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Memorandum of Understanding between the Central Bank of the Russian Federation (the Bank of Russia) and the Superintendency of Banks of the Republic of Panama

The Central Bank of the Russian Federation (Bank of Russia) and the Superintendency of Banks of the Republic of Panama, hereinafter referred to as the „Banking Supervisory Authorities”, have reached an understanding on the need to exchange information for the effective fulfillment of their functions and assist the reliability and stability of banking systems in their countries. This understanding also meets the Basеl Committee recommendations on the principles of conducting consolidated and comprehensive supervision and co-operation between Banking Supervisory Authorities.

1. The Powers of the Banking Supervisory Authorities

1.1. The Russian Federation.

Under the legislation of the Russian Federation, the Central Bank of the Russian Federation (the Bank of Russia) is a body of banking regulation and banking supervision. It constantly monitors the compliance by credit institutions and banking groups (banking holdings) with banking legislation, the Bank of Russia’s regulations and mandatory standards. To fulfill its regulatory and supervisory functions, the Bank of the Russia conducts on-site inspections of credit institutions and their branches, sends them compulsory prescriptions to eliminate the shortcomings discovered in their work and takes measures to credit institutions established by the Federal Law on the Central Bank of the Russian Federation (the Bank of Russia).

1.2. The Republic of Panama

Under the Panamian Banking legislation, the Superintendency of Banks of Panama is the authority responsible for the supervision and regulation of banking institutions established in the Republic of Panama. Also this entity supervises the Economics Groups of the Banks established in Panama. In order to fulfill the regulatory and supervisory functions, the Superintendency of Banks of Panama conducts on-site inspections to the banks established in Panama and their Economics Groups, and engages cross-border inspections based on Memorandum of Understanding subscribed with Foreign Banking Supervisory Authorities.

2. Concepts and Definitions

For the Purposes of this Memorandum, the concepts mentioned below will have the following meaning :

2.1. „Supervised Institution”: a legal entity authorised to conduct banking operations, whose activities are subject to licensing and banking supervision in accordance with the legislation of the Russian Federation or the Republic of Panama.

2.1.1. In the Russian Federation:

Credit institution is a legal entity which, for the purpose of deriving profit as the principal objective of its activity, has the right on the basis of a special permission (license) of the Bank of Russia to conduct banking operations stipulated by the Federal Law on Banks and Banking Activities. A credit institution is established on the basis of any form of ownership as a business entity.

Bank is a credit institution that has the exclusive right to conduct the following banking operations in their entirety: to take funds on deposit from private individuals and legal entities, lend such funds on its own behalf and at its own expense on the condition that they are returned after a specified period of time with an interest, open and keep individual and corporate bank accounts.

Non-bank credit institution is a credit institution that has the right to conduct individual banking operations stipulated by the Federal Law on Banks and Banking Activities. The permissible combinations of banking operations are established for non-bank credit institutions by the Bank of Russia.

A representative office of a credit institution is a separate division thereof, situated outside the seat of the credit institution that represents and protects its interests. A representative office of a credit institution has no right to conduct banking operations. A representative office of a credit institution is not a legal entity and conducts its activities on the basis of the regulations established by the credit institution that created it.

2.1.2. In the Republic of Panama

Bank: any person holding a banking license granted by the Superintendency of Banks, former National Banking Commission, to engage the Banking Business in or from the Republic of Panama.

Representative Office: Such office established to act as a representative of Banking institutions not operating and not engaging the Banking Business in or from the Republic of Panama.

2.2. „Parent Supervised Institution”: a supervised institution incorporated in one of the countries, which has a Cross-Border Establishment (a branch, a subsidiary or a representative office), located in the other country.

2.3. „Cross-Border Establishment”:

2.3.1. The Russian Federation.

In the Russian Federation, foreign banks may participate in the authorised capital of credit institutions and establish subsidiaries, whose activities are subject to licensing under the Russian Federation federal laws, and also open representative offices.

Under the Russian Federation legislation:

A subsidiary credit institution is a legal entity in which another credit institution has majority interest and in accordance with an agreement concluded between them or otherwise can determine the decisions taken by the subsidiary credit institution.

A representative office of a credit institution is a separate division thereof, situated outside the seat of the credit institution that represents and protects its interests. A representative office of a credit institution has no right to conduct banking operations. A representative office of a credit institution is not a legal entity and conducts its activities on the basis of the regulations established by the credit institution that created it.

2.3.2. The Republic of Panama

Subsidiary: A juridicial person which is wholly or mostly (majority) owned by another, or whose administration is controlled by such other. Exception is made under this definition of juridicial persons on whose behalf the Bank acts as a trustee.

Branch: An entity which is devoid of juridicial personality if it’s separated from its Parent Office, and is, therefore, an integral part of the Bank.

Representative Office: Such office established to act as a representative of Banking institutions not operating and not engaging the Banking Business in or from the Republic of Panama.

2.4. „Home Country Supervisor”: the Banking Supervisory Authority located in the Russian Federation or in the Republic of Panama, respectively, in which a Parent Supervised Institution is registered.

2.5. „Host Country Supervisor”: the Banking Supervisory Authority located in the Russian Federation or in the Republic of Panama, respectively, in which a Cross-Border Establishment of an Parent Supervised Institution is registered.

3. Sharing of Information

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

3.2 Co-operation within the framework of this Memorandum shall be conducted at the initiative of a Banking Supervisory Authority on the basis of a request for assistance.

3.3 A request for assistance shall be made in writing. Any type of communication facilities may be used to transmit a request.

3.4 Assistance within the framework of this Memorandum may be refused wholly or in part if the requested Banking Supervisory Authority believes that the fulfillment of the request contravenes its national legislation or runs counter to the interests of the state. In this case, the requesting Banking Supervisory Authority shall be notified in writing and given the reasons for the refusal.

3.5 The Banking Supervisory Authorities:

— exchange public information on the country and development of the national banking sector, the principal banking supervision standards and requirements and significant changes in the procedures and legislation therein;

— notify the other country and provide relevant information regarding any material developments or supervisory concerns in respect of the operations in one of the countries of a Supervised Banking Institution registered in the other country;

— provide each other information necessary for identifying the real owners of a Supervised Banking Institution;

— notify each other without delay of applications of Supervised Banking Institutions registered in one country for approval to establish a Cross-border Establishment or to acquire shares (stakes) in a Supervised Institution in the other country. Upon request, the Home Country supervisor will provide the Host Country Supervisor with information necessary to make a decision on such an application;

— upon the receipt of the application, the Host Country Supervisor shall inform the Home Country Supervisor about its contents, and after consideration of the application shall inform in writing about its results.

If the applicant Supervised Banking Institution receives the permission to establish a Cross-border Establishment, this Memorandum of Understanding should be amended in order to establish procedure for the sharing of information also in such fields as on-going supervision and on-site inspections.

3.6 Each Banking Supervisory Authority shall do everything to ensure a prompt and fullest possible reply to the request of the other Banking Supervisory Authority or it shall notify the latter about the circumstances that prevent or delay the fulfillment of the request.

3.7 Each Banking Supervisory Authority shall bear the expenses that may arise in implementing this Memorandum unless a different procedure is agreed upon.

4. Co-operation related to the prevention and countering money laundering and terrorist financing

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

— laws and regulations related to the prevention and countering money laundering and terrorist financing, which are competence of Banking Supervisory Authorities, as well as about changes in laws and regulations;

— the best practice of clients identification and verification related to money laundering and terrorist financing transactions;

— money laundering and terrorist financing typologies and methods (operations).

5. Other Provisions

5.1. If necessary, the Banking Supervisory Authorities shall meet to discuss and settle matters relating to the implementation of this Memorandum may also be discussed at such meetings.

5.2. To ensure the practical implementation of co-operation after this Memorandum comes into force, the Banking Supervisory Authorities shall exchange lists of contact persons (with full names, job titles, telephone and fax numbers and e-mail addresses).

5.3. Information on the Bank of Russia, banking system, laws and regulations of the Russian Federation may be found on the Bank of Russia website at www.cbr.ru.

Information on the Superintendency of Banks of the Republic of Panama, banking system, laws and regulations of the Republic of Panama may be found on the website at www.superbancos.gob.pa.

The Bank of Russia and the Superintendency of Banks of the Republic of Panama shall not object to placing this Memorandum on their websites.

5.4. This Memorandum shall come into force as of its signing and it will remain effective until one of the Banking Supervisory Authorities notifies in advance the other in writing about its decision to terminate it.

5.5. This Memorandum is done in two copies, in the English language.

For the Central Bank
of the Russian Federation

S.M. Ignatiev
Chairman of the Central Bank
of the Russian Federation

September 2006
For the Superintendency of Banks
of the Republic of Panama

Olegario Barrelier
Superintendent of Banks
of the Republic of Panama

September 2006
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Last updated on: 29/10/2018