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Memorandum of Cooperation between the Central Bank of the Russian Federation (Bank of Russia) and the Banco Central de la Republica Argentina (BCRA)

The Central Bank of the Russian Federation (hereinafter called “Bank of Russia”) and the Central Bank of the Argentine Republic (hereinafter called “BCRA”), jointly referred to as “Banking Supervisory Authorities”, have reached an understanding on the need to both exchange information for the effective fulfillment of their functions and assist each other in developing reliable and stable banking systems in their countries. This Memorandum follows the Basel Committee Recommendations on the principles of consolidated and comprehensive supervision and co-operation between Banking Supervisory Authorities.

1. Banking Supervisory Authorities’ powers

1.1 In the Russian Federation.

Under the Russian Federation law, the Bank of Russia is a banking regulatory and supervisory body. It constantly monitors the compliance with banking legislation and the Bank of Russia’s regulations and mandatory standards by credit institutions and banking groups (banking holdings). Within the framework of its regulatory and supervisory functions, the Bank of Russia conducts on-site inspections of credit institutions and their branches, provides them with compulsory provisions to overcome any shortcoming that may be found out in the course of their work and takes measures in connection with credit institutions incorporated pursuant to the Federal Law on the Bank of Russia.

Under the Russian Federation law, the reporting on credit institutions, banking groups, banking holdings and consolidated groups is submitted to the Bank of Russia.

1.2 In the Argentine Republic

In the Argentine Republic, the BCRA comprises the Superintendence of Financial and Exchange Entities (SEFyC) which is entrusted by virtue of Act No. 24,144, with the supervision, on behalf of the BCRA, of banks and financial institutions as are laid down by the Financial Entities Act.

The general legal framework for the SEFyC and the policy of financial supervision are established under Act 24,144 (BCRA Charter) and Act 21,526 (Financial Entities Act). The Article 43rd of the BCRA Charter provides that: “the Central Bank of the Argentine Republic shall oversee financial and exchange activities through the Superintendence of Financial and Exchange Entities...”. The Article 44 defines the SEFyC as “a body detached from, though budgetary dependent on, the Central Bank of the Argentine Republic.”

In the Argentine Republic, a risk-based supervision is an ongoing process involving on-site and off-site inspections.

The supervision of banking groups is made on a consolidated basis. Pursuant to BCRA regulations, consolidation involves domestic financial entities, their subsidiaries and affiliates located in the country and abroad, and companies rendering supplementary financial services either at home or abroad.

2. Terms and Definitions

For the purpose of this Memorandum, the terms referred to below shall have the following meanings:

2.1 “Supervised Institution”: Legal person licensed to conduct banking operations, whose activities are subject to licensing and banking supervision in accordance with the legislation of the Russian Federation or the Argentine Republic.

2.1.1. In the Russian Federation:

“Credit institution”: Legal person aimed at deriving benefit from its main activity, which is licensed by the Bank of Russia to conduct such banking operations as are prescribed by the Federal Law on Banks and Banking Activities. A credit institution may be incorporated on the basis of any legal form as a business entity.

“Bank”: Credit institution enjoying the exclusive right to conduct the following banking operations in their entirety: take funds on deposit from natural and legal persons; lend funds on its behalf and at its own expense, on condition that they are returned after a specified period of time with the corresponding interest; and open and keep individual and corporate bank accounts.

“Non-bank credit institution”: Credit institution enjoying the right to conduct such individual banking operations as are laid down in the Federal Law on Banks and Banking Activities. Non-bank credit institutions are allowed to conduct any such combinations of banking operations as are provided by the Bank of Russia.

2.1.2. In the Argentine Republic:

The entities included hereunder are supervised by the SEFyC and shall be previously licensed in order to operate.

Bank”: Credit institution licensed to grant loans and borrow funds as well as render any services pursuant to Act 21,526. There may be commercial, investment or mortgage banks.

Financial Company”: Credit institution licensed to grant loans and borrow funds as well as render any services pursuant to Act 21,526.

Savings and Loan Association for Housing and other Real Estate”: Credit institution licensed to grant loans and borrow funds as well as render any services pursuant to Act 21,526.

Credit Union”: Credit institution which has up to five branches, preferably operating with affiliated companies located in the area where it conducts transactions. It must be chartered as a cooperative, allocating its income among its members. It is licensed to grant loans and borrow funds as well as render any services pursuant to Act 21,526.

Exchange House, Agency or Office”: Entity which conducts exchange transactions.

2.2. “Supervised Parent House:” Supervised institution incorporated in one of the countries with a Cross-Border Establishment (a branch, a subsidiary or a representative office) located in the other country.

2.3. Banking and consolidated group, banking holding, financial conglomerate.

2.3.1. In the Russian Federation

A banking group is an association of credit institutions, which is not a legal entity and in which a credit institution (the parent house) exerts directly or indirectly (through a third party) substantial influence on the decisions taken by management of another (other) credit institution (credit institutions).

A consolidated group is an association of legal entities, which is not a legal entity and in which a credit institution (the parent house) exerts directly or indirectly (through a third party) substantial influence on the decisions taken by management of another legal entity (a non-credit institution) or other legal entities (non-credit institutions).

A banking holding means an association of legal entities with the participation of a credit institution/s not being a legal entity, in which a legal entity not being a credit institution (the parent house of the banking holding) is in position to exert, directly or indirectly (through a third person), significant influence on the decisions made by the managerial bodies of the credit institution/s.

2.3.2. In the Argentine Republic:

A banking group is an association of credit institutions, which is not a legal entity and in which a credit institution (the parent house) exerts directly or indirectly (through a third party) substantial influence on the decisions taken by management of another (other) credit institution (credit institutions).

A financial group is any group of companies under common control, whose exclusive or leading activities consist of providing valuable services in, at least, two different financial sectors (banking, securities, insurance, pension).

A banking holding means an association of legal entities with the participation of a credit institution/s, not being a legal entity, in which a legal entity not being a credit institution (the parent house of the banking holding) is in position to exert, directly or indirectly (through a third person), substantial influence on the decisions made by the governance of the credit institution/s.

2.4. “Cross-Border Establishments

2.4.1. In the Russian Federation

In the Russian Federation, foreign banks may have an interest in the authorized capital of credit institutions; establish subsidiary credit institutions, whose activities are subject to licensing under federal laws, and open representative offices.

Under the Russian Federation legislation:

“A subsidiary credit institution” is a legal person for which the majority of its voting stock is owned by a holding company which can determine the decisions taken by the subsidiary credit institution in accordance with an agreement concluded between them or otherwise.

“A representative office” of a credit institution is a separate division thereof, located outside the seat of the credit institution it represents and which interest it protects. A representative office of a credit institution is not entitled to conduct banking operations. The representative office of a credit institution is not a legal person and its activities are governed by the regulations issued by the credit institution that has created it.

2.4.2. In the Argentine Republic:

A cross-border establishment is a branch, subsidiary or any other entity or banking group of a jurisdiction which operates under the wide or consolidated banking supervisory responsibility (or prospect supervisory responsibility) of the other jurisdiction’s group. Cross-border establishments include those located in such jurisdictions where the SEFyC and the Bank of Russia are Banking Supervisory Authorities.

“A representative office” of a credit institution is a separate division thereof, located outside the seat of the credit institution it represents and which interest it protects. A representative office of a credit institution is not entitled to conduct banking operations. The representative office of a credit institution is not a legal person and its activities are governed by the regulations issued by the credit institution that has created it.

2.5. “Home Country Supervisor” is the Banking Supervisory Authority located in the Russian Federation or in the Argentine Republic, respectively, in which a Supervised Institution is registered.

2.6. “Host Country Supervisor” is the Banking Supervisory Authority located in the Russian Federation or in the Argentine Republic, respectively, in which a Cross-Border Establishment of a Supervised Institution is registered.

3. Sharing of Information:

3.1 The Banking Supervisory Authorities believe that closer communications between Home and Host Countries Supervisors would be mutually advantageous.

3.2. Within the framework of this Memorandum cooperation shall be offered at the request of the Banking Supervisory Authorities (hereinafter called “request”).

3.3. The provisions set out in this Memorandum are intended neither to create legally binding obligations nor to prevail over national laws.

3.4. The request shall be made in writing by the contact persons appointed by the Banking Supervisory Authorities. Any means of communication may be used to report the request.

3.5. Within the framework of this Memorandum a request may be rejected wholly or in part, if the requested Banking Supervisory Authority believes that the compliance with the request breaches its national legislation or runs counter to the interest of its State. In this case, the requesting Banking Supervisory Authority shall be notified in writing of the reasons for refusal.

3.6. The Banking Supervisory Authorities shall:

— exchange public information on the country and development of the national banking sector, the principal banking supervision standards and requirements as well as any meaningful changes they may undergo;

— notify the other country and provide it with relevant information regarding any material development or supervisory concern in respect of the operations of a Supervised Institution that applies for a license for its Cross-border Establishments and/or conducts cross-border operations with Supervised Institutions in the Russian Federation or the Argentine Republic;

— provide each other with any necessary information for identifying the real owners of a Supervised Institution with the purpose of assessing risks on consolidated basis (ultimate beneficial owner in line with international supervision principles), whenever beneficiaries are natural persons.

— notify each other without delay of any such applications as Supervised Institutions may file in one country to establish a Cross-border Establishment or acquire shares (stakes) in a Supervised Institution in the other country (hereinafter called “applications”). Upon request, the Home Country Supervisor shall provide the Host Country Supervisor with any necessary information to make a decision on such an application;

— upon receipt of an application, the Host Country Supervisor shall inform the Home Country Supervisor about its content, and, after considering it, the former shall inform the results in writing.

If an applicant Supervised Institution were licensed to create a Cross-border Establishment, this Memorandum of Cooperation should be amended in order to establish a procedure for further sharing information in fields such as off-site supervision and on-site inspections.

3.7. Each Banking Supervisory Authority shall make every effort to ensure that the other Banking Supervisory Authority’s request be responded to promptly and to the fullest possible extent. Contrariwise, it shall notify the other Banking Supervisory Authority of the circumstances that may prevent or delay the compliance with the request.

3.8. Each Banking Supervisory Authority shall bear any such expenses that may arise from the implementation of this Memorandum unless a different procedure is agreed upon.

4. Co-operation related to the prevention of legalization of illegal funds (money laundering) and counter-terrorist financing (AML/CTF)

Within the framework of co-operation in order to increase efficiency in the banking supervision and transparency of the Supervised Institutions the Banking Supervisory Authorities shall exchange information on:

— laws and regulations related to AML/CTF as well as any changes therein;

— the best practice of clients and beneficiaries identification and verification;

— money laundering and terrorist financing typologies.

5. Confidentiality and Use of Information

5.1. Should any material provided within the framework of this Memorandum be “confidential” or protected by the relevant domestic legislation, such circumstance shall be specified in the document.

5.2. Banking Supervisory Authorities will take any necessary step to ensure the confidentiality of the information shared.

5.3. Whenever confidential information is shared pursuant to this Memorandum, such information will be solely used for legal supervisory purposes. The information exchanged shall not be disclosed without the prior written consent of the other Banking Supervisory Authority.

5.4. Each Banking Supervisory Authority’s commitment not to disclose any confidential information provided by the other Banking Supervisory Authority without the latter prior written consent may be abandoned, whenever information is to be disclosed to a third party in compliance with a legal obligation. In this case, both Banking Supervisory Authorities undertake to serve notice to one another of such a circumstance and take all possible measures in order to preserve the confidentiality of such information.

6. Sundry Provisions

6.1. If necessary, the Banking Supervisory Authorities shall hold meetings to discuss and settle matters relating to the implementation of this Memorandum.

6.2. To ensure effective co-operation as from the enforcement of this Memorandum, the Banking Supervisory Authorities shall exchange lists of contact persons (with full names, job titles, telephone and fax numbers and e-mail addresses).

6.3. Information on the Bank of Russia, banking system, laws and regulations of the Russian Federation is available on the website of the Bank of Russia at www.cbr.ru

Information on the BCRA and the Argentine Republic banking system, laws and regulations are available on the website of the BCRA at www.bcra.gov.ar

The Bank of Russia and the BCRA raise no objection to publish this Memorandum on their websites.

6.4. This Memorandum shall come into force as from the date of its signature and shall remain effective indefinitely unless any of the Banking Supervisory Authorities terminates this Memorandum or else the Banking Supervisory Authorities give their mutual consent to amend it with a 30-day prior written notice given by any of the parties. Once this Memorandum has been terminated, the regulations on confidentiality applicable to any such information that has been supplied under this Memorandum shall survive termination.

6.5. This Memorandum shall be executed in two copies in the English language.

For the Central Bank
of the Argentine Republic

___________________

Martin P. Redrado
President
Date: November 9, 2009
For the Central Bank
of the Russian Federation

___________________

Sergey M. Ignatiev
Chairman
Date: November 9, 2009

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Last updated on: 29/10/2018