Circular No. 20/2018/TT-NHNN on supervision of payment systems

CIRCULAR

Provisions on supervising payment systems  

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Within 10 working days before the implementation, installation, relocation, change in operating hours, or cessation of ATM operations outside the province or centrally-administered city where the organization providing payment services has its headquarters or branch directly managing the ATM, such organization must notify both the State Bank branch in the province or centrally-administered city where the ATM is located and the State Bank branch in the province or centrally-administered city where the headquarters or branch directly managing the ATM is located according to Model No. 1 (for fixed ATMs) or Model No. 2 (for mobile ATMs) issued together with this Circular."

Based on Decree No. 101/2012/ND-CP dated November 22, 2012 of the Government on non-cash payments and Decree No. 80/2016/ND-CP dated July 1, 2016 amending and supplementing certain articles of Decree No. 101/2012/ND-CP ARTICLE 1. AMENDING AND SUPPLEMENTING CERTAIN PROVISIONS OF CIRCULAR NO. 36/2012/TT-NHNN DATED DECEMBER 28, 2012 ISSUED BY THE GOVERNOR OF THE STATE BANK OF VIETNAM ON EQUIPMENT, MANAGEMENT, OPERATION, AND SAFETY GUARANTEE OF AUTOMATED TELLER MACHINE (ATM) OPERATIONS (HEREINAFTER REFERRED TO AS CIRCULAR NO. 36/2012/TT-NHNN). "2. Within 10 working days before the implementation, installation, relocation, change in operating hours, or cessation of ATM operations, organizations providing payment services must notify the State Bank of Vietnam branch in the province or centrally-administered city where the ATM is located (hereinafter referred to as the State Bank branch) according to Model No. 1 (for fixed ATMs) or Model No. 2 (for mobile ATMs) issued together with this Circular.;

At the proposal of the Payment Department Director;

The Governor of the State Bank of Vietnam issues this Circular to provide for the supervision of payment systems.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular provides for the activities of supervising important payment systems.

Article 2. Applicability

1. Organizations operating important payment systems.

2. Organizations and individuals related to the supervision of important payment systems.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

1. A payment system is a system comprising payment instruments, regulations, procedures, formalities, technical infrastructure, organizations operating it, and participants to process, net, and settle payment transactions arising between participants.

2. An important payment system is a payment system playing a leading role in serving the payment needs of subjects in the economy, having the potential to generate systemic risk, and meeting at least one of the following criteria:

a) It is the sole system or has a significant share in the total value of payments compared to other similar payment systems; or

b) It processes high-value payment transactions; or

c) It is used to settle for other payment systems or financial market transactions.

Important payment systems specified in this Circular include: The National Interbank Electronic Payment System; The Foreign Currency Payment System (operated by Vietcombank Joint Stock Commercial Bank); the securities transaction payment system; the financial transaction settlement and switching system.

3. The organization operating an important payment system (hereinafter referred to as the operating organization) is the entity directly operating the important payment system.

4. A clearing bank is a bank opening payment accounts for participants in the payment system to perform settlement of financial obligations arising among them within the payment system.

5. Liquidity risk is the risk that a participant in a payment system cannot fully meet its financial obligations in the payment system when due, although it may be able to do so at some future time.

6. Credit risk is the risk that a participant in a payment system cannot fully meet its financial obligations in the payment system when due and at any point in the future.

7. Systemic risk is the risk that a participant in a payment system cannot fulfill its financial obligations in the payment system when due, leading to other participants also being unable to meet their obligations when due, potentially spreading the risk to other payment systems.

8. Settlement risk is the risk arising when the settlement of obligations between participants in a payment system does not occur or occurs at a time not stipulated in the management and operation procedures of the payment system.

9. Operational risk is the risk arising from interruptions or cessation of the operation of a payment system due to hardware, software, communication network errors, human error, or external incidents.

10. Supervision of payment systems is the act of monitoring the operations of payment systems, evaluating payment systems, and issuing warnings or recommendations if necessary.

11. The supervisory unit is an entity within the organizational structure of the State Bank of Vietnam (hereinafter referred to as the State Bank) tasked with supervising payment systems.

12. Payment versus payment (PVP) is a settlement mechanism in the foreign currency payment system to ensure that the transfer of one currency takes place only when and if another or several currencies are transferred based on an exchange rate agreed upon by the parties involved in the transaction.

13. Delivery versus payment (DVP) is a settlement mechanism in securities transactions to ensure that the transfer of securities takes place only when and if the payment for purchasing securities is made.

Article 4. Objectives of supervising important payment systems

1. Ensuring the safety, stability, and efficiency of important payment systems.

2. Ensuring compliance with relevant laws and regulations concerning important payment systems.

3. Timely detection and warning to operating organizations to minimize risks arising during the operation of important payment systems.

4. Protecting the legitimate rights and interests of customers using payment services, enhancing customer confidence in payment services.

Article 5. Activities of supervising important payment systems

The supervisory unit shall supervise important payment systems in accordance with the contents stipulated in Chapter II of this Circular through the following activities:

1. Monitoring the operations of important payment systems through:

a) Collecting documents, information, and data from the following sources:

(i) Reports required by current laws on reporting and statistical regimes for credit institutions and foreign bank branches;

(ii) Operational data of the National Interbank Electronic Payment System as prescribed in Appendix I attached hereto, collected and extracted from related information systems of the State Bank of Vietnam;

(iii) Other reports of the operating organization as prescribed in Article 7 of this Circular;

(iv) Evaluations of the National Interbank Electronic Payment System as prescribed in Appendix V attached hereto, conducted by the supervisory unit every three years;

(v) Supervision tools and software for important payment systems of the State Bank of Vietnam;

(vi) Documents, information, and data collected through on-site inspections of the operating organization as prescribed in Article 6 of this Circular;

(vii) Information related to important payment systems reflected in mass media;

(viii) Information provided by other competent authorities;

(ix) Feedback from participants in important payment systems and customers using payment services;

(x) Other sources of information for monitoring important payment systems;

b) Comparing, cross-checking, and verifying the accuracy of data:

(i) Comparing and cross-checking collected documents, information, and data with historical data to identify abnormal fluctuations;

(ii) Comparing and cross-checking documents, information, and data from different sources as prescribed in point a of this clause to ensure consistency;

(iii) Assessing the rationality of documents, information, and data; in cases where missing, erroneous, or inconsistent data is identified, requiring the operating organization to promptly report and provide accurate information;

c) Summarizing, analyzing collected documents, information, and data as compared and verified as prescribed in points a and b of this clause.

2. Evaluating important payment systems

Based on the documents, information, and data collected as prescribed in Clause 1 of this Article, the supervisory unit shall evaluate each important payment system and prepare supervision reports to submit to the Governor of the State Bank of Vietnam:

a) Quarterly, mid-year, and annual reports for the National Interbank Electronic Payment System;

b) Mid-year and annual reports for the foreign currency payment system, securities transaction payment system, settlement and financial transaction switching system;

c) Ad hoc reports on risks and incidents occurring in important payment systems.

3. Warning and recommendations

In cases where the supervisory unit identifies potential risks that may affect the safe and stable operation of important payment systems or lead to non-compliance by operating organizations with relevant laws and regulations concerning important payment systems, the supervisory unit shall report and propose to the Governor of the State Bank of Vietnam to issue warnings and recommendations to the operating organization.

Article 6. On-site Inspection

1. The supervisory unit shall submit to the Governor of the State Bank of Vietnam a proposal to establish an inspection team to conduct on-site inspections at the workplace of the operating organization in cases where the supervisory unit discovers that the documents, information, and data provided by the operating organization are missing, erroneous, incorrect, or not appropriate but have not been rectified, or where additional documents, information, and data need to be collected due to issues related to risks.

2. Depending on the nature and content of the case, the Governor of the State Bank of Vietnam shall decide on the composition and working period of the inspection team.

3. The State Bank of Vietnam shall notify the operating organization in writing at least five working days prior to the inspection, specifying the content, time, location, and members of the inspection team.

4. The operating organization must prepare all necessary content for the inspection; provide documents, information, data reports, and access to the information technology system to support the inspection; explain and clarify the contents of the information and reports when requested.

5. The inspection team shall record the minutes of the work and sign confirmation between the representatives of the inspection team and the operating organization.

6. The inspection team shall report the results of the inspection to the Governor of the State Bank of Vietnam within thirty working days from the end of the inspection.

Article 7. Reporting and Providing Information

1. Organizations operating foreign exchange payment systems, securities transaction payment systems, settlement systems, and financial transaction switching systems shall be responsible for reporting and providing information to the State Bank of Vietnam about the payment systems they operate as follows:

a) Report statistical data on the operation of foreign exchange payment systems, securities transaction payment systems, settlement systems, and financial transaction switching systems in accordance with Appendix II issued together with this Circular;

b) Submit periodic reports every six months and annually on the operational status of important payment systems in accordance with Appendix III issued together with this Circular;

c) Notify the supervisory unit immediately upon discovering any incident causing the payment system's operations to be interrupted for more than thirty minutes so that the situation can be monitored and handled; send an incident notification in accordance with Appendix IV issued together with this Circular within three working days from the date of completing the incident resolution;

d) Provide a system evaluation report in accordance with Appendix V issued together with this Circular, which is conducted once every three years according to the implementation methods, applicable standards, and submission deadlines specified in the State Bank of Vietnam's request document;

e) Provide information and documents related to changes in the features of the payment system and internal procedures and processes of the payment system within fifteen working days from the date of change;

f) The reporting method prescribed in points a and b of this clause is as follows:

(i) Electronic reports in the form of electronic data files transmitted through computer networks or sent via physical media, signed electronically by the authorized representative of the reporting organization in accordance with the designated transmission codes, file structures specified by the State Bank of Vietnam;

(ii) Written (paper) reports in cases where electronic reporting cannot be implemented, signed by the authorized representative of the reporting organization;

g) Periodic and reporting deadlines prescribed in points a and b of this clause are as follows:

(i) The daily reporting period is determined based on working days; organizations operating the system must submit their reports no later than 14:00 on the next working day following the reporting period;

(ii) Monthly reporting periods run from the first to the last day of the month; organizations operating the system must submit their reports no later than the twelfth day of the following month after the reporting period;

(iii) Six-month reporting periods run from January 1 to June 30; organizations operating the system must submit their reports no later than the fifteenth day of the following month after the reporting period;

(iv) Annual reporting periods run from January 1 to December 31; organizations operating the system must submit their reports no later than the fifteenth day of the first month of the following year after the reporting period.

2. Organizations operating the National Interbank Electronic Payment System shall be responsible for providing the following information:

a) Notify the supervisory unit immediately upon discovering any incident causing the National Interbank Electronic Payment System's operations to be interrupted for more than thirty minutes so that the situation can be monitored and handled; send an incident notification in accordance with Appendix IV issued together with this Circular within three working days from the date of completing the incident resolution;

b) Develop tools and software to allow the supervisory unit to remotely access the National Interbank Electronic Payment System to monitor its online activities based on principles ensuring security, confidentiality of information, and without disrupting or affecting the processing speed of the National Interbank Electronic Payment System, including:

(i) Full access to the list and basic information of participants in the National Interbank Electronic Payment System;

(ii) Monitoring the operational status of the National Interbank Electronic Payment System;

(iii) Accessing warning information about abnormal activities of the National Interbank Electronic Payment System;

(iv) Accessing information on the liquidity status of each participant, including account balance information, net debit limit, overdraft limit of participants, participants showing signs of liquidity difficulties (transactions not processed due to insufficient balances, payment insufficiency in clearing settlement, transactions canceled at the end of the day due to insufficient balances), participants generating liquidity support requests.

Chapter II

CONTENT OF SUPERVISION OF PAYMENT SYSTEMS

IMPORTANT

Article 8. National Inter-bank Electronic Payment System

1. The general situation of the operation of the National Inter-bank Electronic Payment System, including information on operating hours, member participation status, transaction settlement situations for each service provided (high-value payment services, low-value payment services, foreign currency payment services, net settlement services for other payment systems).

2. Risk occurrence situations and risk management for operational risks, credit risks, liquidity risks, settlement risks of the National Inter-bank Electronic Payment System.

3. Compliance with relevant legal regulations related to the management and operation of the National Inter-bank Electronic Payment System.

4. Changes in the activities of the National Inter-bank Electronic Payment System, including changes in system features, procedures, and internal processes.

Article 9. Foreign Currency Payment System

1. The general situation of the operation of the foreign currency payment system, including member participation status, transaction settlement situations.

2. Risk occurrence situations and risk management for operational risks, liquidity risks, settlement risks of the foreign currency payment system.

3. Compliance with relevant legal regulations related to the management and operation of the foreign currency payment system.

4. Changes in the activities of the foreign currency payment system, including changes in system features, procedures, and internal processes.

Article 10. Securities Transaction Settlement System

1. The general situation of the operation of the securities transaction settlement system, including member participation status, transaction settlement situations.

2. Risk occurrence situations and risk management for operational risks, credit risks, liquidity risks, settlement risks of the securities transaction settlement system.

3. Compliance with relevant legal regulations related to the management and operation of the securities transaction settlement system.

4. Changes in the activities of the securities transaction settlement system, including changes in system features, procedures, and internal processes.

Article 11. Financial Transactions Clearing and Switching System

1. The general situation of the operation of the financial transactions clearing and switching system, including member participation status, transaction situations for each provided service.

2. Risk occurrence situations and risk management for operational risks, credit risks, liquidity risks, settlement risks of the financial transactions clearing and switching system.

3. Compliance with relevant legal regulations related to the management and operation of the financial transactions clearing and switching system.

4. Changes in the activities of the financial transactions clearing and switching system, including changes in system features, procedures, and internal processes.

Chapter III

RESPONSIBILITIES OF ORGANIZATIONS INVOLVED IN THE SUPERVISION OF IMPORTANT PAYMENT SYSTEMS

Article 12. Responsibilities of the Payment Department

1. Fulfill the responsibilities of the Supervisory Unit for important payment systems as stipulated in this Circular.

2. Coordinate with the Information Technology Department to build an electronic reporting system to receive, aggregate, exploit, and store data reports as prescribed in Clause 1 of Article 7 of this Circular.

3. Coordinate with the Information Technology Department to develop tools to collect and exploit operational data of the National Inter-bank Electronic Payment System as prescribed in Appendix I issued together with this Circular from related information systems of the State Bank.

4. Submit to the Governor of the State Bank a document requesting organizations operating the foreign currency payment system, the securities transaction settlement system, and the financial transactions clearing and switching system to report on the assessment of important payment systems.

5. Serve as the focal point and coordinate with related units within the State Bank to build a report assessing the National Inter-bank Electronic Payment System as prescribed at point a (iv) of Clause 1 of Article 5 of this Circular.

6. Provide information to Banking Inspection and Supervision Authorities when signs of violations or acts violating legal regulations on organizing and operating important payment systems by operating organizations are detected.

Article 13. Responsibilities of the Information Technology Department

1. Notify the Payment Department of the results when conducting inspections, monitoring the implementation and compliance with current laws related to technical infrastructure conditions of organizations operating systems, ensuring the safety and security of information technology systems serving the operation of important payment systems.

2. Coordinate with the Payment Department to conduct on-site inspections of organizations operating foreign exchange payment systems, securities transaction payment systems, settlement systems, financial transaction switching systems upon request.

3. Serve as the focal point and coordinate with the Payment Department to establish and maintain the operation of an electronic reporting system to receive, compile, exploit, and store data reports as stipulated in Clause 1, Article 7 of this Circular.

4. Serve as the focal point and coordinate with the Payment Department to develop tools to collect and exploit operational data of the National Interbank Electronic Payment System as stipulated in Appendix I issued together with this Circular from relevant information systems of the State Bank.

5. Coordinate with the Payment Department and related units of the State Bank to develop a report evaluating the National Interbank Electronic Payment System as stipulated in Clause 5, Article 12 of this Circular.

6. Provide information about the National Interbank Electronic Payment System as stipulated in Clause 2, Article 7 of this Circular.

Article 14. Responsibilities of the Banking Inspection and Supervision Authority

1. Provide the Supervisory Unit with a list of credit institutions, branches of foreign banks participating in important payment systems subject to early intervention or special control measures.

2. Receive information provided by the Payment Department as stipulated in Clause 6, Article 12 and handle it according to the law.

3. Coordinate with the Payment Department to conduct on-site inspections of organizations operating systems upon request.

Article 15. Responsibilities of organizations operating foreign exchange payment systems, securities transaction payment systems, settlement systems, financial transaction switching systems

1. Fulfill the responsibilities of the operating organization as prescribed in this Circular.

2. Coordinate with the Supervisory Unit to develop common online monitoring tools and software according to the actual monitoring requirements of the State Bank upon request.

3. Appoint focal personnel responsible for coordinating with the Supervisory Unit in reporting, providing information, and handling risks and incidents; promptly notify the Supervisory Unit of any changes to this focal personnel.

4. Implement recommendations of the State Bank and report on their implementation to the Supervisory Unit.

Chapter IV

IMPLEMENTING PROVISIONS

Article 16. Effective Date

This Circular takes effect from January 1, 2019.

Article 17. Implementation Organization

The Director of the Office, Heads of the Payment Department, Heads of Units under the State Bank, Governors of the State Bank Branches in provinces and centrally-administered cities, Chairmen of Management Boards (Board Members), General Directors (Directors) of organizations operating important payment systems are responsible for organizing the implementation of this Circular./.