The Law on Payment and Security Reconciliation Systems, Payment Services and Electronic Money Organisations numbered 6493 (the “Law”) has entered into force as of 27 June 2013, upon its publication in the Official Gazette numbered 28690.
The Law introduces a new regulatory landscape which covers the principles and procedures of payment and security reconciliation systems, payment services, payment organisations and electronic money organisations. Within this framework, it establishes new definitions and licence requirements, which will require certain organisations to take further action in order to achieve regulatory compliance.
It is worth noting that the supplementary secondary legislation setting forth the implementation principles and conditions of the licences under the Law is currently pending and will be issued within one (1) year as of the publication of the law, until June 2014.
Main Novelties at a Glance
Main novelties under the Law include:
• Payment systems (i.e, the structure which has common rules and provides the infrastructure necessary for the exchange and reconciliation transactions which are performed to realize the fund transfers arising from the transfer orders between three or more participants) and security reconciliation systems will be operated by the “System Operator”.
• Certain payment transaction services (e.g., transactions necessary for operation of the payment accounts, issuance or acceptance of a payment account, intermediary services for invoice payments) are defined as “payment services” under the Law, which can be performed either by (i) the banks within the scope of the Banking Code numbered 5411; (ii) electronic money organisations or (iii) payment organisations.
• Only (i) the banks –operating under the scope of Banking Code- and (ii) the electronic money organisations (which are granted permission to issue electronic money under the Law) are entitled to issue electronic money. It follows that; it will no longer be possible for the organisations to issue electronic money without obtaining a licence from the Banking Regulation and Supervision Board (the “Board”).
• Any activities which fall under the scope of the services that can be performed by either one of the (i) system operators, (ii) payment organisations or (iii) electronic money organisations under the Law would trigger licensing requirement.
Operations without Licence
Real persons or the officers of a legal entity, acting as a system operator, payment organisation or an electronic money organisation without obtaining the relevant licences and authorisations pursuant to the Law, shall be sentenced to imprisonment from one (1) to three (3) years and a judicial fine. Furthermore, if these crimes are committed within a place of business, the business shall be closed for a period of two (2) to six (6) months or permanently if such crimes are repeated.
Prospective Implications of the Law No. 6394
The Law grants a period of one (1) year as of the publication date of the supplementary regulation to the organisations who are already operational as “system operators” or have been providing “payment services” or “issuing electronic money” within the meaning of the Law at the effective date of the Law (i.e., 27 June 2013), to apply to the Banking Regulation and Supervision Authority to obtain the relevant authorisation.
Given that the supplementary regulations of the Law are yet to be issued, currently there is a grey area with respect to the details of the licensing requirements (e.g., principles and procedures regarding the payment services, payment organisations and electronic money organisations, their operations, internal systems and etc.).
Therefore, organisations currently engaging in the respective activities in Turkey would need to wait for the issuance of the secondary legislation so as to fully assess their position and the necessary actions that should be implemented in order to achieve regulatory compliance.
Foreign Currency Transfers under Decree No.32 and the Law
Turkish exchange control rules are set forth under the Decree No.32 on the Protection of the Value of Turkish Currency (“Decree No.32”) which covers transactions related to foreign exchange and instruments denominated in foreign currency as well as the use and management of foreign currency.
Pursuant to the Decree No.32, importing foreign currency to Turkey is free and there are no restrictions or reporting requirements regarding the purchase, repatriation or remittance of foreign currency. Article 4(e) of the Decree No.32 stipulates however that “residents of Turkey and non-residents may freely transfer foreign currency abroad through banks. The Ministry of Economy is authorized to determine other establishments that are allowed to transfer foreign currency abroad”.
Having noted the above, the impact of the Law and the Decree No. 32 on the organisations transferring foreign currency abroad should be assessed. Although the Law covers “fund transfers”, it neither specifies the currency of the funds (i.e., whether Turkish Liras or foreign currency) nor the jurisdiction of the transfer (i.e., transfer within Turkey or abroad). Therefore, currently there is an uncertainty as to whether:
i) payment organisations would be free to transfer foreign currency from Turkey to abroad, or
ii) payment organisations would be required to use Turkish banks to provide foreign currency transfers from Turkey to abroad.
Both the Decree No. 32 and the Law contains regulations with regard to the transfer of funds and there is uncertainty on whether the latter constitute an exception to the restriction under Article 4(e) of the Decree No.32, which requires clarification under the supplementary regulation.