BOT Notification No (4 September 2017)-check

Transcription

1 Unofficial Translation This translation is for the convenience of those unfamiliar with the Thai language Please refer to Thai text for the official version Notification of the Bank of Thailand No. FPG. 6/2554 Re: Permission for Commercial Banks to Provide Services to Financial Businesses or Government Entities (Insourcing) 1. Rationale Whereas the Bank of Thailand has policies to encourage commercial banks to better utilize their existing resources in order to reduce operating expenses, increase revenues, enhance capacity-building development of banking services and to accommodate customer needs by gradually permitting banks to engage in the provision of insourcing services and other additional services. Regarding the provision of insourcing services, the Bank of Thailand has permitted banks to provide such services since January Later, after the issuance of consolidated supervision guideline and securitization business guideline in July 2006 and November 1997 respectively, the Bank of Thailand has modified such guidelines so that banks could engage more in the provision of insourcing services, which encompass every business unit in financial business group, specialized juristic person for securitization, and a company that acquires transferred assets under the securities and exchange law from sellers and offers securities which are sold investors. In this Notification, the Bank of Thailand has extended the scope for insourcing to be in line with the Bank of Thailand regulation on Guideline on Outsourcing in Financial Institution s Business Operations. Moreover, commercial banks may also serve as banking agent for other financial institutions within the scope prescribed in the Guideline for the Appointment of Banking Agents. Furthermore, the permission for commercial banks to perform other services to general customers which was previously included in the permission for commercial banks to provide insourcing is now being issued as a separate notification from this Notification to avoid confusion. 2. Statutory power

2 2 By virtue of Section 36 of the Financial Institution Business Act B.E (2008) which is a law containing some provisions pertaining to the restriction of individual rights and liberties, whereas Section 29, in conjunction with Sections 31, 33, 36, 39, 41 and 43 of the Constitution of the Kingdom of Thailand grants such rights and liberties by virtue of the statutory provisions, the Bank of Thailand hereby issues the guidelines for permission for commercial banks to provide insourcing services to financial businesses or government entities as set forth in this Notification. 3. Scope of application This Notification shall apply to all commercial banks according to the law on financial institution business. 4. Repealed notification The Bank of Thailand Notification No. FPG. 8/2552 Re: Permission for Commercial Banks to Provide Support Services (Insourcing) and Other Services, dated 3 April Contents 5.1 Definitions In this Notification, Providing service to financial business or government entity (Insourcing) is where a commercial bank provides a service, which it is conducting for itself, for the followings: (1) Company within the same business group (2) Another financial institution, company within the same business group of the other financial institution, specialized financial institution, special purpose vehicle under the law governing special purpose juristic vehicles for securitisation or company under the law governing securities and exchange which acquires assets from the seller and issuing securities to be sold to investors, and asset management company incorporated under the law governing asset management companies. (3) The Bank of Thailand (4) Government entity Company within the same business group

3 3 (1) In the case of commercial bank incorporated in Thailand, it shall mean a company within the financial business group in accordance with the notification of the Bank of Thailand regarding guideline for consolidated supervision. (2) In the case of commercial banks registered in Thailand that are hybrid banks or subsidiaries, it shall mean a company within the financial business group in accordance with the notification of the Bank of Thailand regarding guideline for consolidated supervision and company related to that hybrid bank or subsidiary. (3) In the case of foreign commercial bank branch, it shall mean the head office or a branch in another country, or regional office of such foreign commercial bank branch that is located in another country, or a company related to such foreign commercial bank. Related company means the parent company, subsidiary, or joint company of the commercial bank providing the insourcing service. Financial business or supporting business means financial or supporting business under the Notification of the Bank of Thailand regarding regulation on consolidated supervision. Information Technology (IT) means information technology function that supports financial services such as data processing done by computer systems, development and distribution of work systems and computer programs, data storage, and maintenance and security of computer resources e.g. computer hardware, work system and software program, communication network system, data, etc. 5.2 Conditions for insourcing services Commercial banks are able to provide insourcing services within the scope permitted to the respective type of users, as follows:

4 User 4 Accepting outsourcing 2 function (non-strategic function and non-material outsourcing activity from another party Scope of Insourcing 1 IT function Banking agent function 3 Other services Company within the same business group Another financial institution - Company within the same business group of the other financial institution Specialized financial institution Special vehicle juristic person or company acquiring assets Asset management company The Bank of Thailand Banknote delivery 4 Government entity Payment and related services Accepting, printing and delivering documents as well as receipts per request Coin delivery 5 Being an agent for deducting withholding 1 means that the Bank of Thailand permits commercial banks to provide such insourcing service. 2 Subject to the scope stipulated in the notification of the Bank of Thailand regarding guideline for outsourcing in financial institution s business 3 Subject to the scope stipulated in the notification of the Bank of Thailand regarding appointment of banking agent and subject to compliance with regulation stipulated therein. 4 In accordance with the Bank of Thailand policy regarding banknote centers 5 Excluding coin handling functions (counting and sorting)

5 User 5 Accepting outsourcing 2 function (non-strategic function and non-material outsourcing activity from another party Scope of Insourcing 1 IT function Guideline for risk supervision Banking agent function 3 Other services tax and issuance of withholding tax certificate There are 2 key risks related to insourcing under Section 5.2.1, namely strategic risk and operational risk. As such, if a commercial bank intends to provide insourcing, it must comply with the following stipulations regarding the risks in these 2 areas Strategic risk: Commercial bank providing insourcing shall at the minimum comply with the followings: (1) It shall stipulate insourcing policy and risk management policy which shall be approved by the commercial bank s board of directors 6. (2) The commercial bank shall assess its potential capacities and resources required for providing the services. The bank shall exercise prudence to ensure that such activities do not harm or hinder its normal business operations and services. The bank shall additionally ensure that the work load of such services does not overwhelm the roles of commercial banking services or exceeds its own capacities to provide the services for the bank itself. These must be functions that the commercial bank is currently performing. In assessing the availability of resources of the commercial bank as mentioned above, resources within the same business group may also be taken into consideration Operational risk: Commercial bank providing the services shall at the minimum comply with the followings: (1) It shall assess the potential operational risk which shall include risk to the performance, bank s image and potential conflict of interests. 6 In the case of foreign bank branches, it may be designated senior executives or a designated executive committee.

6 6 (2) It shall arrange to have a contract specifying the type of services, procedures or operating method, scope of responsibilities, fees or service charges between internal units, internal control system, and security system for storage of data and properties of the commercial bank, user and subcontractor, if any. (3) The bank shall install suitable and adequate security system and system to safekeep related documents. Business continuity plan shall be developed, tested, and regularly updated Storage of documents Commercial bank must retain in custody documents under Section for its own auditing as well as making them available for the Bank of Thailand s examination or upon the Bank of Thailand s request Subcontracting The Bank of Thailand permits commercial banks to subcontract the service to any company within the same business group that is currently performing the function. In the case of commercial bank incorporated in Thailand, hybrid bank and subsidiary, subcontracting is permitted only to companies within the same financial business under the notification of the Bank of Thailand regarding consolidated supervision regulation. As for foreign bank branch, subcontracting is permitted to companies within the same business group which are located in Thailand only. In the case that the commercial bank subcontracts to a company within the same business group, the bank must still comply with the regulations under Sections and and must ensure the subcontractors comply with the regulations as well. In this regard, if necessary, the Bank of Thailand, commercial bank subcontracting the function and external auditor may conduct on-site examination of the subcontractor s operations and its various internal control systems in addition to request for information relevant to the function. 5.3 Power to direct or revoke the permission The commercial bank permitted to conduct the business under this Notification must diligently examine and monitor compliance of the insourcing regulation under Section 5.2 depending on the type of services provided as well as examine and monitor compliance with other relevant laws and regulations. Moreover, the commercial bank must bear in mind while conducting insourcing services under this Notification that it must not do so in order to avoid setting up of additional business unit or branch in Thailand and it must not breach any other regulation issued by the Bank of Thailand.

7 7 If the Bank of Thailand should discover that any commercial bank fails to comply with the regulations or conditions stipulated by the Bank of Thailand or engages in any conduct that affects the public safety and well-being, the Bank of Thailand may issue instructions, stipulate additional conditions or revokes the permission, entirely or partially Any commercial bank intends to provide any business above and beyond those stated in this Notification shall submit an application and presents rationale including relevant details to the Bank of Thailand on a case by case basis. In granting permission, the Bank of Thailand may stipulate regulations or condition pertaining to the business. 5.4 Transitional provision In the case that a commercial bank has been approved by the Bank of Thailand to provide any insourcing service prior to the enforcement of this Notification that conflicts with this Notification, such commercial bank may continue to perform the service as approved and in accordance with the agreement or contract until such agreement or contract expires. Should any commercial have any inquiry, please consult with the Bank of Thailand on a case by case basis. 6. Effective date This Notification shall come into force as from the day following the dates of its publication in the Government Gazette. Announced on 5 th August 2011 (Mr. Prasarn Trairatvorakul) Governor The Bank of Thailand Disclaimer: The Association of International Banks, its directors, members and employees take no responsibility, accept no liability from any use or misuse of the information in these pages and do not attest to the correctness of the translation, if any. This translation contains privileged information. It is intended for the named recipients only. No portion of this translation may be transmitted by any means without prior written permission from the Association of International Banks. All rights reserved.