‘Approved’
Financial Markets Supervisory Authority of
the Republic of Azerbaijan

Resolution № 1851100012

‘08’ October 2018

Acting Chairman of the Management Board

______________________
Ibrahim Alishov

Regulations on supervision of exchange operations of the persons licensed for currency exchange activities

1. General provisions

The ‘Regulations on supervision of exchange operations of the persons licensed for currency exchange activities’ (hereinafter – the regulations) have been developed in connection with the implementation of sub-item 3.1.4 of Decree No 1415 of the President of the Republic of Azerbaijan dated 18 May 2017 ‘on application of the Law of the Republic of Azerbaijan No 649-VQD dated 25 April 2017 ‘on making amendments to the Law of the Republic of Azerbaijan on Currency Regulation’ and determine the order of supervision of exchange operations.

2. Main definitions

2.1. The definitions used herein bear the following meanings:
2.1.1. Exchange office – the place (site) where currency exchange operations are carried out by the persons licensed for currency exchange activities;
2.1.2. Exchange operation – operation on cash buy/sell/exchange of foreign currency.
2.2. Other definitions used herein bear the meanings specified in the Law of the Republic of Azerbaijan ‘on Currency Regulation’ (hereinafter – the Law).

3. Supervision of currency exchange activity

3.1. The goal of supervision is to ensure submission of periodic reports to the Financial Markets Supervisory Authority of the Republic of Azerbaijan (hereinafter - the FIMSA) by persons licensed for currency exchange activities in the required form and timeframe, organization of accounting by persons licensed for currency exchange activities in accordance with legal requirements, protection of the rights of consumers on currency exchange operations and compliance with the requirements set in the Law on currency exchange operations and regulations of the FIMSA and the Central Bank of the Republic of Azerbaijan (hereinafter – the Central Bank) arising from the said Law.
3.2. The activity of the exchange office is supervised based upon the reports submitted by the exchange office to the FIMSA, next and extraordinary onsite inspections by the FIMSA as specified in the legislation, as well as online information sharing with the central server of the software provided by the FIMSA.
3.3. The form, the procedure of and deadline for submission of reports to be delivered by the exchange office to the FIMSA are determined in the ‘Regulations on maintaining currency exchange operations by the persons licensed for currency exchange activities’. In case reports are not submitted within the timeframe specified in the said Regulations, the FIMSA issues an instruction to the person licensed for currency exchange operations within three working days. The instruction requires an explanation of the reasons for non-submission of reports together with the reports within 10 (ten) working days and timely submission of reports from the next reporting date. In the event the person licensed for currency exchange activities fails to follow the instruction of the FIMSA, the FIMSA takes a decision on revoking the license in accordance with Article 13-7.1.2 of the Law and informs the person licensed for currency exchange operations within two working days to that end.
3.4. The FIMSA conducts analytical analysis of monthly reports of the exchange office within 10 (ten) working days, checks completeness of reports and availability of all required information. If the FIMSA discovers shortcomings, as well as violation of the requirements of the Law, regulations of the FIMSA and the Central Bank, it instructs the person licensed for currency exchange activities to make relevant changes to the report within 5 (five) working days from the date of discovery of shortcomings (violations). The person with a currency exchange license eliminates shortcomings (violations) within five business days after receiving relevant information. In the event the person licensed for currency exchange activities fails to comply with the requirement of the FIMSA, the FIMSA takes a decision on revoking the license in accordance with Article 13-7.1.2 of the Law and informs the person licensed for currency exchange activities within two working days to that end.
3.5. The FIMSA conducts an extraordinary inspection if:
3.5.1. the FIMSA receives official appeals (information) based on concrete facts from legal entities and individuals, state and local self-government bodies on direct and significant threat or significant damage to human life or health, the environment and state property interests, as well as mass media spreads information;
3.5.2. The person licensed for currency exchange activities applies to the FIMSA for an extraordinary inspection;
3.5.3. The person licensed for currency exchange activities fails to notify the FIMSA on the implementation of the decision to eliminate the violations revealed as a result of the last inspection or their consequences within a specified period or if the information provided is incorrect;
3.6. The inspection is conducted based on a document (a signed inspection certificate) approved by the decision of the FIMSA. The inspection certificate includes the number and the date of that decision, the name and the TIN of the person, licensed for currency exchange activities, the license number, the address of the exchange office, the type of inspection, the type and the completion date of the last inspection, 1st, middle and last names , position(s) of the inspector(s), and the inspection period (start and end dates); during the extraordinary inspection the case specified in Item 3.5 herein is referred to. The inspection certificate is drawn up in two copies.
One copy of the inspection certificate remains in the exchange office, and the other one in the FIMSA.
3.7. The period of next inspection should not exceed five working days, while the period of the extraordinary inspection should not exceed three working days.
3.8. The next inspection is conducted based on an annual plan developed by the FIMSA on the dates specified in the plan.
3.9. During the inspection, authorized persons of the exchange office should create necessary conditions for the employees of the FIMSA involved in the inspection to perform their duties, provide information and documents, as well as ensure their access to the computer where exchange transactions are recorded.
3.10. No later than the day of completion of the inspection, the employees of the FIMSA develop and sign the inspection report on the issues covered by the inspection, revealed deficiencies and violations in two copies.
3.11. Within one day after the employees of the FIMSA conducting the inspection sign the inspection report, its one copy is submitted to the exchange office on paper for signing or sent by registered mail, and the other copy remains in the FIMSA.
3.12. The person licensed for currency exchange gets acquainted with and signs the inspection report within five working days from the date of receipt and delivers to the FIMSA.
3.13. If a copy of the inspection report is not submitted to the FIMSA within this period, a relevant note is made on the copy remained in the FIMSA.
3.14. In case the person licensed for currency exchange activities does not agree with the findings in the report, he/she signs the inspection report and attaches his/her relevant explanation with the report.
3.15. The FIMSA officially notifies the person licensed for currency exchange activities and related parties in writing about the time and place of the meeting to consider the inspection report.
3.16. After the inspection team of the FIMSA sign the inspection, it takes a decision on the following within 15 (fifteen) days at the latest:
3.16.1. on discovery of no violation, in case the FIMSA does not discover violation of the Law on currency exchange activity, regulations of the FIMSA and the Central Bank;
3.16.2. on initiation of proceedings on administrative violation case and elimination of revealed violations within the terms and in accordance with the procedure established by the Code of Administrative Offenses of the Republic of Azerbaijan in case of revealing signs of administrative violation;
3.16.3. in case of revealing criminal signs, on sending collected materials to relevant prosecutor's office, investigation or inquiry bodies and elimination of the revealed violations;
3.16.4. on measures of responsibility established by law and elimination of revealed violations of the law in case of revealing other violations that give rise to obligation;
3.17. The Chairman of the Management Board of the FIMSA signs the decision on findings of the inspection. A copy of the decision on findings of the inspection is submitted to the person licensed for currency exchange activities or sent by registered mail no later than 3 (three) working days from the date of its issuance, and the original of the decision is kept in the FIMSA.
3.18. The decision on findings of the inspection includes the date and number of the decision, name and address of the person licensed for currency exchange activities, details in case of violation, substantiating evidence and specific structural elements of the violated legal acts, measures to be taken to eliminate the violations, the period for elimination of violations, the decision made with reference to Item 3.16 herein, the period and procedure for appealing the decision. The person licensed for currency exchange activities notifies the FIMSA within 3 (three) working days after implementation of measures to be taken to eliminate the revealed violations.
3.19. If the person licensed for currency exchange activities fails to comply with relevant requirements to eliminate violations in the decision specified in Item 3.18 herein, the FIMSA suspends the license in accordance with Article 13-7.1.2 of the Law and informs the person licensed for currency exchange activities within 2 (two) working days.
3.20. In case the violation of the requirements of the Law, regulations of the FIMSA and the Central Bank is revealed during online information sharing, the FIMSA requires the person licensed for currency exchange activities to eliminate the violation within 3 (three) working days from the date of discovery of the violation. The person licensed to engage in currency exchange activities eliminates such violations within five working days. In case of non-compliance with the requirements of the FIMSA by the person licensed for currency exchange activities, the FIMSA decides to suspend the license in accordance with Article 13-7.1.2 of the Law and notifies the licensee within 2 (two) working days to that end.