Republic, Banks and Banking Activity" Board of National Bank of the Kyrgyz Republic decides:

1. Make changes and additions to the Resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About Licensing of Activities of Banks" of June 8, 2017 No. 2017-P-12/23-1" (are applied).

2. This Resolution becomes effective after fifteen days from the date of official publication.

3. To legal management:

- publish this Resolution on the official website of National Bank of the Kyrgyz Republic;

- after official publication to send this Resolution to the Ministry of Justice of the Kyrgyz Republic for entering into the State register of regulatory legal acts of the Kyrgyz Republic.

4. To management of methodology of supervision and licensing of banks to bring this Resolution to the attention of commercial banks, OYuL "Union of Banks of Kyrgyzstan" and National bank of development of the Kyrgyz Republic.

5. To impose control of execution of this Resolution on the vice-chairman of National Bank of the Kyrgyz Republic Tezekbayeva A. S.

Appendix

to the Resolution of Board of National Bank of the Kyrgyz Republic of October 24, 2018 No. 2018-P-12/44-3

Changes and amendments in the Resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About Licensing of Activities of Banks" of June 8, 2017 No. 2017-P-12/23-1

Bring in the Resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About Licensing of Activities of Banks" of June 8, 2017 No. 2017-P-12/23-1" the following changes and amendments:

in the Provision "About Licensing of Activities of Banks" approved by the above-stated Resolution:

- in all text of the Provision of the word "Management of Methodology of Supervision and Licensing" in the corresponding cases shall be replaced with words "responsible structural division of National Bank" in the corresponding case forms;

- in all text of the Provision of the word "counteraction of legalization (washing) of the criminal income and to financing of terrorist or extremist activities" in the corresponding cases shall be replaced with words "counteraction to financing of terrorist activities and to legalization (washing) of the criminal income" in the corresponding case forms;

- in Item 29:

state subitem 2 in the following edition:

"2) the protocol of constituent (general) assembly of founders, - two copies of the copies certified notarially, containing decisions:

a) about organization of bank;

b) about approval of its trade (official) name;

c) about election of board members and its chairman;

d) about election of members of Committees of the Board of directors and their chairmen;

e) about appointment of board members, the chairman of the board and his deputy(deputies), statement of the chief accountant;

e) about approval of the charter;

g) about approval of the business plan, organizational structure of bank, the balance estimation and plan of the income, expenses also arrived for the first three years of activities;

h) about approval of the authorized person and investment with its right of signing of the relevant documents.";

state subitem 14 in the following edition:

"14) the list of members of the committee on audit, the Management committee risks, Committee on appointments and remunerations with indication of the presiding persons and data/documents on chairmen, according to the Section IV of this provision;";

state subitem 20 in the following edition:

"20) the letter obligation on connection/accession to national system of clearing settlements with use of bank payment cards Elkart in the Kyrgyz Republic, the business plan with indication of the planned indicators (card issue, the number of the installed peripheral equipment, including regions) and the letter obligation on providing necessary for conducting activities in state language of number of personnel.";

- in Item 37:

state subitem 15 in the following edition:

"15) the list of members of the committee on audit, the Management committee risks, Committee on appointments and remunerations with indication of the presiding persons and data/documents on chairmen according to the Section IV of this provision;";

state subitem 22 in the following edition:

"22) the letter obligation on connection/accession to national system of clearing settlements with use of bank payment cards Elkart in the Kyrgyz Republic, the business plan with indication of the planned indicators (card issue, the number of the installed peripheral equipment, including regions) and the letter obligation on providing necessary for conducting activities in state language of number of personnel.";

- state Item 92 in the following edition:

"For receipt of permission of National Bank to carrying out the banking activities which are not specified in the list of the permitted transactions, or on lifting of restrictions in the banking license (in the list of the permitted banking activities), the corrective actions established within application, attracting replacement of the list of the permitted banking activities to the license, bank within one month from the date of acceptance by the Board of directors of bank of the relevant decision, sends the following documents to National Bank:

1) the petition of bank signed by the chairman of the board of directors about consideration of question of permission to carrying out separate bank transactions / about lifting of restrictions in the license with indication of the specific list of transactions which the bank intends to perform;

2) the minutes of the Board of directors containing the solution of the Board of directors resolving carrying out expected transactions - the copy certified by bank;

3) the document testimonial of the fact that the Board of directors carries out the comprehensive analysis of expected transactions and their influence on activities of bank and that the Board of directors identifies the risks integrated to expected transactions;

4) the approved business plan of bank on expected transactions containing economic case of need of carrying out transactions/removal from them of restrictions, marketing plan on implementations of actions, forecast economic calculations, credit strategy, strategy for risk management;

5) the forecast of profitability connected with expected transactions;

6) information and data on execution of requirements of National bank / about elimination of the violations revealed by National Bank in this connection restrictions for carrying out the corresponding banking activities were set;

7) the data confirming availability of qualified personnel;

8) the organizational structure of bank reviewed in connection with the planned expansion of activities of bank (if necessary);

9) the internal documents of bank (policy) regulating activities for expected transactions;

10) original of the warrant for receipt of the license;

11) payment for the license.

For receipt of permission to carrying out additional banking activities and transactions according to the Islamic principles of banking and financing in addition to the documents provided for receipt of permission of National Bank to carrying out the banking activities which are not specified in the list of the permitted transactions, or for lifting of restrictions in the banking license (in the list of the permitted banking activities), the corrective actions established within application, attracting replacement of the list of the permitted banking activities to the license, shall provide the following documents:

1) policy on financing, accounting policy and other main politicians of bank approved by Sharia council of the bank, approved by the Board of directors of bank, and providing:

a) measures for identification, measurement, control and monitoring of all possible risks to which the bank, as a result of carrying out banking activities by it according to the Islamic principles of banking and financing is subject;

b) control measures for minimization on permanent basis of all possible risks arising in connection with implementation of banking activities by bank according to the Islamic principles of banking and financing;

2) the standard agreements on banking operations according to the Islamic principles of banking and financing constituted according to standards of Sharia and approved by Sharia council of the bank.

For receipt of permission to release of electronic money the bank in addition to the documents provided for receipt of permission of National Bank to carrying out the banking activities which are not specified in the list of the permitted transactions, or for lifting of restrictions in the banking license (in the list of the permitted banking activities), the corrective actions established within application, attracting replacement of the list of the permitted banking activities to the license shall provide the following documents:

To declare 1) invalid;

2) the copy of the standard agency agreement on distribution of electronic money with the agent - in duplicate;

3) the copy of the contract with the operator (if the issuer works with the operator) - in duplicate;

4) the copy of the act of installation of the software for obtaining, daily updating and storage of the database about turnovers and remaining balance on electronic money - in duplicate;

5) the rules of system operation of electronic money signed by the chairman of the Board/board of directors in duplicate which shall contain provisions about:

- procedure of transactions between bank, the operator, agents, acceptors who shall include the general scheme of all cash and information flows;

- the organizations of control of financial and technical risks when using electronic money;

- to security system and information security and differentiation of access rights to information resources when using electronic money - in duplicate;

- information on limits of e-wallets according to the established requirements to limits, and also other requirements specified in the Provision "About Electronic Money in the Kyrgyz Republic" in tabular form;

- interaction between participants of electronic payment system in the form of the scheme/chart.

For receipt of the operating authority on acceptance, processing and issue of financial information (processing, clearing) on payments and calculations of the third parties the bank shall members of payment service provider, this processing, clearing center in addition to the documents provided for receipt of permission of National Bank to carrying out the banking activities which are not specified in the list of the permitted transactions, or for lifting of restrictions in the banking license (in the list of the permitted banking activities), the corrective actions established within application, attracting replacement of the list of the permitted banking activities to the license to submit the following documents:

1) list of participating banks;

2) copies of the internal documents regulating procedure of financial monitoring of the transactions performed in payment system;

3) the rules of functioning of payment system signed by the chairman of the Board/board of directors and certified by seal of bank which shall contain the following:

a) architecture of system and scheme of its work;

b) procedures of the introduction and leaving the system;

c) procedure for connection of the participant to system;

d) procedure for carrying out processing;

e) procedure for provision of data by members of payment service provider on the activities to the operator of payment system;

e) risk management system in payment system, including the used management model risks, the list of actions and methods of risk management;

g) requirements to information security;

h) procedure for the dispute resolution;

i) mode of operation of participants in case of emergency situations in system;

j) rights, obligations and responsibility of participants;

k) the description about availability in system of mechanisms on management of reference books of senders and receivers, check of clients according to the lists of terrorists issued by the international organizations, the national list of terrorists, the national list of suspects of participation in terrorism;

4) information on execution of the requirements established in regulatory legal acts of National Bank on regulation of activities of operators of payment systems.

At the same time, for implementation of activities for acceptance, processing and issue of financial information (processing, clearing) on payments and calculations of the third parties to members of payment service provider, this processing, clearing center, the bank shall:

1) to perform the requirements established by regulatory legal acts of National Bank on regulation of activities of operators of payment systems;

2) to fulfill all economic standard rates and requirements established by National Bank;

3) not to have restrictions on activities of bank, as a result of application to bank of corrective actions or other sanctions.";

- add Item 94 with the paragraph the second the following content:

"At any stage of consideration of the petition of bank the National Bank has the right to refuse issue of permission in cases:

- identifications of violations by National Bank in activities of banks if violations directly testify to absence in bank of adequate internal control system;

- identifications of violations of the law in the field of counteraction to financing of terrorist activities and to legalization (washing) of the criminal income or requirements for observance of the economic standard rates established by National Bank.";

- to state the subitem 4 of Item 99 in the following edition:

"4) the business plan with indication of the predicted profitability connected with implementation of expected transactions (at least for two forthcoming years);";

- in Item 101:

in paragraph one and the second "additional" to exclude the word;

add Item with the paragraph third the following content:

"In case of discrepancy of documents on one or several expected banking activities the Board of National Bank issues permission to carrying out only those transactions on which all necessary documents conforming to requirements of regulatory legal acts of National Bank are provided.";

- in Item 112:

word in paragraph three of "this purpose" shall be replaced with words "such purchase or ownership";

add with the paragraph of the following content:

"At the same time persons jointly holding shares shall provide documents and information at the request of National Bank according to requirements of this provision for acquisition of threshold equity participation of bank.";

- state Item 115 in the following edition:

"115. According to the arrived statement the National Bank makes the decision no later than 60 (sixty) calendar days from the date of the notification of the applicant on adoption of the statement. The National Bank has the right to extend the term of consideration of the application for 30 (thirty) calendar days. The National Bank reports to the applicant about the decision - consent or refusal - in writing within 3 (three) working days from the date of its acceptance. The refusal shall be motivated.

The decision of National Bank on satisfaction of the declaration of abandonment in allowance of the application on receipt of consent of National Bank to acquisition of threshold equity participation of bank as a result of which the applicant - the physical person or legal entity becomes the considerable participant or the face exercising immediate or indirect possession or control (including according to the trust management agreement) 20 (twenty) and more or 33 (thirty three) and more percent of voting shares of bank, is accepted by the deputy the chairman/board member of National Bank supervising questions of banking supervision and licensing.

The decision of National Bank on satisfaction of the declaration of abandonment in allowance of the application on receipt of consent of National Bank to acquisition of threshold equity participation of bank as a result of which the applicant - the physical person or legal entity becomes the controlling face of bank or person exercising immediate or indirect possession or control (including according to the trust management agreement) 50 (fifty) and more or 67 (sixty seven) and more percent of voting shares of bank, is accepted by Committee on supervision of National Bank.

If the applicant according to requirements of the bank law is recognized-faced, jointly holding shares, the National Bank issues permission to acquisition of threshold participation in the amount of the stocks which are directly owned by the applicant and on joint tenancy with the third parties.

The decision of National Bank on satisfaction of the declaration of abandonment in allowance of the application on receipt of consent of National Bank to acquisition of threshold equity participation of bank is brought to the attention of the applicant in writing within 3 (three) working days from the date of adoption of such decision.";

- Add provision with Chapter 15-1 of the following content:

"Chapter 15-1. Procedure for provision of data by shareholders of bank on compliance to requirements of faultless goodwill and to other mandatory requirements

125-1. All shareholders of banks holding bank shares in the amount of less considerable equity participation of bank shall confirm lack of the restrictions and prohibitions specified in article 79 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity".

125-2. Any person acquiring bank shares in the amount of, not reaching the first threshold value (considerable participation), shall within 20 (twenty) working days after acquisition of property right to shares provide the following documents in National Bank:

1) for physical persons:

a) passport copy;

b) data on sources of origin of money;

c) the reference from credit bureau or from authorized body of the country (for nonresidents of the Kyrgyz Republic) about lack of overdue debts;

d) the reference or other document confirming lack of obligations on payment of obligatory payments in the budget (bodies of Tax Service and Social fund or authorized body of country of source (for nonresidents of the Kyrgyz Republic);

e) the reference or other document confirming lack of criminal record (for nonresidents of the Kyrgyz Republic);

e) data on the main activities (service record, patent and description of activities);

2) for legal entities:

a) copies of constituent documents;

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