The Colombian Financial Supervisor (SFC) has issued the External Circular 050/2016, creating a new chapter for the Basic Legal Circular, which it set forth originally to establish special provisions applicable to specialist electronic payment and deposit companies (Sociedades Especializadas en Depósitos y Pagos Electrónicos or SEDPEs).

The new chapter includes standards regulating the legal regime for SEDPEs and their corporate governance, risk management, electronic deposits, money orders, consumer protection and service channels.

It reiterates that the corporate purpose of a SEDPE must be limited to: i) funding from electronic deposits; ii) making payments and transfers, iii) acquiring local and external loans to finance its operation and iv) sending and receiving money orders.

The SFC establishes that the corporate governance of SEDPEs should include the suitable structure to manage the risks associated to its operation, providing a clear definition of the roles and responsibilities and reporting lines.  

Pursuant to these instructions, SEDPEs must have at least the following governance bodies: i) general meeting of shareholders; ii) board of directors; iii) a legal representative; iv) tax auditing department; v) internal audit department and vi) an audit committee.

Regarding risk management, it makes it mandatory for SEDPEs to design and implement risk management systems to ensure suitable, timely management of the risks inherent to their operation. These systems must cover operating risk (including legal and reputational risk), anti-money laundering and financing of terrorism measures (AML and AFT), liquidity risk, funding risk and market risk.  

The instructions on money orders establish that SEDPEs must have mechanisms to that they can return money to the order-issuer when money orders are sent out to parties that have not claimed them.

The chapter also deals with consumer protection, indicating that SEDPEs must follow the regulations established in the Basic Legal Circular published by the SFC in this matter (Circular Básica Jurídica expedida por la SFC. Specifically, SEDPEs must inform their customers that electronic deposits are covered by the FOGAFÍN deposit insurance, and notify them of the interest rates being offered for electronic deposits, and any restrictions on withdrawing such deposits in cash.

Finally, the instructions state which services SEDPEs may offer through correspondents. These include: i) money deposit, payment and transfers, ii) sending and receiving money orders in Colombian currency within national territory and iii) balance information.