Payment Systems Act 2012


Published: 2012-06-18

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Get a Day Pass for only USD$19.99.
EXTRAORDINARY

OFFICIAL GAZETr-fE
THE BAHAMAS
PUBLISHED BY AUTHORITY

NASSAU 201" March, 2012

TABLE OF CONTENT&

Act No. Title Page

5 The Bankruptcy (Amendment) 2
Act, 2012

6 The Bills of Exchange (Amendment) 5
Act, 2012

7 The Payment Systems Act, 2012 8

No.7of2012

PAYMENT SYSTEMS ACT, 2012

AN ACT TO PROVIDE FOR THE REGULATION AND OVERSIGHT
BY THE CENTRAL BANK OF THE BAHAMAS OF PAYMENT

SYSTEMS AND PAYMENT INSTRUMENTS; THE ESTABLISHMENT
AND PUBLICATION BY THE CENTRAL BANK OF A NATIONAL
PAYl\'lENT SYSTEM POLICY AND FOR CONNECTED MATTERS

[Date of Assent - 19' 11 March , 20 12]

Enacted by the Parliament of The Bahamas

PRELIMINARY

1. Short title and commencement.
(l) This Act may be cited as the Payment Systems Act, 2012.

(2) This Act shall come into force on a date to be appointed by the Minister
by notice published in the Gazette.

2. Interpretation.

In this Act-
"approved system" means a domestic payment system granted approval

by the Central Bank under section 8;
"bill of exchange" has the same meaning as stated in section 3 of the

Bills of Exchange Act (Ch. 335);
"Central Bank" and "Bank" respectively means the Central Bank of The

Bahamas, established under section 3 of the Central Bank Act;
"Central Bank Act" means the Central Bank of The Bahamas Act ( Ch.

351);
"central counter-party" means a company, corporation, association,

partnership, agency or other entity in a payment system which is
interposed between the participants and which acts as the exclusive

Page- 3

Page - 4

counter-party of these institutions with regard to their transfer
orders;

"cheque" means a bill of exchange drawn on a banker payable on
demand;

"clearing" means the process of transmitting, reconciling and, in some
cases, confirming transfer orders or security transfer instructions
prior to settlement and may include the netting of instructions and
the establishment of final positions for settlement;

"clearing-house" means a company, corporation, association, partnership,
· agency, organisation or other entity or person that provides clearing

or settlement services for a payment system but does not include the
Central Bank;

"Committee" means the National Payments Committee;
"designated system" means any domestic payment system liable to pose

a risk of systemic disruption or adversely affect the public interest
and designated by the Bank pursuant to section 16;

"existing payment system" means a payment system operating at the
time of the commencement of this Act;

"fin ancial collateral" means-

(a) cash or cash equivalents, including negotiable instruments
and demand deposits;

(b) securities, including a securities account, a securities
entitlement, or a right to acquire securities;

(c) a futures agreement or futures account,

subject to an interest, right or title transfer securing payment or
performance of an obligation in respect of a financial contract;

"indirect participant" means a financial institution for which transfer
orders are capable of being affected through a designated system
pursuant to a contractual relationship with a participant;

"insolvency proceedings" means any collective measures provided for in
any applicable law -

(a) to wind-up or to re-organise a participant, whether
voluntarily or involuntarily; or

(b) to suspend the business of a participant, where such measures
involve the suspension of, or the imposition of limitations on,
transfer orders and payments;

"Minis ter " means the Minister of Finance;
"National Payments Committee" and "Committee" respectively m..:ans

the advisory body to the Bank established under section 7;
" national payment system" means the system referred to in section 5( I)

(c) of the Central Bank Act comprising the rules and procedures
governing the establishment and operation of payment systems

within The Bahamas and their oversight by the Central Bank and
the oversight of payment instruments by the Central Bank;

" netting" means the conversion into one net claim or net obligation of
claims and obligations resulting from transfer orders which a
participant either issues to, or receives from, one or more other
participants with the result that only a net claim can be demanded
or a net obligation be owed;

"overseas regu la tory authority" means an authority in a country or
territory outside The Bahamas which exercises functions
corresponding to any functions of the Bank;

"part icipant" means any person, excluding the Bank, who is recognised
in the rules of a payment system as being eligible to settle payments
through the system with other participants but does not include a
user or customer of a participant who instructs or receives payment
over the system;

"payment" means the payer's transfer of a monetary claim on a party
acceptable to the beneficiary;

"payment instru ment" means any instrument, whether tangible or
intangible, that enables a person to obtain money, goods or services
or to otherwise execute payment transactions;

"payment system" means a formal arrangement with common rules and
standardised arrangements for the execution of transfer orders
between participants, including a clearing house, the settlement of
payments relating to securities, or for the processing, clearing, or
settling of payment transactions or payment messages between - -

(a) three or more participants; or

(b) two or more participants provided the formal arrangement
between these participants is designated by the Bank as a
payment system pursuant to section 16;

"payment transaction" means any act initiated by the payer or the payee
of placing, transferring or withdrawing funds irrespective of any
underlying obligations between the payer and the payee and
includes payment messages;

"Policy" means the national payment system policy referred to in section
6;

"regulatory laws" means the Banks and Trust Companies Regulation Act
(Ch. 316);

"securities" means transferable securities traded on a local stock
exchange authorised under the Securities Industry Act and or
Regulations (Ch. 363);

"settlement" means an act that discharges obligations in respect of funds
or securities transfers between two or more parties;

Page - 5

"settlement account" means ;Jn account at the Bank, settlement
institution or a central counter-party used to hold funds or securities
and to settle transactions between participants in a system;

"settlement agent" means an institution that manages the settlement
process, including the detem1ination of settlement positions and
monitoring of the exchange of payments, for transfer systems or
other arrangements that require settlement;

. "settlement institution" means an institution, excluding the Central
Bank, that provides to partic1pants and or a central counter-party
participating in one or more systems -

(a) settlement accounts through which transfer orders within
such system or systems are settled; and

(b) credit, as may be required, for settlement purposes;

"system" means an individual payment system;

"transfer order" means any instmction by a participant-

(a) to place at the disposal of a recipient an amount of money by
means of a book entry on the accounts of a participant,
seitlement institution or the Bank;

(b) which results in the assumption or discharge of a payment
obligation; or

(c) to transfer the title to, or interest in, a security or securities by
means of a book entry on a register or otherwise.

3. Derogation.

(!) The obligations, requirements, powers and regulatory schemes established
under or pursuant to the provisions of this Act shall be in addition to, and
shall not derogate from -

(a) the obligations, requirements, powers and regulatory schemes
established under or pursuant to any other written law; and

(b) the powers conferred on the Central Bank by the Central Bank Act,
the Banks and Trust Companies Regulation Act ( Ch 316), or by
any other written law for the time being in force .

(2) The provisions of this Act shall be read and construed in conformity with
the Central Bank Act and the Banks and Trust Companies Regulation Act
(Ch. 316).

Page- 6

PART I - FUNCTIO S A D POWERS OF THE CENTRAL
BA K

4. Oversight powers of Central Bank.

( 1) The Central Bank may, in the exercise of its functions and powers
pursuant to paragraphs (b) and ( c) of subsection (1) of section 5 and
section 25 respectively of the Central Bank Act, in relation to the
establishment and oversight of a national payment system -

(a) determine general or individual standards and guidelines for
approved systems, designated systems and payment instruments;

(b) establish and perform control and audi t procedures; and

(c) impose administrative sanctions.

(2) The Bank shall, in the exercise of the powers granted by or referred to in
subsection (I), be guided by best international standards.

5. Bank to have regard to public interest.

The Central Bank shall, in exercising its powers under this Act, have regard to
the interests of the public and may take into consideration -

(a) whether any system is, in the opinion of the Bank --

(i) financially safe for use by participants;

(ii) efficient;

(ii i) competitive;

(iv) not materially causing or contributing to increased risk to the
financial system of The Bahamas; and

(b) such other matters as the Central Bank may consider to be relevant.

PART 11 - NATIONAL PAY ENT SYSTEM POLICY

6. Bank to oversee national payment system policy.

( 1) The Central Bank shall formulate, adopt and monitor the implementation
of a national payment system policy for The Bahamas.

(2) The Bank shall make public the Policy adopted.

(3) The Bank shall design the Policy primarily to-

(a) facilitate the overall stability of the financ ial system of The
Bahamas;

(b) promote the safety and efficiency of payment systems;

(c) control risk;

Page- 7

(d) contribute to the promotion of competition in the market for
payment services;

(e) contr ibute to the protection of payment system users; and

(f) enhance other aspects of the public interest;

(4) The Bank shall, in pursuance of the Poiicy objectives stated in subsection
(3), facilita te-

(a) the interaction of its cleruing and settlement systems and related
arrangements with other systems or arrangements connected with
the exchange, clearing or settlement of payments or securities;

(b) the development of new methods and technologies for payments
and the transfer of securities; and

(c) the cooperation among all participants in the evolution of payment
systems and the provision of money transmission services.

(5) The Bank shall, in promoting the safety and efficiency of the national
payment system, cooperate with central banks of other countries and other
relevant domestic authorities.

(6) The Bank may, in pursuance of its obligations under subsection (5),
undertake commitments under memoranda of understanding and or other
instruments and, unless prohibited by law, adopt joint measures.

7. Establishment of National Payments Committee.

( 1) There is established for the purposes of this Act a committee to be known
as the National Payments Committee.

(2) The Committee shall act as an advisory body to the Bank in the exercise
of its oversight function in respect of the national payment system.

(3) The Committee shall support the achievement of sound and efficient
payment systems in The Bahamas and serve as a forum for cooperation to
maintain orderly conditions in regional and international systems.

( 4) The Committee shall comprise --

Page - 8

(a) the Bank, whose representative shall also act as chairman of the
Committee;

(b) such other governmental bodies regulating or in any other way
involved in payments activities and the financial markets as the
Bank may determine;

(c) major financinl institutions, or their national associations, that are
participants in payment systems;

(d) other persons approved by the Committ ee that are involved in the
ckaring and settlement of payments or securities or in the financial
markets.

(5) The Bank may i$sue bye -laws in respect of the-

(a) the composition of the Committee;

(b) the competencies, working procedures and timing of meetings of
the Committee;

(c) eligibility requirements for individuals and financial institutions;
and

(d) all other malters relevant to the opemtions and functions of the
Committee.

(G) 'The Bank shall serve as the secretariat of the Committee.

8. Approval required for domestic payment systems.

( 1) No person shall, after this Act comes into force, organise, establish,
operate or participate m a proposed domestic payment system unless - -

(a) application is made to the Bank for approval; and

(b) the Bank grants approval in writing of such proposed payment
system.

(2) Every clearing house of an existing payment system shall, within three
:110nths after this Act -::omes into force -

(a) make application to the Bank to continue its operations; or

(b) cease to operate.

(J) Every application made pursuant to subsections (I) or (2) shall be-

(a) in writing in such form and containing such particulars as the Bank
may from time to time determine;

(b) accompanied by-

(i) the rules of the proposed payment system or existing
payment system, as the case may be, in respect of which the
application is made; and

(ii) such other documents as the Bank may require.

( 4) The Bank may, pending a decision pursuant to an application made under
paragraph (a) of subsection (2), impose such conditions or restrictions on
the existing payment system as the Bank deems necessary in the interest
of-

(a) the proper and orderly regulation of the payment system concerned;
and

(b) competition between payment systems.

(5) This section shall not apply to a payment system operated by the Central
Bank.

Page· 9

9. Grant of approval.

(I) Subject to subsection (2), the Bank may upon approving an application
made pursuant to section 8 impose such conditions or restrictions or both
as the Bank thinks fit, in the interest of the proper and orderly regulation
of the payment system concerned and of competition between payment
systems, upon either or both-

(a) the class of payment system concerned; or

(b) the participants of the payment system concerned.

(2) The Bank shall, before imposing any conditions or restrictions under
subsection (1), provide the clearing house or participants of the payment
system concerned with an opportunity to make representation regarding
such proposed action.

(3) The Bank shall not approve an application made pursuant to section 8
unless the clearing house of the existing payment system or proposed
payment system, as the case may be, is a company incorporated under the
Companies Act, (Ch. 308).

(4) The Bank may publish an approval granted under this section in the
Gazette.

(5) A person who contravenes the provisions of subsections ( I) or (2) of
section 8 commits an offence and shall be liable on summary conviction
to a fine not exceeding one hundred thousand dollars or to imprisonment
for a term not exceeding twelve months or to both fine and imprisonment,
and, in the case of a continuing offence, to a fine not exceeding two
thousand dollars for each day, or part of a day, during which the ofTence
continues.

10. Withdrawal of approval.

( 1) The Bank may, where it is of the view that a system is being operated in a
manner detrimental to the interests of the participants or customers of that
system or to the financial system of The Bahamas, by order withdraw any
approval granted under section 9.

(2) An order withdrawing an approval pursuant to subsection ( 1) shall be
published in the Gazette and shall take effect from such date as the Bank
may determine and state in the order.

(3) The Bank shall, before withdrawing any approval pursuant to subsection
(1), give the clearing house an opportunity to be heard.

Page - 10

PART Il l - FINALITY OF PAYMENTS AND PROTECTION
OF DESIGNATED SYSTEMS

11. System rules and finality of payments.

( 1) Notwithstanding any provision of any statute or other law of The
Bahamas-

(a) the system rules of a designated system are valid and shall be
binding on the clearing house, the participants, a central counter-
party and the Bank and any action may be taken or payment made
in accordance with the system rules;

(b) the obligation of a participant, a clearing house or a central counter-
party to make payment or transfer securities to a participant and the
right of a participant, a clearing house or a central counter-party to
receive payment or securities from a participant, a clearing house or
a central counter-party shall be netted and a net settlement or close-
out amount shall be determined in accordance with the system rules
of a designated system, if they so provide; and

(c) where the system rules of a designated system provide that the
settlement of a payment obligation through an entry to or a payment
out of a settlement account of a participant, a clearing house or a
central counter-party at the Bank is final and irrevocable, the entry
or payment, as the case may be, shall not be reversed, repaid or set
aside.

(2) An entry to or a payment out of the settlement account of a participant, a
clearing house or a central counter-party at the Bank made to settle a
payment obligation in accordance with the rules of a designated system
shall not be the subject of any provision or order that operates as a stay of
that activity.

(3) The rights and remedies of a participant, a clearing house, a central
counter-party or the Bank in respect of collateral granted to it as securi ty
for a payment or the performance of an obligation incurred in a designated
system shall not be the subject of any stay, provision or order affecting the
ability of creditors to exercise rights and remedies with respect to the
collateral.

(4) The provisions of this section shall apply in whole or in part where in any
judicial proceedings in The Bahamas a court determines that,
notwithstanding that all or part of the administration or operation of a
designated system is conducted outside The Bahamas or that its system
rules are governed by the laws of a foreign jurisdiction, the rights and
obligations of any person arising out of or in connection with the

Page- 11

operation of a designated system are governed in whole or in part by
Bahamian law.

(5) A participant of a designated system or the Bank, where it is a party to a
netting agreement or to a close-out netting and notwithstanding --

(a) any provision of any law, domestic or foreign, relating to
bankruptcy or insolvency; or

(b) any order of a court, domestic or foreign , made pursuant to a
petition to wind up any company or to an administration of a
reorganisation, arrangement or receivership involving insolvency,

may tem1inatc the agreement and determine a net termination value or net
settlement amount in accordance with the provisions of the agreement and
the party en titled to the net termination value or settlement amount shall
be a creditor of the party owing the net termination value or net settlement
amount for that value or amount.

(6) The Bank, or a participant of a designated system with the approval of the
Bank, may deal with financial collate;al in accordance with the provisions
of a netting agreement, including -

(a) selling, foreclosing or surrendering financial collateral; and

(b) setting off or compensating financial collateral or applying the
proceeds or value of financial collateral.

12. Protection from insolvency proceedings.

( I) Insolvency proceedings commenced against a participant shall not have
retroactive effect on the rights and obligations of a participant which arose
from, or in connection with, its participation in a designated system before
the commencement of such insolvency proceedings.

(2) For the purposes of this Act, the moment of commencement of insolvency
proceedings against a participant of a designated system shall be the
moment when the clearing house of that system -

(a) receives from the court a copy of the court's written order for the
winding up and dissolution of the participant; or

(b) in the case of a voluntary winding up of a participant, receives from
the participant notice in writing that a creditor's resolution to wind
up the participant has passed.

(3) Transactions valid, enforceable and binding against liquidators and or
third parties, and which shall not be challenged on any ground
whatsoever, include-

Page- 12

(a) transfer orders, and the payments and settlements resulting from
such transfer orders, which have been entered into a designated
system in accordance with its rules prior to the moment of the

commencement of insolvency proceedings even if the payment or
settlement took place after the moment of commencement of
insolvency proceedings ; and

(b) the netting of transfer orders and of the debts and obligations
resulting from such transfer orders when the former have been
entered into a designated system in accordance with its rules prior
to the moment of the commencement of insolvency proceedings
even if the netting took place after the moment of commencement
of insolvency proceedings.

(4) Subject to subsection (1), a clearing house, settlement institution or
settlement agent if authorised under the applicable system rules of a
designated system or other relevant contractual provisions may,
notwithstanding the commencement of insolvency proceedings against a
participant in the system, make use of or realise -

(a) money and financial collateral available on the settlement account
of the participant in order to settle outstanding transfer orders and
any net debit balance the participant may owe after netting to allow
for final settlement of the system;

(b) credit lines granted to the participant and collateral provided for the
purpose of securing such credit lines.

(5) A court shall, where it makes an order to wind-up a participant of a
designated system, forthwith notify the clearing house of the designated
system and the Central Bank that such an order has been made and
forward to each one a copy of the order.

(6) A participant of a designated system shall, where a resolution to
voluntarily wind-up a participant of a designated system has been passed,
forthwith notify the clearing house of the designated system and the
Central Bank that such a resolution has been passed and forward to each
one a copy of the resolution.

13. Non-recognition of insolvency order of foreign court.

Notwithstanding any provision of any other written law or rule of law, a court in
The Bahamas shall not recognise or give effect to an order of a court outside The
Bahamas exercising jurisdiction under the law of insolvency of that foreign
jurisdiction to the extent that the making of or contents of that order would be
inconsistent with or contrary to the provisions of this Act.

Page - 13

PART !V- ELECTRONIC PROCESSING OF PAYMENTS

14. Truncation of cheques.

( l) A cheque may, in order to facilitate electronic processing of payment
instruments, in particular by way of multilateral clearing procedures, be
presented for payment to the banker on whom it is drawn by notification
of the cheque's essential features by-

(a) physical presentation of the cheque; or

(b) electronic or other means, including electronic transmission of the
image of the cheque.

(2) For the purposes of subsection ( 1 ), the essential features of a cheque are

(a) its serial number;

(b) the code which identifies the bank on whom the cheque is drawn;

(c) the account number of the drawer of the cheque;

(d) the amount for which the cheque is drawn as entered by the drawer
of the cheque; and

(e) any other feature as the Central Bank may by order prescribe from
time to time.

(3) The image of a cheque presented electronically shall comprise both the
front view and the back view of the cheque.

(4) There shall be no requirement for presentment at the proper place or at a
reasonable hour where a cheque is presented for payment under this
section.

(5) The banker on whom a cheque is drawn may, before the close of business
on the business day immediately following presentment of a cheque by
electronic means or otherwise, request the banker by whom the cheque
was presented to present the cheque itself whereupon -

(a) the presentment by electronic means or otherwise shall be
disregarded; and

(b) this section shall not apply to the subsequent presentment of the
cheque.

(6) A request by a banker under subsection (5) for the physical presentation of
a cheque shall not constitute dishonour of the cheque by non-payment.

(7) For the avoidance of doubt, any payment made upon presentment in
accordance with this Part shall not be taken to have been made outside of
the ordinary course of business, in bad faith, or negligently, by reason
only that it is made by electronic or other means rather than by physical
presentation of the cheque itself.

Page- 14

(8) Section 12 of the Electronic Communications and Transactions Act (Ch.
33 7 A) shall apply in relation to the electronic presentment of a cheque
under this Part.

15. Image return documents.

(I) The presenting banker shall, where a cheque presented for payment m
accordance with section 14 is dishonoured for non-payment, issue to the
holder an image return document unless-

(a) the presenting banker either returns the cheque itself to the holder;
or

(b) the holder requests the return of the cheque itself.

(2) Subject to subsection (4), an image return document may be presented for
payment to the presenting banker by the holder to whom it was issued as
if that document were the cheque to which it relates.

(3) For the purpose of presentment under subsection (2), an image return
document shall be deemed to be the cheque to which it relates.

(4) The holder of an image return document may present it for payment only
if-

(a) the presenting banker states in the document that it is valid for
presentment; and

(b) the presentment is made within the period for its presentment stated
in the document.

(5) Subject to subsection (6), the person to whom an image return document
was issued may, where that document has been lost before the expiry of
the period for its presentment stated in the document, apply to the drawer
of the cheque to which the document relates to give him another cheque of
the same tenor.

(6) The drawer of a cheque to which an image return document that has been
lost before expiry relates shall, upon the request of the holder, issue
another cheque of the same tenor-

(a) if the holder of the image return document so requests; and

(b) if the holder, upon the request of the drawer, provides security to
indemnify the drawer against all claims arising in the event the
document alleged to have been lost is found .

(7) In this section -

(a) "image return document" means a document issued by a presenting
banker as a substitute for a dishonoured cheque containing such
particulars as the Bank may specify; and

(b) "presenting banker" means the banker to whom a cheque was first
presented by the holder of the cheque.

Page- 15

PART V- DESIGNATION OF SYSTEMS

16. Power of Bank to designate systems.

(I) The Central Bank may, by order published in the Gazette, designate a
system for the purposes of this Act as a designated system.

(2) The Central Bank shall, when considering whether to designate a system,
take the following factors into account --

. (a) whether a disruption in the operations of the system could - -

(i) trigger, cause or transmit further disruption to participants or
systemic disruption to the financial system of The Bahamas;
or

(ii) affect public confidence in payment systems or the financial
system of The Bahamas;

(b) the best interests of-

(i) system participants and their customers; or

(ii) the financial system ofThe Bahamas.

(3) An order made under subsection(!) shall identify the clearing house and
the settlement institution of the designated system and shall continue to
have effect until it is withdrawn by the Central Bank.

(4) The Central Bank shall, prior to the designation of a system, consult the
clearing house, participants of the system, and the settlement institution of
the system, and may consult interested parties, with respect to the effects
of such designation.

(5) The Central Bank shall notify the clearing house, participants or
settlement institution of the designation of the system in such manner as
the Bank considers appropriate.

(6) A designation made under subsection (1) shall be effective from the date
specified in such notification.

17. Withdrawal of designation of a system.

( 1) Subject to subsection (2), the Central Bank may by order published in the
Gazette withdraw the designation of any designated system at any time if,
in the opinion of the Bank, the factors specified in subsection (2) of
section 16 no longer apply.

(2) The Central Bank shall, prior to the withdrawal of the designation of a
system, give the clearing house and the settlement institution of the
system an opportunity to be heard.

Page- 16

18. Clearing house to forward system rules to Central Bank.

(I) Upon designation of a system by the Central Bank under section 16, a
copy of every system rule governing the designated system shall be
forwarded to the Bank by -

(a) the clearing house of the designated system; or

(b) if there is no clearing house, the participants of the designated
system.

(2) A copy of a system rule shall be forwarded to the Bank -

(a) where a system rule was made before the designation of the system,
within thirty days of the date of such designation; and

(b) where a system rule was made after the designation of the system,
within ten days of the date of the making of such rule.

(3) Subject to subsection (4), a system rule made after the designation of a
system shall not come into operation before the thirtieth day after a copy
of it is sent to the Central Bank.

(4) The Central Bank may declare a system rule made after the designation of
a system to be in force at any time before the expiry of the period referred
to in subsection (3).

(5) The Central Bank, if of the opinion that an extension of the period
specified in subsection (3) is required to permit adequate review of a
system rule, may within ten days of its receipt of the system rule extend
that period up to thirty days after giving written notice to the sender of the
system rule.

(6) The Central Bank may, before or any time after it comes into force or is in
force, disallow the whole or a part of a system rule governing a designated
system.

(7) A system rule that is disallowed pursuant to subsection (6) shall become
ineffective from such date as may be stated by the Bank in the decision
communicated in writing to the participants of the designated system.

(8) The Central Bank shall, where a system rule in force is disallowed in
whole or in part under subsection (6), include the decision to disallow it in
a direction issued pursuant to section 20 in any case where the decision
gives rise to the need to amend or replace the system rule in order to
facilitate the continued smooth operation of the designated system.

(9) A direction disallowing a system rule under subsection (8) shall provide a
text for a temporary system rule which shall apply unti l an amendment or
replacement of the disallowed rule is adopted by the system.

(10) A temporary system rule shall become effective immediately upon the
disallowed rule becoming ineffective.

Page· 17

(11) The Central Bank may exempt a designated system from the requirements
of subsections (1) or (2).

PART V -CENTRAL BANK OVERSIGHT OF DESIGNATED
SYSTEMS

19. Power ,of Bank to issue directions.

(I) The Central Bank may issue written directions of a general or specific
nature to any participant or class of participants or clearing house of a
designated system in any case where the Bank is of the opinion that -

(a) it is necessary or expedient for ensuring the integrity or proper
management of a designated system;

(b) it is necessary or expedient for the effective administration of this
Act;

(c) it is otherwise in the interests of the public or a section of the
public;

(d) a person is engaged in, or is about to engage in, any unsafe,
unsound or unfair practice in the operation of a designated system;
or

(e) a person has contravened or failed to comply with, or is likely to
contravene or fail to comply with, the provisions of this Act or any
rule, regulation, instruction, direction or order given under it or any
other written law which, in the opinion of the Bank, relates to
systems or any category of system.

(2) Without prejudice to the generality of subsection( !)-

Page- 18

(a) any written direction issued by the Bank may relate to-

(i) the appropriate actions to be taken by the participant or class
of participants, or the clearing house, in relation to its
business;

(ii) the appointment of a person approved by the Bank to advise
the participant or class of participants, or the clearing house,
on the proper conduct of its business;

(iii) the conditions that will apply if any function of the clearing
house is outsourced; and

(iv) such other matters as the Bank may consider necessary or
expedient or in the interests of the public or a section of the
public;

------~-----------

(b) the Bank may by a written direction speci fy that a participant or
clearing house of a designated system shall, within such time as the
Bank considers necessary -

(i) cease or refrain from engaging in an act or course of conduct;

(ii) perform such acts as in the opinion of the Central Bank are
necessary in the public interest; or

(iii) make, amend or repeal a payment system rule .

(3) I\ person or class of persons to whom the Bank issues directions pursuant
to subsection (I) shall comply with such directions.

(4) Any person who fails to comply with a direction issued by the Bank under
subsection (1) commits an offence and shall be liable on summary
conviction to a fine not exceeding one hundred thousand dollars and, in
the case of a continuing offence, to a further fine not exceeding two
thousand dollars for each day or part of a day during which the offence
continues after conviction.

20. Procedure for issuance of directions.

( 1) The Central Bank shall, prior to issuing a direction under section 19,
consult the person to whom it is directed, and such interested persons as
the Bank considers appropriate, with respect to the content and the effect
of the direction.

(2) The person to whom the Bank gives a written direction under section 19
shall, within thirty days after implementing the direction and completing
any actions required to be taken in connection with it, notify the Central
Bank that the direction has been implemented and the action completed.

(3) Every direction issued by the Bank under section 19 shall be --

(a) communicated to the person to whom it is directed and come into
operation from the date of its issue;

(b) binding on the person to whom it is directed and contain a
statement of the penalty prescribed for non-compliance pursuant to
subsection ( 4) of section 19.

21. Power of Bank to impose, vary or revoke conditions and
restrictions.

( 1) The Central Bank may by written notice impose on the participant or
clearing house of a designated system such conditions or restrictions as
the Bank thinks fit.

(2) The Central Bank may by written notice vary or revoke at any time any
condition or restriction imposed pursuant to subsection ( l) as the Bank
thinks fit.

Page- 19

(3) The Central Bank may, without affecting the generality of subsections ( 1)
or (2), impose conditions or restrictions relating to the-

(a) conditions to be met by any person in order to have access to, or to
become a participant of, the designated system;

(b) operation of the designated system, including the clearing and
settlement procedures to be followed;

(c) interaction of the designated system with other systems; or

(d) relationship of the designated system with its participants.

(4) A participant or clearing house of a designated system which fails to
comply with any condition or restriction imposed or varied under
subsections ( l) or (2) commits an offence and shall be liable on summary
conviction to a fine not exceeding one hundred thousand dollars and, in
the case of a continuing offence, to a further fine not exceeding two
thousand dollars for each day or part of a day during which the offence
continues after conviction.

(5) A condition or restriction in respect of a designated system shall cease to
be in force if- ·

(a) the notice imposing or varying the condition or restriction provide
for an expiry date and that date is reached;

(b) the bank revokes the condition or restriction under subsection (2);
or

(c) the payment system concerned ceases to exist or operate or ceases
to be a designated system.

(6) The Central Bank shall, in considering whether to impose, vary or revoke
a condition or restriction under subsections ( 1) or (2), have regard to the
following-

(a) whether the imposition, variation or revocation of the condition or
restriction in respect of the designated system would be in the
interests of the public;

(b) the interests of the current participants and clearing house of the
designated system;

(c) the interests of persons who, in the future, may require or desire
access to the designated system; and

(d) such other matters as the Bank may consider to be relevant.

(7) The Central Bank may publish any action it takes pursuant to subsections
(1) and (2) in such forum as the Bank deems appropriate.

22. Power of Bank to inspect.

( 1) The Central Bank may, for the purpose of satisfying itself that this Act or
any other relevant law is being complied with, conduct on-site

Page- 20

examinations and off-site supervision of the business of a partir:ipant or
clearing house of a designated system.

(2) The Bank shall, in the performance of its duties under this Act, be entitled
at all reasonable times to -

(a) have access to the accounts, records, books and documents of any
panicipant or clearing house;

(b) request from a participant or clearing house, or any of their
managers or agents, such information or explanation relating to the
accounts, records, books and documents as the Bank considers
appropriate;

(c) call upon the participant or clearing house for such auditor's reports,
working papers, information or explanation as the Bank considers
appropriate;

(d) require that the auditor of a participant or clearing house, as the
case may be, report to the Bank on the extent of the procedures of
the auditor in respect of any examination undertaken by them;

(e) require that the auditor make a particular examination relating to
the adequacy of the procedures adopted by the participant or
clearing house, as the case may be, for the safety of its creditors and
shareholders or any other examination as considered necessary by
the Bank in order for it to reasonably perform its functions under
this Act;

(f) require that audits of the operations and systems (including the
information technology systems) of the clearing house of a
designated system be conducted.

(3) The Bank may, where it considers it necessary, delegate by appointment
the conduct of examinations under subsection (I) in whole or in part to a
person duly approved by the Bank and such person shall submit their
report to the Bank within such period as the Bank may determine.

(4) An examination carried out on behalf of the Bank pursuant to subsection
(3) shall be at the expense of the participant or clearing house as the case
may be.

(5) All the duties imposed under this section on a clearing house of a system
shall apply jointly and severally to each participant of the system and the
participants jointly and severally shall, where the clearing house fails to
perform such duties, comply with and be liable for contravention of those
obligations in the same manner and to the same extent as the clearing
house.

(6) Any person who--

Page- 21

(a) fails, without reasonable justification, to comply with any
requirement of the Bank pursuant to subsection (2) within the
period of time determined by the Bank for compliance;

(b) being an auditor of a participant or clearing house - -

(i) makes untrue statements in an audit report;

(ii) omits essential facts;

(iii) fails to request pertinent infonnation from the participant or
clearing house; or

(iv) fails to report his findings to the Bank,

commits an offence and shall be liable on summary conviction to a fine
not exceeding one hundred thousand dollars or to a term of imprisonment
not exceeding five years or to both such fine and imprisonment, and, in
the case of a continuing offence, to a fine not exceeding two thousand
dollars for each day or part of a day during which the offence continues.

PART VU- REQUIREMENTS FOR CLEA ING HOUSES

23. Duty of clearing house to notify Bank of certain events.

( l) Each clearing house shall, with respect to its designated system, provide
the Central Bank with thirty days notice in advance of any significant
change intended to be made in relation to the designated system.

(2) For the purposes of subsection ( 1 ), a significant change shall include but
not be limited to a change affecting-

(a) any document, including its Memorandum of Association and the
relevant resolutions, agreements, rules and procedures, relating to
the formation, establishment, constitution, governance,
administration and operation of the designated system; or

(b) the operation of the designated system.

(3) Each clearing house shall as soon as practicable after any non-significant
change is made in relation to the designated system provide the Bank with
written notice of such change including information in respect of any
change affecting the composition of the Board of Directors, whether by
resignation or otherwise.

24. Power of Bank to enter agreement with clearing house.

( 1) Subject to any regulations made pursuant to subsection (2), the Central
Bank may issue directions to, and enter into any agreement with, a
clearing house or a participant of a designated system, or both clearing
house and participant, in respect of the following matters-

Page- 22

(a) netting anangements;

(b) risk sharing and risk control mechanisms;

(c) certainty of settlement and finality of payment;

(d) the nature of financial anangements among participants;

(e) the operational systems and financial soundness of the clearing
house; and

(f) such other matters that, in the Bank's opinion, pertain to a risk to
the financial system of The Bahamas.

(2) The Bank may make regulations in respect of all or any of the matters
specified in paraf,>Taphs (a) to (f) of subsection (I) and such regulations
shall, in the event of a conflict between any rule, instruction, direction or
agreement by the Bank, prevail.

25. Function and powers of Bank in relation to designated systems.

( l) The Central Bank may perform all or any of the following functions in
relation to a designated system and its clearing house -

(a) the provision of a secured guarantee of settlement by participants;

(b) the making of liquidity loans to the clearing house and the central
counter-party; and

(c) acting as the central counter-party to the participants.

(2) The Bank may exercise in relation to a designated system and its clearing
house all or any of the following powers-

(a) to be a participant, participate and act as central counter-party,
including in a loss-sharing mechanism; and

(b) to act as a custodian of financial assets, or settlement institution, or
both.

PART VIII - LICENSING REGIME FOR ISSUE OF
ELECTRONIC MONEY

26. Licence required to issue electronic money.

( l) No person other than a bank, bank and trust company or trust company
licensed under the regulatory laws shall, after this Act comes into force,
commence the issue of electronic money without having applied for and
obtained the grant of a license from the Central Bank.

(2) Every person issuing electronic money at the time this Act comes into
force shall, within four months of the coming into force of this Act,-

Page- 23

(a) make application to the Bank for the grant of a licence to issue
electronic money; or

(b) cease to issue electronic money.

(3) Application for a license to issue electronic money under this Part shall be
made by the applicant to the Central Bank in such form and contain such
particulars as the Bank may from time to time determine.

27. Eligibility requirements.

T he Central Bank shall publish in the Gazette or by regulation prescribe the
following-

(a) the category of persons eligible to apply for a grant of a licence to issue
electronic money;

(b) the prudential and other requirements and criteria applicable to eligible
applicants;

(c) the persons or category of persons exempted from the requirement of a
licence to issue electron ic money.

28. Grant of licence by the Bank.

( l) The Central Bank may grant and issue a licence pursuant to an application
made under section 26 and may at any time-

(a) impose such terms and conditions on the licence as the Bank sees
fit;

(b) issue directions to licensed issuers of electronic money as the Bank
sees fit; and

(c) revoke a licence if the licensed issuer of electronic money -

(i) fails to meet the prescribed category, requirements or criteria
for the grant of a licence; or

(ii) is in breach of any terms and conditions imposed or
directions issued by the Bank.

(2) Any person who -

Page- 24

(a) subject to subsection (2) of section 26, issues electronic money
without the grant of a licence by the Central Bank;

(b) being a licensed issuer of electronic money, continues to issue
electronic money after his licence is revoked by the Bank; or

(c) is in breach of any terms and conditions imposed or directions
issued by the Bank,

commits an offence and shall be liable on summary conviction to a fine
not exceeding one hundred thousand dollars or to imprisonment for a term
not exceeding five years or to both such fine and imprisonment, and, in

the case of a continuing offence, to a fine not exceeding two thousand
dollars for each day or part of a day during which the offence continues.

29. Definition of "electronic money".

For the purposes of this Part, "electronic money"
represented by a claim on the issuer, which is-

(a) stored electronically;

means monetary value

(b) issued 011 receipt of funds for the purpose of making payment
transactions but does not amount to a deposit under the regulatory
laws; and

(c) accepted as a means of payment by persons other than the issuer.

PART IX- GENERAL POWERS OF THE CE TRAL BANK

30. Power of Bank to investigate existence of systems.

( 1) The Central Bank may, where it has reasonable grounds to believe that a
system or arrangement exists for the clearing and settlement of payments
or securities, request in writing a person who is a party to the system or
arrangement to provide the Bank with further information, records and
documents relating to the system or arrangement as the Bank may require
in order to make a determination on the existence of the clearing and
settlement system or arrangement.

(2) Every person who is requested by the Bank pursuant to subsection ( 1) to
provide information, records and documents shall comply with such
iequest within the time period for compliance stated in the request.

(3) Any person who contravenes subsection (2) commits an offence and shall
be liable on summary conviction to a fine not exceeding fifty thousand
dollars and, in the case of a continuing offence, to a further fine not
exceeding five hundred dollars for each day or part of a day during which
the offence continues after conviction.

31. Power to obtain information.

(I) The Central Bank may, by notice in writing, require any participant or
clearing house to supply to the Bank, in such form and within such time
period as the Bank may determine, such information as the Bank
considers necessary to enable it to carry out its functions under this Act.

(2) The Bank may, as it may reasonably require in connection with the
exercise of its functions under this Act and the regulatory laws, at all
reasonable times by notice in writing require the production within a
stated time of specified information or information of a specified

Page- 25

description, or of specified documents or documents of a specified
description, from ---

(a) a person regulated under the reguiatory laws;

(b)

(c)

(d)

(e)

a clearing house;

a participant or indirect participant in a system;

a connected person; or

a person reasonably believed to have information relevant to an
enquiry by the Bank.

(3) St~bject to subsection (4), and to subsections (4) and (7) of section 36, the
Bank may, where it is satisfied that assistance should be provided in
response to a request by an overseas regulatory authority and in order to
provide such assistance, issue directions in writing to -- -

(a) a person regulated under the regulatory laws;

(b) a clearing house;

(c) a participant or indirect participant in a system;

(d) a connected person;

(e) a person that is engaging in an activity that is subject to regulation
under the regulatory laws; or

(f) a person reasonably believed to have information relevant to an
enquiry to which the request relates.

(4) Directions by the Bank issued pursuant to subsection (3) may request a
person, within a time period stated in the direction, to -

(a) provide the Bank with specified information or information of a
specified description with respect to any matter relevant to the
inquiries to which the request relates;

(b) produce specified documents or documents of a specified
description relevant to those inquiries; or

(c) give to the Bank such assistance in connection with those inquiries
as the Bank may specify in writing.

(5) The Bank may, where documents are produced pursuant to this section,
take copies of them or extracts from them.

(6) The production of a document under this section shall, where a person
claims a lien on such document, be without prejudice to the lien.

(7) For the purposes of this section-

Page- 26

(a) "document" includes information recorded in any form;

(b) "regulated person" means a person regulated under the regulatory
Jaws;

(c) in rela tion to information recorded otherwise than in legible form,
the power to require its production includes the power to request the
production of a copy of it in legible and intelligible form; and

(d) a person is connected with a regu lated person if he is or has at any
relevant time been -

(i) a member of the regulated person's group;

(ii) a controller of the regulated person;

(iii) any other member of a partnership of which the regulated
person is a member; or

(iv) a member, officer, manager, employee or agent of the
regulated person.

( 8) A person who -

(a) without reasonable cause fails to comply with a requirement or
direction of the Bank under subsections (2) and (3) respectively;

(b) with intent to avoid the provisions of subsections (2) or (3)
destroys , mutilates, defaces, hides or removes a document; or

(c) wilfully obstructs an inquiry by the Bank made in accordance with
the provisions of this section,

commits an offence and shall be liable on summary conviction to a fine
not exceeding one hundred thousand dollars and in the case of a
continuing offence to a fine not exceeding two thousand dollars for each
day or part of a day during which the offence continues.

32 . Power of Bank to apply to the court.

( I) The Bank may, where a person fa ils to comply with a requirement under
subsection (2) or a direction given under subsection (3) of section 3 1
within three days from the date stated in the requirement or direction for
compliance or within such longer period as the Bank may permit, apply to
a Stipendiary and Circuit Magistrate for an order requiring the person to
comply with the requirement or direction.

(2) The Bank may, where it considers it necessary in connection with a
requirement under subsection (2) or a direction given under subsection (3)
of section 31 to examine a person on oath, apply to a Stipendiary and
Circuit Magistrate to have that person examined by the court and to have
the result of that examination sent to the Bank.

(3) The court shall process an application made under subsection (2) within
seven days of its receipt and shall send the resul t of the examination to the
Bank within fourteen days of the examination.

Page - 27

.....

33. Power to obtain assistance of Police.

(I) The Bank may .1t any time request the assistance of the Commissioner of
Police in the exercise of its powers under this Act.

(2) The Bank may, where necessary or expedient in relation to a request made
under subsection ( 1 ), authorise in writing a person competent in the
opinion of the Bank to exercise on its behalf any one or more of its
powers.

(3) The Bank shall make no request under subsection ( 1) nor grant any
authority under subsection (2) except for the purpose of investigating -

(a) the affairs, or any aspect of the atfairs, of a person specified by the
Bank; or

(b) a person or a subject matter specified by the Bank that is the subject
of the inquiries being carried out by or on behalf of an overseas
regulatory authority or the Bank.

(4) No person shall be bound to comply with a requirement imposed by a
person exercising powers by virtue of an authority granted under
subsection (2) unless the authorised person has, if requested to do so,
produced evidence of his authority.

(5) The assistance or authority, where the Bank requests assistance or grants
an authority under this section, shall be provided or executed in such
manner as the Bank may determine.

(6) A person granted an authority under this section shall make a report on the
method and result of exercise of that authority in such manner as the Bank
may require.

34. Power of search.

(I) Subject to subsection (2), the Bank may apply by information on oath
given by a duly authorised officer of the Bank to a Magistrate for the grant
of a search warrant if there is reasonable ground for suspecting -

(a) that an offence against this Act has been or is being committed and
that evidence of the commission of the offence is to be found at any
premises specified in the information or in any vehicle, vessel or
aircraft so specified; or

(b) that any books,accounts, records, documents or reports which ought
to have been produced under subsection (2) of section 22 and have
not been produced are to be found at any such premises or in any
such vehicle, vessel or aircraft specified in the inf01mation.

(2) A Magistrate may, if satisfied of the matters referred to in paragraph (a) or
(b) of subsection (I), grant a search warrant authorising the duly

Page- 28

appointed representative of the Bank or any police officer together wi th
any other person named in the warrant and any other police officers -

(a) at any time within four weeks from the date of the warrant to enter
the premises specified in the information or, as the case may be, any
premises upon which the vehicle, vessel or aircraft so specified may
be; and

(b) to search the premises or, as the case may be, the vehicle, vessel or
aircraft.

(3) A person authorised pursuant to a warrant granted under subsection (2)
may-

(a) search every person who is found in, or whom he has reasonable
ground to believe to have recently left or to be about to enter, the
specified premises or vehicle, vessel or aircraft, as the case may be;
and

(b) seize any books, records, vouchers, documents, computers, cash or
securities, found in the premises or the vehicle, vessel or aircraft
which he has reasonable ground for believing -

(i) to be or to contain evidence of the commission of any offence
against this Act; or

(ii) ought to have been produced under subsection (2) of section
22.

(4) No female shall in pursuance of any warrant granted under this section be
searched except by a female.

(5) A person authorised by warrant under this section to enter any premises
may use such force as is reasonably necessary for the purpose of
exercising the power granted to him.

(6) Any person who obstructs a person duly authorised by warrant under this
section in the exercise of any powers conferred on him commits an
offence and shall be liable on summary conviction to a fine not exceeding
one thousand dollars or to imprisonment for a term not exceeding three
months or to both such fine and imprisonment.

PART X- CONFIDENTIALITY

35. Bank has duty of confidentiality.

(I) Subject to the provisions of this Part, the Central Bank shall not disclose
any information acquired in the course of its duties or in the exercise of its
functions under this Act or any other law relating to-

(a) the aiTairs of the Bank;

Page - 29

(b) the affairs of a clearing house;

(c) any application for any approval or designation made to the Bank
under this Act;

(d) the affairs of a participant or indirect participant; or

(e) the affairs of a customer of a participant, or indirect participant, of a
payment system.

(2) The Bank's duty of confidentiality shall extend to every director, officer,
employee, agent or adviser of the Bank.

(3) A director, officer, employee, agent or adviser of the Bank who discloses
any information relating to the matters referred to in paragraphs (a) to (e)
of subsection ( 1) that he has acquired in the course of his duties or in the
exercise of the Bank's functions under this Act or any other law commits
an offence and shall be liable on summary conviction to a fine not
exceeding fifty thousand dollars or to imprisonment for a term not
exceeding three years or to both such fine and imprisonment.

36. Permissible disclosures.

( 1) Section 35 shall not apply to a disclosure -

Page- 30

(a) lawfully required or permitted by any court of competent
jurisdiction within The Bahamas;

(b) for the purpose of assisting the Bank to exercise any functions
conferred on it by this Act, by any other Act, or by regulations made
under this or any other Act;

(c) in respect of the affairs of a participant or clearing house, or a
customer of a participant of a system, where the disclosure has been
made with the authority and consent, voluntarily given, of the
participant or clearing house, or customer of a participant of a
system, as the case may be;

(d) if the information disclosed is or has been available to the public
from any other source;

(e) where the information disclosed is in a manner that does not enable
the identity of any participant or clearing house, or customer of a
participant of a system, to which the information relates to be
ascertained;

(f) made to a person with the view to the institution of, or for the
purpose of-

(i) criminal proceedings;

(ii) disciplinary proceedings, whether within or outside The
Bahamas, relating to the exercise by a counsel and attorney,
auditor, accountant, valuer or actuary of his professional
duties; or

(iii) disciplinary proceedings relating to the discharge by a public
officer, or a member or employee of the Bank, of his duties;

(g) for the purposes of any legal proceedings in connection with -

(i) the winding-up or dissolution of a participant or clearing
house; or

(ii) the appointment or duties of a receiver of a participant or
clearing house;

(2) The Bank may, through its directors, officers, employees, agents or
advisers, cooperate with any other regulatory authority in The Bahamas
where the Bank considers that such cooperation may be --

(a) relevant to the functions of such other regulatory authority; or

(b) a necessary part of a framework for consolidated supervision,
oversight or regulation, of the financial services sector.

(3) Cooperation by the Bank pursuant to subsection (2) may include sharing
with such other regulatory authority information that has been acquired by
the Bank in the course of exercising its functions under this Act or any
other law.

(4) Subject to subjection (7), the Bank may disclose to an overseas regulatory
authority information necessary to enable that authority to exercise
regulatory functions including the conduct of civil or administrative
investigations and proceedings to enforce laws, regulations and rules
administered by that authority.

(5) The Bank may, in deciding whether or not to exercise its power under
subsection (4), take into account-

(a) whether the inquiries relate to the possible breach of a law or other
requirement which has no close parallel in The Bahamas or involve
the assertion of a jurisdiction not recognised by The Bahamas; and

(b) the seriousness of the matter to which the inquiries relate and the
importance to the inquiries of the information sought in The
Bahamas.

(6) The Bank may decline to exercise its powers under subsection (4) unless
the overseas regulatory authority undertakes to make such contribution
towards the costs of the exercise as the Bank considers appropriate .

(7) The Bank shall make no disclosure pursuant to subsection (4) unless the
Bank is satisfied that -

(a) either the requesting regulatory authority is subject to adequate
legal restrictions on further disclosures and has provided the Bank a
written undertaking of confidentiality, or, the intended third party
recipient authority has provided the Bank a written undertaking not

Page- 31

to disclose the information provided without the written consent of
the Bank;

(b) the assistance requested by the regulatory authority is required for
the purposes of the authority's regulatory functions including the
conduct of civil or administrative investigations or civil
proceedings to enforce laws administered by the authority; and

(c) information provided following the exercise of its powers under
subsection ( 4) will not be used in criminal proceedings against the
person providing the information.

37. Attorney General may act as amicus curiae.

(I) The Bank shall, where it considers it necessary in relation to any request
for assistance received from an overseas regulatory authority to invoke the
jurisdiction of a Stipendiary and Circuit Magistrate pursuant to section 32,
immediately notify the Attorney General with particulars of the request
and send him copies of all documents relating to the request.

(2) The Attorney General shall be entitled, as amicus curiae, to appear or take
part in any proceedings in The Bahamas, or in any appeal from such
proceedings, arising directly or indirectly from any request for assistance
received by the Bank from an overseas regulatory authority in which the
Bank invokes the jurisdiction of the court under section 32.

PART XI -MISCELLANEOUS

38. Protection of legal privilege.

(I) A person shall not be required under this Act to disclose information or to
produce a document which he would be entitled to refuse to disclose or to
produce on the grounds of legal professional privilege in court
proceedings.

(2) For the purposes of this Act, any information or other matter comes to a
professional legal adviser in privileged circumstances if it is
communicated or given to him-

Page- 32

(a) by, or by a representative of, a client of his in connection with the
giving by the adviser of legal advice to the client;

(b) by, or by a representative of, a person seeking legal advice from the
adviser; or

(c) by any person-

(i) in contemplation of, or in connection with, legal proceedings;
and

(ii) for the purpose of those proceedings.

(3) No information or other matter shall be treated as coming to a professional
legal adviser in privileged circumstances if it is communicated or given
with a view to furthering any criminal purpose.

39. Liability and indemnity.

( 1) If a body corporate commits an offence under this Act and it is proved that
th~ offence occurred with the consent or connivance of, or was
attributable to any neglect on the part of, a director, manager, secretary or
other similar officer of the body corporate, or any person who was
purporting to act in any such capacity, that director, manager, secretary,
similar officer or person as the case may be, as well as the body corporate,
commits the offence and shall be liable to be prosecuted and punished
accordingly.

(2) If the affairs of a body corporate are managed by its members, subsection
(l) shall apply in relation to the acts and defaults of a member in
connection with the member's functions of management as if the member
were a director of the body corporate.

(3) No civil or criminal liability shall attach to the Central Bank or any
officer, employee, director of the Bank, or any person acting under the
direction of the Bank, for anything lawfully done or omitted to be done in
good faith in the exercise or the performance of any powers, duties or
functions of the Bank under this Act or under any regulations, rules or
bye-laws made under this Act.

(4) The Board of Directors of the Central Bank may indemnify any person
duly authorised by the Bank to act under this Act or under any regulations,
rules or bye-laws made under this Act against the cost of defending their
actions while in good faith so discharging their functions.

40. Attorney General's fiat.

( l) No prosecution in respect of any offence under this Act shall be instituted
except by or with the consent of the Attorney General.

(2) Proceedings for an offence against this Act may, notwithstanding any
provision in any enactment prescribing the period within which summary
proceedings may be commenced, be commenced at any time within the
period of three months from the date on which evidence sufficient, in the
opinion of the Attorney General, to justify a prosecution for the offence
comes to his knowledge, or within the period of twelve months after the
commission of the offence, whichever period last expires.

Page- 33

41. Publication of information.

The Central Bank may, from time to time, prepare and publish-

(a) consolidated statements aggregating any information provided
under this Act or any regulations made under this Act; or

(b) for statistical purposes, statements that relate to or are derived from
any information provided under this Act in respect of a payment
system or a payment instrument.

42. Memoranda of Understanding.

(I) The Central Bank may, for the purpose of facilitating the discharge of its
functions under this or any other relevant legislation, enter into
memoranda of understanding with the clearing house of a system.

(2) No memorandum of understanding entered into pursuant to subsection (I)
may-

(a) call for assistance beyond that which is provided for by this Act; or

(b) relieve the Central Bank of any of its functions or duties under this
Act.

43. Offences.

(I) Any person who knowing the same to be misleading or false in a material
particular supplies or is concerned in supplying the Bank, or any person
authorised by the Bank, any information lawfully required under this Act
commits an offence and shall be liable on summary conviction to a fine
not exceeding one hundred thousand dollars or to imprisonment for a term
not exceeding five years, and, in the case of a continuing offence to a fine
not exceeding two thousand dollars for each day or part of a day during
which the offence continues.

(2) Every employee, agent or consultant-

(a) of a participant or clearing house; or

(b) of a person licensed to issue electronic money,

shall take all reasonable steps to secure -

(i) compliance by the participant or clearing house, or person
licensed to issue electronic money, as the case may be, with
the requirements of this Act ; and

(ii) the accuracy and correctness of any information provided to
the Bank by the participant or clearing house, or person
licensed to issue electronic money, as the case may be.

(3) Subject to subsection (5), a person who contravenes subsection (2)
commits an offence and shall be liable on summary conviction to a fine

Page- 34

not exceeding one hundred thousand dollars or to a tenn of imprisonment
not exceeding two years or to both such fine and imprisonment.

( 4) It shall be a defence, in any proceedings against a person pursuant to
subsection (3), for the defendant to prove that he had reasonable grounds
for believing that another person was charged with the duty of securing
compliance with the requirements of this Act, or of ensuring the accuracy
and correctness of infonnation provided to the Bank, as the case may be,
and that such other person was competent and in a position to discharge
that duty.

(5) The court shall not impose a tenn of imprisonment for an offence under
subsection (3) unless the court trying the offence is of the opinion the
defendant committed the offence wilfully.

44. Penalties and fines.

(l) Any penalty incurred under this Act shall be paid to the Central Bank.

(2) Any person who commits an offence under this Act for which no penalty
is expressly provided shall be liable on summary conviction to a fine not
exceeding one hundred thousand dollars.

(3) The Central Bank may order a person to pay a fine--

(a) not exceeding one hundred thousand dollars in any case where the
Bank is satisfied that such person has committed an offence against
this Act; or

(b) as may be prescribed by regulations in any case where the Bank is
satisfied such person has failed to comply with any directive issued
pursuant to any provision of this Act or has eontravened any
regulations made under this Act.

( 4) An order made by the Bank pursuant to this section shall -

(a) be put in writing;

(b) specify the nature of the default or offence which the person
committed and the penalty or fine imposed by the Central Bank;

(c) be copied and a copy of the order given to the person fined; and

(d) in the discretion of the Bank, be enforceable in the same manner as
an order of the court.

45. Appeals.

( 1) An appeal by motion shall lie to the Supreme Court from any decision of
the Bank-

(a) withdrawing an approval under section 10;

Page- 35

(b) requiring a participant or a clearing house, as the case may be, to
comply with general or specific directions by the Bank issued under
subsection (I) of section 19;

(c) imposing or varying any conditions or restrictions under section 21;

(d) making an order for payment of a fine under section 44;

(e) requiring the replacement of an auditor under any regulation made
pursuant to this Act.

(2) Subject to subsection (3), the appellant shall, within twenty-one days after
the date of the Bank's decision, serve on the Attorney-General a written
notice of his intention to appeal and of the general ground for his appeal
signed by the appellant or his counsel and attorney.

(3) Any person aggrieved by a decision of the Bank referred to in subsection
(1) may, upon written notice to the Attorney-General, apply to the
Supreme Court for leave to extend the time within which the notice of
intention to appeal may be served and the Supreme Court may, upon the
hearing of such application, extend the time prescribed in subsection (2)
as it deems fit.

( 4) The Attorney-General without delay shall, upon receiving the notice of
appeal, transmit to the Registrar of the Supreme Court a copy of the
Bank's decision and all papers relating to the appeal but the Attorney-
General shall not be compelled to disclose any information if he considers
that the public interest would suffer by such disclosure.

(5) "The Registrar shall set the appeal down for hearing on such day and shall
cause notice of the date of such hearing to be published in such manner as
the Supreme Court may direct.

( 6) The appellant at the hearing of the appeal shall, before going into the case,
state· all the grounds of appeal on which he intends to rely and shall not,
unless by leave of the Supreme Court, go into any matters not raised by
his statement.

(7) The Supreme Court may -

(a) adjourn the hearing of the appeal; and

(b) upon the hearing or adjourned hearing -

(i) confirm, reverse, vary or modify the decision of the Bank; or

(ii) remit the matter together with the opinion of the Supreme
Court, to the Governor of the Central Bank.

(8) An appeal against the decision of the Bank shall not have the effect of
suspending the execution of such decision.

Page- 36

46. Exemptions.

(1) The Central Bank may by regulations, subject to such conditions or
restrictions as may be prescribed, either permanently or for such period as
the Bank may think fit, exempt from all or any of the provisions of this
Act-

(a) any person or class of persons;

(b) any system or class of systems; and

(c) any issuers of electronic money.

(2) The Bank may, where it considers it appropriate to do so in the
circumstances of the case, exempt by notice in writing any person from-

(a) all or any of the provisions of this Act; or

(b) the requirements specified in any written direction made by the
Bank under this Act.

(3) An exemption granted pursuant to subsection (2) -

(a) shall be granted pursuant to an application made in writing by the
applicant;

(b) may be granted subject to such conditions or restrictions as the
Bank may specify by notice in writing;

(c) need not be published in the Gazette; and

(d) may be withdrawn at any time by the Central Bank.

(4) Any person who contravenes any condition or restriction imposed
pursuant to subsection (1) or (3) commits an offence against this Act.

47. Regulations.

(1) The Central Bank may make regulations, rules and bye-laws for carrying
out the purposes and provisions of this Act.

(2) Without prejudice to the generality of subsection (1), the Bank may make
regulations for or with respect to systems, including but not limited to
regulating, prescribing and providing for the following matters-

(a) such matters as may be necessary or expedient for giving effect to
the provisions of this Act in respect of any matter or thing relating
to cheque truncation;

(b) the information which is to be disclosed to the Central Bank, a
participant or clearing house on the commencement of insolvency
proceedings against a participant or clearing house;

(c) the imposition, variation or revocation of an oversight regime by
the Bank and such transitional or savings provisions as the Bank
may consider necessary or expedient;

(d) the standards to be maintained by a participant or a clearing house;

Page- 37

(e) the responsibilities and duties of the chief executive officer and
directors of a clearing house;

(t) the preparation and publication of reports on the performance of a
designated system;

(g) the acquisition or holding of shares or any other interest in a
clearing house;

(h) the acquisition or holding of shares or any other interest by a
clearing house in any other person;

(i) different requirements for the audit of accounts in relation to
different designated systems;

U) the responsibilities of a clearing house relating to the audit of its
accounts;

(k) the responsibilities of an auditor for the accounts of a participant or
clearing house;

(l) the procedures applicable in the event of a default in payment
obligations, including the suspension and re-admission of
participants;

(m) the fees to be paid in respect of any matter or thing required for the
purposes of this Act, including the refund and remission whether in
whole or in part of such fees; and

(n) all matters and things which by this Act are required or permitted to
be prescribed or which are necessary or expedient to be prescribed
to give effect to this Act.

(3) Without prejudice to the generality of subsection (1), the Bank may make
regulations for or with respect to electronic money, including but not
limited to regulating, prescribing and providing for the following matters

(a) all matters necessary or expedient to ensure that an issuer of
electronic money is fully liable to the users of such money;

(b) the standards to be maintained by an issuer in respect of electronic
money; and

(c) all matters and things which by this Act are required or permitted to
be prescribed or which are necessary or expedient to be prescribed
to give effect to this Act.

( 4) Except as otherwise expressly provided in this Act, regulations may-

Page - 38

(a) be of a general or specific application;

(b) prescribe, where this Act provides for a person to be given an
opportunity to be heard, the manner in which the Bank shall give
the person an opportunity to be heard;

(c) provide that a contravention of any specified regulation or provision
thereof shall be an offence liable to be prosecuted summarily; and

(d) for each offence pursuant to paragraph (c), provide penalties not
exceeding a fine of one hundred thousand dollars or imprisonment
for a term not exceeding twelve months, or both; and, in the case of
a continuing offence, a further penalty not exceeding a fine of two
thousand dollars for each day or part of a day during which the
offence continues after conviction.

48. Bank may promulgate codes, guidelines.

(1) The Central Bank may, as and in such manner as it considers appropriate,
issue and publish such codes, guidelines, policy statements and practice
notes for providing guidance-

(a) in furtherance of its regulatory objectives;

(b) in relation to any matter relating to any of the functions of the
Bank under any of the provisions of this Act; and

(c) in relation to the operation of any of the provisions of this Act.

(2) Subject to subsection (3), the Bank may, in such manner as it thinks fit,
revoke, vary, revise or amend the whole or any part of a code, guideline,
policy statement or practice note issued under this section.

(3) This section shall apply in the same manner to a code, guideline, policy
statement or practice note both before and after its variation, revision or
amendment and any reference in this Act or any other written law to such
code, guideline, policy statement or practice note however expressed
shall, unless the context otherwise requires, be a reference to it as so
varied, revised or amended.

(4) A failure to comply with a code, guideline, policy statement or practice
note shall not of itself render a person liable to criminal proceedings but
any such failure may in any proceedings, whether civi l or criminal, be
relied on by any party to the proceedings as evidence to establish or to
negate any liability which is in question in the proceedings.

(5) A code, guideline, policy statement or practice note-

(a) may be of a general or specific application;

(b) may specify that its different provisions apply to different
circumstances or provide for different cases or classes of cases; and

(c) shall be deemed not to be subsidiary legislation.

Page- 39

Related Laws