RESOLUTION OF BOARD OF CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN

of November 22, 2023 No. 36/9

About approval of the Regulations on procedure for application of measures and sanctions against banks and non-bank credit institutions

According to the laws of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan", "About banks and banking activity", "About non-bank credit institutions and microfinancial activities", "About currency control" and "About counteraction of legalization of income gained from criminal activities to financing of terrorism and financing of distribution of weapons of mass destruction" the Board of the Central bank of the Republic of Uzbekistan DECIDES:

1. Approve Regulations on procedure for application of measures and sanctions against banks and non-bank credit institutions, according to appendix.

2. This resolution is approved with the Comissioner for the President of the Republic of Uzbekistan on protection of the rights and legitimate interests of subjects of entrepreneurship and Chamber of Commerce and Industry of the Republic of Uzbekistan.

3. This resolution becomes effective after three months from the date of its official publication.

Appendix

to the Resolution of Board of the Central bank of the Republic of Uzbekistan of November 22, 2023 No. 36/9

Regulations on procedure for application of measures and sanctions against banks and non-bank credit institutions

This Provision determines procedure for application by the Central bank of the Republic of Uzbekistan (further - the Central bank) measures and sanctions against banks, the microfinancial organizations, pawnshops, the organizations for refinancing of mortgage (further - non-bank credit institutions), direct and indirect shareholders of banks, including final beneficial owners (further - owners of bank), members of the supervisory board and board, and also key bank staff (further - the leading persons of bank).

Chapter 1. General provisions

1. Central Bank has the right:

apply measures and sanctions against banks and non-bank credit institutions, owners and the leading persons of bank;

apply on the same violation at the same time or consecutive several measures and (or) sanctions.

2. The measures and sanctions applied by the Central bank concerning banks and non-bank credit institutions, owners and the leading persons of bank shall not exceed the sizes established by the legislation and this Provision.

Chapter 2. Bases and procedure for application of measures and sanctions

3. Central Bank in case of application of measures and sanctions uses the following sources:

data and the processed documents received as a result of implementation of control actions, inspections (checks) and remote control;

reports or the conclusions by results of the audit inspection which is carried out by auditing organizations;

the documents of state bodies, including law-enforcement bodies, prosecutor's offices and vessels reflecting the violations made by banks and non-bank credit institutions;

the data received as a result of studying of addresses of consumers of banks and non-bank credit institutions;

the documents or data provided by banks and non-bank credit institutions according to instructions of the Central bank;

motivated judgment of the Central bank, and also other sources provided by acts of the legislation.

4. In case of application of measures and sanctions the Central bank considers:

risk level, nature, scale of violations and their consequences;

systematicity and duration of violations;

influence of the allowed violations on financial condition of banks and non-bank credit institutions;

opportunity to correct situation as a result of the applied measures and (or) sanctions;

the reasons which caused emergence of the revealed violations and (or) risks;

efficiency (effectiveness) of earlier applied measures and sanctions;

acceptance by bank, his owner and the leading person, and also non-bank credit institution of the independent measures directed to elimination of violations.

5. The decision on application of measures and sanctions against banks and non-bank credit institutions, owners and the leading persons of bank is accepted by Committee of banking supervision of the Central bank (further - Committee of banking supervision) according to the laws of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan", "About banks and banking activity", "About non-bank credit institutions and microfinancial activities", "About currency control" and "About counteraction of legalization of income gained from criminal activities, to financing of terrorism and financing of distribution of weapons of mass destruction" and also this Provision.

At the same time decisions on revocation of license on the right of implementation of banking activity, and also about exception of data on non-bank credit institution of the register of the organizations performing activities of the microfinancial organization, or the register of the organizations for refinancing of mortgage or the register of pawnshops are accepted by board of the Central bank based on the offer of Committee of banking supervision.

6. The committee of banking supervision consists of the odd number of members from 7 to 11 people, at the same time members of the committee, including the chairman of committee and its deputy, are appointed board of the Central bank from among vice-chairmen and managing personnel of the Central bank.

According to the main objectives and functions assigned to Committee of banking supervision the organization of activities of Committee of banking supervision, and also holding committee meetings and management of them is performed of the vice-chairman of the Central bank - the chairman of Committee of banking supervision.

Ensuring organizational preparation for committee meeting of banking supervision is assigned to the secretary of committee.

Committee meetings of banking supervision are held at least once a month. Decisions on the questions included in the agenda of meetings are accepted in joint form.

Committee meeting of banking supervision is considered competent if at least two thirds of his members participate in it.

Decisions of Committee of banking supervision are considered accepted in case of approval by most of the members participating in meeting.

7. By consideration of question of application of measures and sanctions against banks and non-bank credit institutions, owners and the leading persons of bank responsible representatives of this organization, the owner or the leading person of bank can participate in committee meeting of banking supervision.

8. The term of application of measures and sanctions for the violations revealed by the Central bank shall not exceed six months from the date of identification of these violations and three years from the date of their making.

9. Central Bank monthly to the 10th posts on the official website statistics of data on the applied measures and sanctions within last month.

10. For making of gross or severe violations by banks the Central bank has the right to publish in the mass media the message on the name of the violator (bank or non-bank credit institutions) made by them the violations, measures and sanctions applied concerning violators (bank or non-bank credit institutions).

11. Central Bank sends the statement from the decision on application of measure and the sanction within three working days to bank or non-bank credit institution, the owner and (or) the leading person of bank.

12. Died person (persons) not concordant with the decision of the Central bank on application also sanctions, had the right within thirty days from the date of receipt of the statement from the decision to submit the appeal in writing in Appeal council of the Central bank (further - Appeal council) or to take a legal action according to the procedure and the terms established by the legislation.

In case of submission of the appeal by the applicant to Appeal council with violation of term of its giving, the appeal by Appeal council is not considered.

13. Appeal council considers the appeal of the applicant within fifteen days from the date of its giving.

Appeal council notifies the applicant on day of appeal. At the same time the applicant has the right to participate in appeal.

Central Bank by results of appeal accepts one of the following decisions:

about refusal in satisfaction of the appeal and leaving of the decision of Committee of banking supervision without changes;

about satisfaction of the appeal and cancellation of the decision of Committee of banking supervision.

In case of non-confirmation of the arguments specified in the appeal, the Central bank makes the decision on refusal in satisfaction of the appeal and leaving of the decision of Committee of banking supervision without changes.

Central Bank in three-day time notifies the applicant on the made decision.

Chapter 3. Direction Central bank of the instruction

14. Central Bank can send to banks and non-bank credit institutions instructions, obligatory for execution, about elimination of the violations revealed in their activities, including about elimination of the reasons leading to violation of the rights of consumers of banking and financial services (further - the instruction).

15. Central Bank in the instruction specifies to bank, non-bank credit institution, the owner and (or) the leading person of bank about violation of requirements of acts of the legislation, and also the terms established for elimination of violations. At the same time the term of elimination of violations specified in the instruction shall not exceed one year.

Central Bank in the instruction requires (in the presence):

elimination of violations or shortcomings which did not make direct impact on financial condition of bank or non-bank credit institution, but further can lead to deterioration in financial condition or threaten interests of investors and creditors;

elimination of cases of violation of prudential standard rates by bank, microfinancial organization or organization for refinancing of mortgage;

decrease in interest, interest-free or operating expenses of bank and (or) non-bank credit institution;

establishments of the maximum sizes of interest rates for the funds raised by bank and (or) non-bank credit institution;

remedial action, revealed in the reports submitted to the Central bank;

submissions of the relevant documents and data;

carrying out obligatory audit inspection according to the legislation on auditor activities;

elimination of violation of requirements of the legislation on counteraction of legalization of income gained from criminal activities, to financing of terrorism and financing of distribution of weapons of mass destruction;

elimination of cases of violation by bank and (or) non-bank credit institution of requirements of the Central bank for organization of risk management for information security;

elimination of cases of violation of requirements of the legislation on currency control;

elimination of cases of violation of the rights and consumer interests of bank and non-bank credit institution;

minimizing available or the potential separate or generalized risks;

elimination of cases of violation of requirements of acts of the legislation on the organization of cash turnover and cash work;

elimination of other violations, stipulated by the legislation.

16. The bank and (or) non-bank credit institution from the date of receipt of the instruction shall provide during the term specified in this instruction the reply letter with indication of the term of taking measures to elimination of the revealed violations.

17. In case of making of insignificant violations by bank the Central bank in the instruction can give the written warning of application of measures and sanctions against bank.

18. In case of not elimination by bank and (or) non-bank credit institution, the owner and (or) the leading person of bank at the scheduled time of the shortcomings and (or) violations specified in the instruction of the Central bank, or failure to meet requirement, stipulated in Item 16th this provision, the Central bank considers question of application of other measures and sanctions.

Chapter 4. Requirement of plan development of actions for elimination of violations

19. In case of violation of the requirements established by acts of the legislation on banking activity, currency control, the organization of cash turnover and cash work, counteraction of legalization of income gained from criminal activities to financing of terrorism and financing of distribution of weapons of mass destruction, and also prudential standard rates the Central bank can demand from bank to develop the actions plan on elimination of the revealed violations.

20. The bank represents to the Central bank the actions plan during the term established by the decision of Committee of banking supervision on the requirement of plan development of actions for elimination of violations.

21. In the actions plan the actions directed to elimination and (or) the prevention in further activities of violations, terms of implementation of actions and executives in charge shall be specified by bank.

22. The actions plan affirms the chairman of the board of bank.

23. If approval of the actions plan is included into power of the supervisory board of board, general meeting of shareholders (founders) of bank, the actions plan shall affirm authorized body, with appendix of the statement to it from the relevant protocol.

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