Payment Systems (Oversight) Regulations 2012

Link to law: http://laws.bahamas.gov.bs/cms/images/LEGISLATION/SUBORDINATE/2012/2012-0100/PaymentSystemsOversightRegulations2012_1.pdf
Published: 2012-06-18

EXTRAORDINARY

OFFICIAL GAZETTE
THE BAHAMAS

PUBLISHED BY AUTHORITY

NASSAU 3ro October, 2012

TABLE OF CONTENTS

S.l. No. TITLE PAGE

100 The Payment Systems (Oversight) Regulations, 2012 2

101 The Payment Systems (National Payments Committee) 13
Bye laws, 2012

PAYMENT SYSTEMS (OVERSIGHT) REGULATIONS, 2012

Arrangement of Sections

Section
1. Citation ................................................................................................................ 2
2. Interpretation ....................................................................................................... 2
3. Yearly financial statements and special returns .................................................... 2
4. Bank may impose penalties ................................................................................. .3
5. Appointment, rights and duties of auditors .......................................................... .4
6. System and operational audits and inspections ..................................................... 5
7. Access to information and records ....................................................................... 5
8. Bank approval required for appointment of directors and officers ....................... 5
9. Removal of chief executive officer and directors ................................................. 6
10. Bank approval required for substantial shareholding in clearing house ................ 8
11. Grant of approval. ................................................................................................ 9
12. Emergency powers ofBank ............................................................................... 10

S.I. No. 100 of2012

MINISTRY OF FINANCE

PAYMENT SYSTEMS ACT, 2012

N0.7 OF 2012

PAYMENT SYSTEMS (OVERSIGHT) REGULATIONS, 2012

The Central Bank of The Bahamas, in exercise of the powers conferred by
section 47 of the Payment Systems Act, 2012, makes the following

Regulations -

1. Citation.

(I) These Regulations may be cited as the Payment Systems (Oversight)
Regulations, 20 12.

(2) These Regulations shall be deemed to come into force on the 18"' day of
June, 2012.

2. Interpretation.

(I) In these Regulations-

"the Act" means the Payment Systems Act, 2012 (No. 7 of 2012);

(2) Any term used in these Regulations without definitions, shall, unless the
context indicates otherwise, have the same meaning ascribed to those
terms in the Act.

3. Yearly financial statements and special returns.

(I) Every clearing house of a designated system shall, within ten days of its
Annual General Meeting, submit to the Central Bank a true and full yearly
statement of its accounts containing a certification by its auditor that the
statement submitted is a true and correct view, as shown by its books, of
the state of affairs of the clearing house.

(2) The Bank may, if it sees fit, exempt any clearing house of a designated
system from the requirements of paragraph (I).

(3) A statement submitted pursuant to paragraph ( I) shall -

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(a) be in such form and contain such particulars as the Bank may from
time to time direct;

(b) be signed by the manager, or by such other person or officer of the
clearing house as may from time to time be authorised to sign such
statement, on behalf of the clearing house; and

(c) contain a declaration as to its correctness made in such manner and
by such persons as the Bank may direct.

(4) A clearing house of a designated system shall, at any time at the written
request of the Bank and within the time period stated in such request,
provide the Bank with a special return and such further information as the
Bank may reasonably request.

4. Bank may impose penalties.

(I) The Central Bank may impose by order, for every day of default, a penalty
of two hundred ' and fifty dollars on any person or clearing house of a
designated system which fails to comply with the requirements of-

(a) paragraph (I) of regulation 3 within a period of ten days after the
Annual General Meeting of the clearing house or other relevant
person, as the case may be, or within such extended period as may
be allowed by the Bank;

(b) paragraph (4) of regulation 3 within a period of forty-two days of
the date stated in a request or within such extended period as may
be allowed by the Bank; or

(c) paragraph (2) of regulation 6 for thirty days after the date stated in
the request or within such extended or shorter period as may be
allowed by the Bank.

(2) The Bank may extend the time for sending any information or documents
required under regulation 3 for such further period not exceeding sixty
days as the Bank deems expedient.

(3) Subject to paragraph (4), any person who fails to comply with any
provision of these Regulations for which no specific penalty is imposed
shall be liable to pay a fine imposed by order of the Bank.

(4) The Bank may impose by order a fine not exceeding fifty thousand dollars
where any person fails to comply with any provision of these Regulations
and, in the case of a continuing default, five hundred dollars for each day
or part of a day during which the default continues.

(5) An order imposed pursuant to this regulation-

(a) shall be in writing;

(b) shall state the default in respect of which the penalty or fine is
imposed; and

Page· 3

(c) may be executed by the Bank in the same manner as an order of the
court.

5. Appointment, rights and duties of auditors.

(I) A clearing house of a designated system shall appoint an auditor who is a
certified public accountant or chartered accountant to audit its accounts
and shall, where for any reason such auditor ceases to act, immediately
appoint another auditor.

(2) The appointment of the auditor of a clearing house of a designated system
shall be notified to the Central Bank within ten days of the appointment.

(3) Subject to paragraph (4), the Bank may at any time require the
replacement of an auditor by notice in writing delivered to the usual place
of business of the auditor and the clearing house of the auditor.

(4) A notice under paragraph (3) shall-

(a) set out the grounds upon which the replacement of the auditor is
being sought;

(b) state that the auditor or clearing house of the auditor affected by the
notice given under paragraph (3) may, within such time not being
less than seven days as may be specified in the notice, submit a
written statement setting out the grounds of its objection to the
proposed replacement; and

(c) state that the Bank shall, within seven days of receipt of a written
statement of objection, advise the auditor and the clearing house of
the auditor of its decision in writing.

(5) An auditor of a clearing house shall give the Bank immediate written
notification of the auditor's-

(a) intention to resign before the expiration of his term of office as
auditor;

(b) intention not to seek re-appointment as auditor; and

(c) decision to include a modification of his report on the clearing
house's financial statements and, in particular, a qualification or
denial of his opinion or the statement of an adverse opinion.

( 6) An auditor or former auditor of a clearing house shall give written notice
to the Bank of any fact or matter in relation to the clearing house of which
he has or had become aware and which is likely to be of material
significance for the discharge of the functions of the Bank under these
Regulations.

(7) Paragraph (6) shall apply to any matter of which an auditor or former
auditor has or had become aware in his capacity as auditor and which

Page- 4

relates to the business or affairs of the clearing house or any related
company.

(8) An auditor or former auditor who fails to comply with paragraph (6)
commits an offence and shall be liable on summary conviction to a fine
not exceeding twenty-five thousand dollars.

(9) For the purposes of this regulation, "related company" in relation to a
clearing house includes -

(a) a parent, subsidiary or associate company of that clearing house;

(b) a subsidiary company of a parent company of that clearing house;

(c) a parent company of a subsidiary company of that clearing house;
or

(d) a company in which a controlling shareholder of that clearing house
either alone or with one or more associates -

(i) holds 10 per cent or more of the shares of the company; or

(ii) is entitled to exercise, or to control the exercise of, more than
I 0 per cent of the voting power at a general meeting of the
company.

6. System and operational audits and inspections.

( 1) The Central Bank may, for the purpose of carrying out its function under
the Act, conduct audits and inspections of the systems and operations of
the clearing house of a designated system.

(2) The Central Bank may, where it considers it necessary, at the expense of a
clearing house of a designated system, require that audits and inspections
under paragraph (1) shall be carried out on its behalf in whole or in part
by qualified auditors, or by a person appointed by the Bank for the
purpose, who shall submit their report to the Central Bank.

7. Access to information and records.

The Central Bank, and every auditor or person appointed by the Bank pursuant
to paragraph (2) of regulation 6, shall have the right of access at all times to such
of the books, accounts, records and systems of the clearing house of a designated
system, and shall be entitled to require from the clearing house such information
and explanations, as they or each of them considers necessary for the
performance of their respective duties under these Regulations.

8. Bank approval required for appointment of directors and officers.

(I) The clearing house of a designated system shall obtain the prior approval
of the Central Bank before appointing any person as its -

Page- 5

(a) chief executive officer in The Bahamas; or

(b) director in The Bahamas.

(2) Subject to regulation 9, a person whose appointment has received the prior
approval of the Bank pursuant to paragraph ( 1) may, upon the expiry of
his term, be reappointed as chief executive officer or director, as the case
may be, without the further approval of the Bank ..

(3) An application for approval under paragraph (I) shall be made in such
form and manner as the Bank may specify.

( 4) Without prejudice to any other matters that the Bank may consider
relevant, the Bank shall, in determining whether to grant its approval
under paragraph (1), have regard to such criteria as the Bank may
prescribe or specify in written directions.

(5) Subject to paragraph (6), the Bank shall not refuse an application for
approval under this regulation without giving the clearing house of the
designated system an opportunity to be heard.

(6) The Bank may refuse an application for approval under paragraph (1)
without giving the clearing house of the designated system an opportunity
to be heard in any case where -

(a) the applicant is an un-discharged bankrupt, whether in The
Bahamas or elsewhere;

(b) the applicant has been convicted, whether in The Bahamas or
elsewhere, of an offence -

(i) involving fraud or dishonesty or the conviction for which
involved a finding that he had acted fraudulently or
dishonestly; and

(ii) which is punishable with imprisonment for a term of three
months or more.

(7) The clearing house of a designated system shall immediately give written
notice to the Central Bank of the resignation or removal of its chief
executive officer or a director.

9. Removal of chief executive officer and directors.

(I) The Central Bank by notice in writing may, where it considers it necessary
in the interests of the public or a section of the public, direct the clearing
house of a designated system to remove the chief executive officer or a
director from his office or employment in any case where the Bank is
satisfied that the chief executive officer or the director has-

Page- 6

(a) wilfully contravened or wilfully caused the clearing house of that
designated system to contravene these Regulations or the Act;

(b) without reasonable justification or excuse failed to ensure
compliance with these Regulations or with the Act;

(c) failed to discharge the duties or functions of his office or
employment;

(d) been adjudged by a court of Jaw, whether in The Bahamas or
elsewhere, a bankrupt and has remained un-discharged;

(e) had execution against him in respect of a judgement debt returned
unsatisfied in whole or in part;

(f) whether in The Bahamas or elsewhere, entered into a compromise
or scheme of arrangement with his creditors, being a compromise or
scheme of arrangement that is still in operation; or

(g) been convicted, whether in The Bahamas or elsewhere, of an
offence involving fraud or dishonesty or the conviction for which
involved' a finding that he had acted fraudulently or dishonestly.

(2) Without prejudice to any other matter that the Central Bank may consider
relevant, the Bank may, in determining whether the chief executive officer
or a director of a clearing house of a designated system has failed to
discharge the duties or functions of his office or employment, have regard
to such criteria as the Bank may prescribe or specify in written directions.

(3) Subject to paragraph (4), the Central Bank shall not direct a clearing
house of a designated system to remove from office or employment the
chief executive officer or a director without giving that clearing house an
opportunity to be heard.

( 4) The Central Bank may direct a clearing house of a designated system to
remove the chief executive officer or a director from his office or
employment without giving the clearing house an opportunity to be heard
in any case where -

(a) the chief executive officer or director is an un-discharged bankrupt,
whether in The Bahamas or elsewhere;

(b) the chief executive officer or a director has been convicted, whether
in The Bahamas or elsewhere, of an offence -

(i) involving fraud or dishonesty or the conviction for which
involved a finding that he had acted fraudulently or
dishonesty; and

(ii) which is punishable with imprisonment for a term of three
months or more.

(5) Subject to paragraph (6), any clearing house of a designated system that,
without reasonable excuse, contravenes a written direction issued by the
Bank under paragraph (I) commits an offence and shall be liable on
summary conviction to a fine not exceeding one hundred thousand dollars

Page -7

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.

(6) No criminal or civil liability shall be incurred by a clearing house of a
designated system, or any person acting on behalf of a clearing house of a
designated system, in respect of anything done or omitted to be done with
reasonable care and in good faith in the discharge or purported discharge
of that clearing house's obligations under these Regulations.

10. Bank approval required for substantial shareholding in clearing
house.

(1) No person shall, without first obtaining the written approval of the Central
Bank, enter into any agreement to acquire shares in a clearing house of a
designated system by virtue of which such person would, if the agreement
was carried out, became a substantial shareholder of the clearing house.

(2) No person shall, without first obtaining the written approval of the Central
Bank, either alone or together with his associates own, hold or exercise
voting control over 20% or more of the paid up share capital of a clearing
house of a designated system.

(3) Application for the grant of an approval pursuant to paragraphs (1) and (2)
shall be made to the Bank in writing in such form as the Bank may
specify.

(4) For the purposes of this regulation-

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(a) a reference to the acquisition or voting control of a percentage of
the paid up share capital in a clearing house of a designated system
is a reference to the control, whether direct or indirect, of that
percentage of the total number of votes that might be cast in a
general meeting of the clearing house of the designated system; and

(b) a person shall be deemed to be an associate of another person if-

(i) he is the spouse, parent, remoter lineal ancestor or step-
parent, son, daughter, remoter issue, step-son or step-
daughter or brother or sister of the other person;

(ii) being a corporation, the directors are accustomed or under an
obligation, whether fonnal or informal, to act in accordance
with the directions, instructions or wishes of the other person
or of the directors of the other person;

(iii) the other person is a corporation whose directors are
accustomed or under an obligation, whether formal or
informal, to act in accordance with his directions, instructions

or wishes or, if he is a corporation, with the directions,
in::: ~ructions or wishes of the directors of the corporation;

(iv) he is a person who is accustomed or under an obligation,
whether formal or informal, to act in accordance with the
directions, instructions or wishes of the other person;

(v) the other person is accustomed or under an obligation,
whether formal or informal, to act in accordance with his
directions, instructions or wishes;

(vi) it is a related corporation of the other person;

(vii) it is a corporation in which the other person, either alone or
together with associates as described in sub-paragraphs (ii) to
(vi), is in a position to control not less than 20% of the votes;

(viii) the other person is a corporation in which the first person,
·either alone or together with associates as described in sub-
paragraphs (ii) to (vi), is in a position to control not less than
20% of the votes; or

(ix) he is a person with whom the other person has an agreement
or arrangement, whether oral or in writing and whether
express or implied, to act together with respect to the
acquisition, holding or disposal of shares or other interests in,
or with respect to the exercise of their votes in relation to, the
clearing house of the designated system.

11. Grant of approval.

(I) The Central Bank may, where it grants approval of an application made
pursuant to paragraph (3) of regulation I 0, impose such conditions or
restrictions as the Bank may think fit.

(2) Without prejudice to paragraph (1), the Bank may, in order to secure
compliance with paragraph (I) or (2) of regulation I 0 or with any
condition or restriction imposed under paragraph (I), by notice in writing
direct the transfer or disposal of all or any of the shares of a clearing
house of a designated system in which the substantial shareholder has an
interest.

(3) Where the Bank issues a direction under paragraph (2), the person to
whom the direction is issued shall immediately comply with such
direction.

( 4) Pending the transfer or disposal of shares which are the subject of a
direction by the Bank under this regulation, and notwithstanding anything
to the contrary in the Companies Act or the memorandum or articles of
association of the clearing house of the designated system -

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(a) no voting rights shall be exercisable in respect of the shares which
are the subject of the direction;

(b) the clearing house of the designated system shall not offer or issue
any shares, whether by way of rights, bonus, share dividend or
otherwise, in respect of shares which are the subject of the
direction; and

(c) except in a liquidation of the clearing house of the designated
system, the clearing house of the designated system shall not make
any payment, whether by way of cash dividend, dividend in kind, or
otherwise, in respect of the shares.

(5) Any offer or issue of shares by a clearing house of a designated system in
contravention of sub-paragraph (b) of paragraph ( 4) shall be deemed to be
null and void and a person to whom a direction has been issued shall
immediately return those shares to the clearing house of the designated
system which shall return to such person any payment received from him
in respect of those shares.

( 6) Any payment made by a clearing house of a designated system in
contravention of sub-paragraph (c) of paragraph ( 4) shall be deemed to be
null and void and a person to whom a direction has been issued under
paragraph (2) shall immediately return the payment he has received to the
clearing house of the designated system.

(7) The Central Bank may, subject to such conditions or restrictions as it
thinks fit, exempt from the requirements of paragraphs (I) or (2) of
regulation I 0, -

(a) any person or class of persons; or

(b) any class or description of shares or interests in shares.

12. Emergency powers of Bank.

(I) The Central Bank may at any time by notice in writing direct a clearing
house of a designated system to take such action, within such time period
as may be specified by the Bank, as the Bank considers necessary to
maintain or restore the safe and efficient operation of the designated
system if the Bank-

(a) has reason to believe that an emergency exists; or

(b) thinks it is necessary or expedient in the interests of the public or a
section of the public.

(2) Without prejudice to the generality of paragraph (I), the actions which the
Bank may direct a clearing house of a designated system to take shall
include the modification or suspension of any of the rules of the
designated system.

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(3) The Bank may, where a clearing house of a designated system fails to
comply with a direction under paragraph (I)-

(a) appoint a person to advise the clearing house in the proper conduct
of its operations;

(b) assume control of and carry on the operations of the clearing house
or direct some other person to do so on behalf of the Bank;

(c)

(d)

(e)

require the clearing house to cease operation of the designated
system;

apply to the Supreme Court for an order that the clearing house be
forthwith wound up by the court and that the provisions of the
Companies Act (Ch. 308) relating to the winding up of a company
by the court shall, mutatis mutandis, apply; or

take such other action, as the Bank thinks fit, to maintain or restore
the safe and efficient operation of the designated system.

(4) The Bank may in any case in which a clearing house is being wound up
voluntarily apply to the Supreme Court for such order as the court may
deem appropriate if the Bank considers that the winding up is not being
conducted in the best interests of the customers of the participants of the
system or of other creditors.

(5) The Bank may at any time modify or cancel any action taken by it under
paragraph (1) and may impose such conditions as it thinks fit subject to
which the modification or cancellation shall have effect.

( 6) The Bank shall, where it has assumed control of the operations of a
clearing house of a designated system under sub-paragraph (b) of
paragraph (3) -

(a) remain in control of and continue to carry on the operations in the
name and on behalf of the clearing house until such time as the
Bank is satisfied that the reasons for which it assumed control have
ceased to exist or it is no longer necessary that the Bank should
remain in control; and

(b) notify that fact in the Gazette.

(7) The Bank shall where it has ceased to control the operations of a clearing
house of a designated system notify that fact in the Gazette.

(8) The clearing house of a designated system shall, where the Bank has
assumed control of its operations under sub-paragraph (b) of paragraph
(3), submit its operations to the control of the Bank and shall provide the
Bank with such facilities as the Bank may require to carry on its
operations.

(9) Any clearing house which fails to comply with paragraph (8), or with any
direction or requirement of the Bank under paragraph (I), commits an

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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 every day or part of a day
during which the offence continues after conviction.

(I 0) The Bank may at any time fix-

(a) whether or not the appointment of the person has terminated, the
remuneration and expenses to be paid by the clearing house of a
designated system to any person appointed by the Bank under sub-
paragraph (a) of paragraph (3);

(b) where it has exercised its power under sub-paragraph (b) of
paragraph (3) and whether or not the Bank or some other person has
ceased to be in control of operations, the remuneration and
expenses to be paid by the clearing house to -

(i) the Bank; and

(ii) any person employed or authorised to assist the Bank in the
control and conduct of the operations of the clearing house.

( 11) A clearing house which is aggrieved by any action taken by the Bank
under this regulation may, within 30 days after notification by the Bank of
the action taken, appeal to the Supreme Court.

( 12) Notwithstanding the lodging of an appeal under paragraph ( 11 ), any action
taken by the Bank under this regulation shall continue to have effect
pending the judgement of the Court.

( 13) In this regulation, "emergency" means -

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(a) any situation which prevents a designated system from carrying out
its functions;

(b) any situation in which, in the opinion of the Bank, a designated
system is carrying on its operations in a manner likely to be
detrimental to the interests of its participants; or

(c) any undesirable situation or practice which, in the opinion of the
Bank, constitutes an emergency.

Made this 27'h day of September, A. D., 2012.

Signed
WENDY CRAIGG

The Central Bank of The Bahamas
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