Decree No. 7 / 2018 Coll.
Ordinance on certain conditions for the performance of the activities of a payment institution, the administrator of payment account information, a small-scale payment service provider, an electronic money institution and a small-scale electronic money issuer
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Effective from 13.01.2018
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7
DECLARATION
of 5 January 2018
on certain conditions for the performance of the activity of a payment institution, the administrator of the payment account information, a small-scale payment service provider, an electronic money institution and a small-scale electronic money issuer
The Czech National Bank provides pursuant to § 263 of Act No. 370 / 2017 Coll., on payment, ("the Act ') for the implementation of § 16 (5), § 17 (3), § 20 (4), § 46 (2), § 48 (4), § 59 (4), § 65a (2), § 74 (6), § 75 (3), § 78 (4), § 100 (4), § 106a (2) and § 254h (4):
GENERAL PROVISIONS
Subject matter
This decree implements the relevant provisions of the European Union1) and provides for
(a) the manner in which certain requirements for the payment institution's management and control system, the electronic money institution and the payment account information administrator are met;
(b) the way in which the requirements of the security and operational risk management system and the complaint and complaint management system of the small-scale payment service provider and the small-scale electronic money issuer are met;
(c) rules for calculating the amount of own funds and capital adequacy of the payment institution and electronic money institution, including the individual approaches that may be applied in the calculation of capital adequacy;
(d) the minimum level of insurance premiums and the minimum level of comparable collateral for the payment institution, the electronic money institution and the payment account information manager;
(e) the way in which the requirements of the system for handling complaints and complaints are met with the provider of the dynamic currency shift service.
METHOD OF IMPLEMENTATION OF CERTAIN REQUIREMENTS
METHOD OF IMPLEMENTATION OF CERTAIN REQUIREMENTS FOR MANAGEMENT AND CONTROL SYSTEM OF PAYMENT INSTITUTIONS
(K § 20 (4) of the Act)
Internal rules
(1) The payment institution shall incorporate the requirements laid down for the management and control system and the procedures for their implementation into its internal rules, which shall mean the strategies, organisational rules, plans and other internal principles and procedures of the payment institution.
(2) The paying institution shall establish and apply the procedure for the adoption and amendment of internal rules and shall ensure that internal rules are regularly evaluated and, where appropriate, adjusted.
(3) The paying institution shall ensure that internal rules are in accordance with the information provided in the application for authorisation to operate the payment institution or its annexes, on the basis of which the authorisation was granted, possibly amended in accordance with Article 11 of the Act.
(4) Payment institutions shall take into account in their internal rules the general guidelines and recommendations issued by the European Banking Authority, the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority or the Joint Committee of European Supervisory Authorities and addressed to payment service providers.
(5) Payment institutions shall ensure that all workers are familiar with and comply with the relevant internal rules and any changes thereto to the extent necessary.
Approval and decision-making processes
The payment institution shall ensure that the authorisation for the approval and signature of documents in the context of the activity of the payment institution is clearly established and that all relevant approval and decision-making processes and control activities, including the related responsibilities and powers in the context of the activity of the payment institution and its internal rules, can be recorded, stored and traced and reconstructed. To this end, it shall also adjust its information and communication systems accordingly.
Safety and operational risk management system
(1) The paying institution shall implement measures to mitigate these risks and control mechanisms to manage the security and operational risks associated with the payment services it provides. Payment institutions shall establish and maintain effective procedures for the management of security and operational incidents, including for the detection and classification of serious security and operational incidents.
(2) Paragraph 1 shall be without prejudice to the obligations of the payment institution to manage risks in the field of information and communication technologies to which the payment institution is or could be exposed in connection with the payment services provided by it, pursuant to Chapter II of Regulation (EU) 2022 / 2554 of the European Parliament and of the Council. The risk mitigation measures in the field of information and communication technologies and the control mechanisms established by the payment institution pursuant to Chapter II of Regulation (EU) 2022 / 2554 of the European Parliament and of the Council shall form part of its management of the security and operational risks referred to in paragraph 1.
Complaints and complaints system
(1) A payment institution shall establish and apply procedures for the handling of complaints and complaints by payment service users which:
(a) they are approved by the person who actually manages the activities of the payment institution in the field of the provision of payment services, and that person also checks their compliance on an ongoing basis;
(b) are specified in the internal Regulation;
(c) enable their proper investigation and ensure the identification and mitigation of potential conflicts of interest in their handling.
(2) The payment institution shall register internally, in accordance with the time limits laid down for the complaint and the complaint and the handling thereof, in a manner that complies with the information security requirements.
(3) The payment institution will set up a complaint and complaint settlement system by allowing it to provide the Czech National Bank, upon request, without undue delay, with information on complaints and complaints, including specific procedures for handling them.
(4) Payment institutions shall continuously analyse the data on complaints and complaints and the results of their processing in order to ensure the identification and resolution of any systemic deficiencies and potential risks, at least:
(a) analyse the reasons for individual complaints and complaints and identify the main causes of each type of complaints and complaints;
(b) assess whether the identified main causes may affect other processes, services or products, including those which are not directly concerned by the complaint or complaint;
(c) in the case of systemic deficiencies, it shall always remove identified causes of complaints and complaints.
(5) Payment institutions
(a) provide the payment service user, on request and at all times in connection with confirmation of receipt of a complaint or complaint, with written information about his complaint or complaint procedure, in the Czech language or in another language, if agreed with the payment service user;
(b) make the information referred to in point (c) available to payment service users and to the public through e-mail addresses of payment service users or in any other way agreed with payment service users in their business premises and, where websites are set up, also on them, at least in the Czech language;
(c) provide comprehensive, accurate and up-to-date information on the complaint and complaint procedure, including:
1. details of how to file a complaint or complaint, in particular the type of information that a payment service user must provide, and contact details of the person or service of the payment institution to whom the complaint or complaint is to be sent;
2. information on the period within which the payment service user will be informed of the handling of the complaint and the indicative time limit for processing the complaint or complaint;
3. substantial interim information on the processing of complaints or complaints;
4. information on the contact details of the Czech National Bank, the Financial Arbiter's Office and the Ombudsman's Office.
(6) Payment institutions
(a) make efforts to reasonably require it to obtain and verify all relevant evidence and information relating to the complaint or complaint;
(b) communicate with the payment service user in a simple and understandable way;
(c) provide answers without undue delay and not later than within the deadlines laid down in Section 258 of the Act; If it is unable to comply with these deadlines, it shall inform the payment service user of the reasons for the delay and the date on which the complaint or complaint is completed;
(d) when making an opinion which does not fully comply with the requirements of the payment service user, it shall explain in detail the solution to the complaint or complaint and shall provide information on the possibility of the payment service user to insist on complaints or complaints and contact the Financial Arbiter's Office, the Czech National Bank and the right to equal treatment and protection against discrimination to the Ombudsman's Office, including contact details of the institution or the court.
METHOD OF IMPLEMENTATION OF CERTAIN REQUIREMENTS FOR MANAGEMENT AND CONTROL SYSTEM OF ELECTRONIC MONEY INSTITUTION
(K § 78 (4) of the Act)
For an electronic money institution, paragraphs 2 to 5 shall apply mutatis mutandis.
METHOD OF IMPLEMENTATION OF CERTAIN REQUIREMENTS FOR MANAGEMENT AND CONTROL SYSTEM OF PAYMENT ACCOUNT INFORMATION
(Paragraph 48 (4) of the Law)
(1) Paragraph 2 and 3 shall apply mutatis mutandis to the administrator of payment account information.
(2) In order to meet the requirements of the security and operational risk management system, the payment account information administrator shall act mutatis mutandis in accordance with Section 4.
(3) In order to meet the requirements for handling complaints and complaints, the payment account information manager shall proceed mutatis mutandis in accordance with Section 5.
METHOD OF IMPLEMENTATION OF THE REQUIREMENTS FOR THE SAFETY, OPERATIONAL RISK MANAGEMENT SYSTEM AND THE COMPLAINING AND RECRACING SYSTEM FOR THE PAYMENT SERVICES OF SMALL SCOPE
(Articles 59 (4) and 65a (2) of the Law)
(1) A small-scale payment service provider shall reflect the requirements laid down for the security and operational risk management system and the complaint and complaint management system into its internal rules and shall act mutatis mutandis in accordance with Article 2 (2) to (5) for the fulfilment of the requirements for such internal rules.
(2) In order to meet the requirements for approval and decision-making processes concerning the safety and operational risk management system and the complaint and complaint management system, a small-scale payment service provider shall act mutatis mutandis in accordance with Article 3.
(3) In order to meet the requirements of the system for the management of security and operational risks related to the provision of payment services, a small-scale payment service provider shall act mutatis mutandis in accordance with Section 4.
(4) In order to meet the requirements of the complaints and complaints settlement system, a small-scale payment service provider shall act mutatis mutandis in accordance with Section 5.
METHOD OF IMPLEMENTATION OF THE REQUIREMENTS FOR THE SAFETY AND OPERATING RISK MANAGEMENT SYSTEM AND THE COMPLAINING SYSTEM AND RECLAIMS OF THE ELECTRONIC MONEY ISSUER
(Articles 100 (4) and 106a (2) of the Law)
(1) A small-scale electronic money issuer shall reflect the requirements laid down for the safety and operational risk management system and the complaint and complaint management system into its internal rules and shall act mutatis mutandis in accordance with Article 2 (2) to (5) for the fulfilment of the requirements for such internal rules.
(2) In order to comply with the requirements for approval and decision-making processes relating to the safety and operational risk management system and the complaint and complaint management system, the small-scale electronic money issuer shall act mutatis mutandis in accordance with Article 3.
(3) In order to meet the requirements of the safety and operational risk management system, the small-scale electronic money issuer shall act mutatis mutandis in accordance with Section 4.
(4) In order to meet the requirements of the complaints and complaints system, a small-scale electronic money issuer shall act mutatis mutandis in accordance with Section 5.
METHOD OF IMPLEMENTATION OF THE REQUIREMENTS FOR THE COMPLAINING AND RECRUING SYSTEM OF MONITORING SERVICES
(K § 254h (4) of the Act)
In order to meet the requirements of the complaint and complaint settlement system, the provider of the currency exchange service shall proceed mutatis mutandis in accordance with Section 5.
CAPITAL APPROACH AND INSURANCE
CAPITAL ASSESSMENT OF THE PAYMENT INSTITUTION
(Paragraph 16 (5) of the Law)
Capital
(1) The own funds are calculated mutatis mutandis as the own funds referred to in Article 4 (1) (118) of Regulation (EU) No 575 / 2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648 / 2012 ("the Regulation").
(2) At least 75% of Tier 1 capital takes the form of Common Equity Tier 1 capital pursuant to Article 50 of the Regulation and Tier 2 capital is equal to not more than one third of Tier 1 capital.
(3) In order to prevent multiple use of the elements eligible for the calculation of own funds, a payment institution which is a member of a group of which another payment institution, foreign payment institution, credit institution, investment firm, asset management company or insurance undertaking is also a member shall not include in the own funds determined in accordance with paragraph 1 those items or parts thereof which are included in the own funds to meet any other capital requirements. A credit institution, an investment firm and an asset management company shall, for the purposes of this Order, be understood to mean those entities as defined in the Regulation.
(4) A payment institution which carries out business activities other than those for which it is entitled under an authorisation granted under the law ("hybrid payment institution") may not include in the own funds designated under paragraph 1 those items or parts thereof which are used for the pursuit of activities other than those for which it is authorised under the law.
Accessibility for calculating the own funds requirement
(1) The approaches for calculating the own funds requirement are:
(a) overheads approach ("approach A");
(b) access based on the volume of payments (hereinafter referred to as "access B"),
(c) the basic indicator approach (hereinafter "C approach").
(2) Hybrid payment institutions will apply one of the approaches only to activities under Section 8 of the Act.
Access A
(1) The capital requirement under Approach A is equal to 10% of the total overheads for the immediately preceding financial year; overheads shall mean:
(a) the cost of depreciation of tangible and intangible assets; and
(b) administrative costs5) or performance consumption, personnel and taxes 6).
(2) If there is a significant change in the activity of a payment institution which sets the capital requirement by approach A compared to the immediately preceding accounting year, the Czech National Bank may, where justified, allow an adjustment in the calculation of this capital requirement.
(3) The payment institution, which will start operating during the current accounting year, sets the capital requirement by approach A of 10% of the total overheads planned for the current accounting year, adjusted where appropriate to the requirements of the Czech National Bank.
Access B
(1) The own funds requirement laid down in approach B is equal to the sum of the coefficient referred to in § 32 and the amount to be determined as the sum
(a) 4% of the part of the amount of payments not exceeding EUR 5 000 000;
(b) 2,5% of the part of the amount of payments exceeding EUR 5 000 000 and not exceeding EUR 10 000 000;
(c) 1% of the part of the amount of payments exceeding EUR 10 000 000 and not exceeding EUR 100 000 000;
(d) 0,5% of the part of the amount of payments exceeding EUR 100 000 000 and not exceeding EUR 250 000 000; and
(e) 0,25% of the part of the amount of payments exceeding EUR 250 000 000.
(2) For the period from 31 December of the current year to 30 December of the following year, the amount expressed in euro as referred to in paragraph 1 shall be converted into the amount in the crowns of the Czech exchange rate, which the Czech National Bank shall declare last in October of the current year.
(3) The volume of payments referred to in paragraph 1 shall be equal to one twelfth of the total amount of payment transactions carried out by the payment institution in the immediately preceding accounting year.
(4) If the payment institution has only started to operate during the current accounting year, it shall determine the volume of payments on the basis of its plan, adjusted as required by the Czech National Bank.
Access C
(1) The own funds requirement laid down in approach C is equal to the sum of the coefficient referred to in § 32 and the amount to be determined as the sum
(a) 10% of the part of the value of the relevant indicator not exceeding EUR 2 500 000;
(b) 8% of the part of the value of the relevant indicator above EUR 2 500 000 and not exceeding EUR 5 000 000;
(c) 6% of the part of the value of the relevant indicator above EUR 5 000 000 and not exceeding EUR 25 000 000;
(d) 3% of the part of the value of the relevant indicator above EUR 25 000 000 and not exceeding EUR 50 000 000; and
(e) 1,5% of the value of the relevant indicator in excess of EUR 50 000 000.
(2) The value of the relevant indicator referred to in paragraph 1 shall be equal to the sum of interest income, interest costs, fees and commission income and other operating income and shall be treated as follows:
(a) the value of the relevant indicator is calculated on the basis of a previous 12-month observation at the end of the last financial year;
(b) each item is taken into account at a corresponding positive or negative value;
(c) exceptional and irregular returns are not included in the calculation of the value of the relevant indicator; and
(d) the value of the relevant indicator may be reduced by the outsourcing costs provided by the person to whom the competent supervisory authority exercises comparable supervision.
(3) If the payment institution has only started to operate during the current accounting year, it shall determine the value of the relevant indicator on the basis of its plan, possibly adjusted according to the requirements of the Czech National Bank.
(4) Where the value of the relevant indicator referred to in paragraph 2 is less than 80% of the average of the values of the relevant indicators over the last 3 financial years, 80% of the average of the values of the relevant indicators over the last three financial years shall be used as the value of the relevant indicator for the purposes of determining the capital requirement under paragraph 1.
(5) For the period from 31 December of the current year to 30 December of the following year, the amount expressed in euro as referred to in paragraph 1 shall be converted into the amount in the crowns of the Czech exchange rate, which the Czech National Bank shall declare last in October of the current year.
Coefficient
The coefficient to be applied when applying the B or C approach is
(a) 0,5 if the payment institution provides only the payment service referred to in Article 3 (1) (f) of the Act; or
(b) 1, provided that the payment institution provides one of the payment services referred to in Article 3 (1) (a) to (e) of the Act.
CAPITAL ASSESSMENT OF THE ELECTRONIC MONEY INSTITUTION
(Paragraph 74 (6) of the Law)
Calculation of capital adequacy
For the purposes of calculating the solvency of an electronic money institution, the amount of the capital requirement to cover risks shall be determined as the sum of the capital requirements under Sections 34 and 35.
Capital and own funds requirement to cover the risks associated with the issuance of electronic money
(1) Capital shall be calculated mutatis mutandis as own funds under Article 4 (1) (118) of the Regulation.
(2) The capital requirement to cover the risks associated with the issuance of electronic money is at least 2% of the average of electronic money in circulation.
(3) In order to prevent multiple use of the elements eligible for the calculation of own funds, an electronic money institution which is a member of a group of which a payment institution, a foreign payment institution, a credit institution, an investment firm, an asset management company or an insurance undertaking shall not include in the own funds determined in accordance with paragraph 1 those items or parts thereof which are included in the own funds to meet any other capital requirements.
(4) An electronic money institution which carries on business activities other than that for which it is entitled to perform on the basis of an authorisation granted under the law may not include in the own funds designated under paragraph 1 those items or parts thereof which are used for the pursuit of activities other than those for which it is authorised under the law.
(5) Where it is not possible to determine which part of the funds transferred to the electronic money institution by the holder is intended for the activity referred to in Article 67 (1) (b) of the Act, the average of the electronic money in circulation shall be based on that part of the money corresponding to the estimate on the basis of data from previous periods.
(6) Where an electronic money institution issues electronic money for a period of less than 6 calendar months, the capital requirement shall be at least 2% of the average of the electronic money in circulation determined on the basis of its business plan, adjusted where appropriate according to the requirements of the Czech National Bank.
Calculation of the own funds requirement to cover the risks associated with the provision of payment services not related to electronic money
For the calculation of the capital requirement to cover the risks associated with the provision of payment services other than electronic money, paragraphs 29 to 32 shall apply mutatis mutandis.
MINIMUM LIMITS OF INSURANCE AND MINIMUM AMOUNT OF COMMERCIAL INSURANCE
(Articles 17 (3), 46 (2) and 75 (3) of the Law)
Minimum cash amount
The minimum level of insurance premiums or the minimum level of comparable reinsurance shall be determined for the previous calendar year and shall be equal to the minimum cash amount calculated according to the relationship
MMA = RP + TA + SA
where:
The MMA shall indicate the minimum cash amount in euro;
RP indicates the value of the risk profile indicator expressed in euro;
TA indicates the value of the activity type indicator expressed in euro;
SA indicates the value of the range indicator expressed in euro.
Risk profile indicator
The value of the risk profile indicator shall be calculated according to the relationship
RP = CR + NT + NA
where:
RP denotes the value of the risk profile indicator expressed in euro;
The CR shall indicate the total value of all claims arising from § 17 (1) or (2), § 46 (1) or § 75 (1) or (2) of the law applied by users or payment service providers holding a payment account against the payment service provider of the indirect payment order or payment account information in the previous calendar year; the value is expressed in euro;
the value of entitlements, expressed in a currency other than euro, shall be converted into an amount in euro at the rate declared by the Czech National Bank as last in the month of October of the previous calendar year;
where the services have not been provided in that calendar year, the CR shall correspond to the estimated amount of entitlements but at least EUR 50 000;
NT indicates the number of all payment transactions to which the payment order was submitted indirectly and is calculated according to the relation:
NT = 0,4.Na + 0,25.Nb + 0,1.Nc + 0,05.Nd + 0,00025. No,
where:
Na = min {10,000; N}
Nb = max {0; min {90,000; N-10,000}}
Nc = max {0; min {900 000; N - 100 000}}
Nd = max {0; min {9,000 000; N - 1,000}}
No = max {0; N - 10,000 000}
N is the total number of payment transactions to which the payment order was submitted indirectly in the previous calendar year and equal to the sum of Na + Nb + Nc + Nd + Ne;
where indirect payment order services have not been provided in that calendar year, the NT shall correspond to the estimated number of payment transactions to which the payment order will be submitted indirectly but at least 50 000;
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Regulation Information
| Citation | Decree No. 7 / 2018 Coll., on certain conditions for the performance of the activities of the payment institution, the administrator of the payment account information, the small-scale payment service provider, the electronic money institution and the issuer of small-scale electronic money |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 11.01.2018 |
|---|---|
| Effective from | 13.01.2018 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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