RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF BELARUS

of March 27, 2025 No. 74

About the organization and functioning of risk management system of the factoring organization

Based on the paragraph of the eleventh subitem 1.4 of Item 1 of the Presidential decree of the Republic of Belarus of November 11, 2024 "About activities for financing under concession of monetary claim (factoring)" and parts one of article 39 of the Bank code of the Republic of Belarus the Board of National Bank of the Republic of Belarus DECIDES: No. 416

1. Approve the Instruction about the organization and functioning of risk management system of the factoring organization it (is applied).

2. This resolution becomes effective since May 13, 2025.

Approved by the Resolution of Board of National Bank of the Republic of Belarus of March 27, 2025 No. 74

The instruction about the organization and functioning of risk management system of the factoring organization

1. This Instruction establishes requirements to the organization and functioning of risk management system of the factoring organizations *, connected with implementation of activities for financing under concession of monetary claim (factoring) (further - factoring).

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* For the purposes of this Instruction the factoring organizations are understood as the commercial organizations specified in subitem 1.3 of Item 1 of the Presidential decree of the Republic of Belarus of November 11, 2024 to No. 416.

2. For the purposes of this Instruction the following terms and their determinations are used:

the risk connected with implementation of activities for factoring (further - risk), - objectively existing potential possibility (probability) of losses (losses), non receipt of the planned income, and (or) deteriorations in liquidity, and (or) approach of other negative consequences owing to emergence of the events connected with internal and (or) external factors of activities of the factoring organization;

risk management system - set of organizational structure, powers and responsibility of officials, local legal acts determining policy, techniques and procedures of risk management, and also the risk management process directed to achievement of financial stability of the factoring organization.

3. The following types of risks belong to risks of the factoring organization:

risk of delay of payment - risk of negative impact on liquidity of the factoring organization of the fact of origin at the debtor (when factoring without the regress right) or the debtor and the creditor (when factoring with the regress right) lack of means for execution of the current financial liabilities;

credit risk - risk of emergence of losses (losses), non receipt of the planned income owing to non-execution, untimely or incomplete execution by the debtor (when factoring without the regress right) or the debtor and the creditor (when factoring with the regress right) obligations to the factoring organization in accordance with the terms of the agreement of factoring and (or) the legislation regulating activities of the factoring organization;

risk of failure to carry out by the creditor of agreement obligations, concluded with the debtor, - risk of non-compliance by the creditor of the conditions on quantity, completeness, goods quality (works, services) provided by the contract with the debtor, availability of restrictions (encumbrances) of the rights to goods delivered by the creditor to the debtor (the performed work, the rendered service), circumstances because of which the transaction between the creditor and the debtor can be acknowledged invalid, etc.;

risk of failure to carry out by the creditor of terms of the contract of factoring - risk of emergence of losses (losses), non receipt of the planned income in connection with remuneration non-payment under the agreement of factoring and (or) failure to carry out by the creditor of obligations on regress;

fraud risk - the risk of emergence of losses (losses), non receipt of the planned income connected with acts from the creditor and (or) the debtor or as a result of their joint collusion to participation or without participation of employees of the factoring organization (concession of nonexistent and (or) counterfeit requirements, requirements to persons whose decisions the creditor has opportunity to determine, control or exert impact on their acceptance, concession by the creditor of one requirement to two and more factors under various agreements of factoring, etc.);

currency risk - risk of emergence of losses (losses), non receipt of the planned income in result of change of the foreign exchange rates;

legal risk - risk of emergence of losses (losses), non receipt of the planned income owing to change of the legislation regulating activities of the factoring organization, non-compliance by the factoring organization with requirements of the specified legislation, lack of precepts of law on regulation of the single questions arising in the course of activities of the factoring organization, the legal mistakes made when implementing activities;

operational risk - risk of emergence of losses (losses) and (or) additional costs as a result of incompetence or mistakes of staff of the factoring organization, including legal, non-compliance with measures for prevention of legalization of income gained in the criminal way, financings of terrorist activities and financing of distribution of weapons of mass destruction, discrepancy or refusal of the used systems including information, and also as a result of action of external factors;

interest risk - risk of emergence of losses (losses), non receipt of the planned income from change of market value of resources owing to change of the market interest rates influencing result of economic activity of the factoring organization;

country risk - risk of emergence of losses (losses), non receipt of the planned income in result of non-execution, untimely or incomplete obligation fulfillment by the creditor and (or) debtor, the being residents of foreign state, owing to economic, political, social changes and also for the reason that the currency of monetary commitment can be unavailable to specified persons in view of features of the legislation of the country of their location (irrespective of financial position of specified persons);

liquidity risk - risk of emergence of losses (losses), non receipt of the planned income owing to inability of the factoring organization to provide execution of the obligations timely and in full, and also as a result of imbalance of financial assets and financial liabilities (including owing to untimely execution of financial liabilities by one or several partners) and (or) emergence of unforeseen need of immediate and one-time execution of financial liabilities by the factoring organization;

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