1. Introduction
With effect from 1 March 2000, Norges Bank has amended the Foreign Exchange Regulations of 27 June 1990 pursuant to Act no. 10 of 14 July 1950 relating to Currency Control (the Currency Control Act) and the Ministry of Finance's regulation of 22 June 1990.
As a result of the amendments, the provisions in the present Chapters 6 and 7 concerning the establishment of settlement arrangements with non-residents and/or accounts in foreign banks have now been combined into one chapter, in order to make the rules simpler and more consistent. Provisions concerning exemption from reporting of both accounts and settlement arrangements have been incorporated. Changes have additionally been made in Chapter 14 concerning rules for foreign exchange banks that are exempted from computerised reporting. Technical changes have been made in Chapter 18 to bring the provisions of the regulations into line with amendments made in legislation. Reporting requirements are also being relaxed in some respects as a result of the amendments to the Foreign Exchange Regulations.
2. Details of the amendments
The following provides an overview of the amendments, with reference to the respective subsections of the Exchange Rate Regulations. For exhaustive information about the provisions that have been made, please see the text of the regulation that is quoted in this circular.
New Chapter 6 Accounts in foreign banks and other settlement arrangements between residents and non-residents without using a foreign exchange bank
The existing provisions in Chapters 6 and 7 - with some amendments - have been incorporated as subsections in the new Chapter 6. The purpose of these changes is to make the regulations governing this area simpler and more consistent. Consequently, provisions concerning exemption from notification and reporting obligations with respect to both accounts and settlement arrangements have been included. This satisfies the need for regulations that are simpler to interpret and for consistent treatment, irrespective of whether the matters in hand concern accounts in foreign banks or other payment arrangements not involving a Norwegian foreign exchange bank.
Chapter 14 Foreign exchange activities in foreign exchange banks and in financial institutions subject to exposure regulation
Norges Bank has previously allowed foreign exchange banks to be exempted from the requirement of daily computerised reporting (BRAVO). In accordance with the established procedural routines, exemption was contingent on the foreign exchange bank's foreign exchange activities/activities abroad being limited to maintaining NOK accounts for non-residents other than banks, and/or providing NOK loans to such non-residents on own accounts. As a result of the regulatory amendment in question, banks that are exempt from the requirement of daily computerised reporting may now also be exempted from the obligation to submit paper-based reports.
Chapter 18 Other provisions
As a consequence of previous decisions to amend the Currency Control Act such that Norges Bank's duty of confidentiality in relation to ØKOKRIM and the Banking, Insurance and Securities Commission is suspended, amendments have been made to Chapter 18 of the Foreign Exchange Regulations.
3. Procedural routines/exemption from reporting requirements
The background to the amendments in Chapters 6 and 14 is that Norges Bank wishes to allow exemption from reporting requirements with respect to accounts and settlement arrangements that are regarded as of minimal importance to foreign exchange statistics and the external account. Accounts in foreign banks and other settlement arrangements with non-residents are exempt from notification and reporting requirements, providing that sales in the last 12 months and/or the average balance at month-end for the past 12 months does not exceed the maximum amount stipulated by Norges Bank at any time. The maximum amount is hereby stipulated as being NOK 100 million.
For banks with BRAVO reporting, the existing arrangement, whereby banks with limited foreign activities are exempt, is maintained. However, the existing application procedure ceases to apply, and banks that are exempt from BRAVO reporting are also exempted from paper-based reporting. This means that banks with no foreign exchange/foreign activities other than that they
? keep NOK accounts for non-residents other than banks, and/or
? offer NOK loans to such non-residents
? while the balance of each of these types of accounts does not exceed the limit stipulated by Norges Bank are exempt from the reporting requirements in the first paragraph of Section 14-3.
Figures from the banking statistics (ORBOF), Report 10 - the Super Balance - are used as a basis for setting this limit. The limit is set as NOK 3 million.
4. The amendments
Chapter 6 Accounts in foreign banks and other settlement arrangements between residents and non-residents without using a foreign exchange bank
Section 6-1 (notification and reporting requirement) Residents shall immediately notify Norges Bank of the establishment of accounts in a non-resident bank or other settlement arrangement with a non-resident without using a resident foreign exchange bank, and to report gross transactions and balances at the end of each month in the manner stipulated by Norges Bank. The notification shall contain the following information:
(1) the resident's name, address, telephone number and, if applicable, the name of a contact person,
(2) the resident's personal identification number or organisation number,
(3) the name and address of the non-resident bank, business connection/participant in the settlement arrangement,
(4) a specification of the type of account, or description of the settlement arrangement and
(5) the date on which the account or settlement arrangement was established.
Residents are also obliged to notify Norges Bank of individual direct payments to foreign countries, or of other individual settlements not involving a foreign exchange bank.
The notification and reporting requirement does not apply to foreign exchange banks, or to settlements between residents and non-residents in physical means of payment. Norges Bank may, however, require that residents report settlements in physical means of payment.
Section 6-2 (exemption from notification and reporting requirement)
Norges Bank may exempt residents fully or partially from the notification and reporting requirement in Section 6-1. Exemption may be granted following an overall evaluation of the significance of the account or settlement arrangement for Norges Bank's compilation of statistics.
Section 6-3 (change in foreign exchange status)
A resident who opened an account with a non-resident bank, or established other settlement arrangements while a non-resident, is subject to the notification and reporting requirements concerning accounts in non-resident banks pursuant to Section 6-1. The resident can apply for exemption pursuant to Section 6-2.
Section 6-4 (sanctions)
In the event of failure by a resident to comply with the notification and reporting requirement in Section 7-1, Norges Bank may rule that accounts in non-resident banks or other forms of settlement arrangements not involving resident foreign exchange banks are to be closed or discontinued, including all settlements with non-residents not involving resident foreign exchange banks.
The existing Chapters 6 and 7 are repealed.
Section 14-3, second and third paragraphs
Norges Bank may exempt foreign exchange banks from the obligation to report pursuant to the rules in the first paragraph, and may stipulate that the foreign exchange bank shall instead report in writing, in accordance with conditions laid down by Norges Bank.
Foreign exchange banks and financial institutions subject to exposure regulation must submit foreign currency position reports in accordance with the requirements laid down by Norges Bank.
Chapter 18 Other provisions
Section 18-1 last paragraph
Information obtained according to the first paragraph of Section 7 of the Currency Control Act may be communicated by the Ministry of Finance or Norges Bank to tax, customs/excise and supervisory authorities, and to the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (ØKOKRIM) when the information is assumed to be of importance to these authorities.
These amendments take effect immediately.
On 15 November 1999, the Ministry of Finance laid down a regulation amending Regulation no. 780 of 17 July 1996 concerning minimum capital adequacy requirements etc. for credit institutions and securities firms. These regulations enter into force on 1 April 2000. With effect from the same date, Norges Bank exempts these institutions from the obligation of submitting Exposure Report 1.
13 Sep 2000 11:42