ISR ISA issued consultations on proposed instructions for payment companies in relation to outsourcing, plus corporate governance, compliance and risk management.
The Law for the Regulation of the Practice of Payment Services, Law 5773-2023, was published in Official Gazette on Jun. 6, 2023, and will come into effect in Jun. 2024.
Law 5773-2023 authorizes ISR ISA to grant licenses and supervise companies engaged in non-bank payment services, to encourage competition and act in customer interest.
Takes into account both Electronic payment activities in Europe directive, and PSD2.
Outsourcing
Payments services regulated in law and requiring ISR ISA licenses are: payment means issuance; clearing of payment transactions; payment account management.
The law also allows for two new and advanced types of technological services, which are advanced initiation and basic initiation, for easy, convenient bank transfers, and enables creation of an alternative competitive, use of credit cards merchant payments.
Proposals cover: board of director role; outsourcing policy; limitations on transfer to outsourcing; preliminary exams for outsourcing/risk management arrangements.
Outsourcing supplier engagement; business continuity plans; RIA report exemption.
Corporate Governance
Section (23A) of Law 5773-2023 states that a license holder must ensure adequate and advanced mechanisms for secure information, risk management, cybersecurity.
Section 23B stipulates ISR ISA will determine rules, including the obligation to appoint officials responsible for information security, risk management and cyber protection.
Will also be responsible for determining eligibility conditions and training requirements.
Directive establishes guidelines and principles for license holder risk management, with principles to ensure uniform minimum corporate governance, compliance for licensees.
ISR ISA will also issue additional designated instructions on management of specific risks, e.g., equity, financial protection, customers, technology, information security.
Effectiveness
Responses to both consultations are invited until May 19, 2024.
