As from the Amendment to the Law on the Supervision and Regulation of the Financial System which came into effect on August 2, 2015, legal entities engaged in money transfer services are subject to the supervision of the Superintendence of the Financial System of El Salvador ("SSF"). In accordance with the provisions of said Amendment, the Central Reserve Bank ("BCR") enacted the Technical Standards for the Registration and Operation of Money Transmitters ("NRP-12" or "Standard"), which became effective on January 4, 2016, to ensure the proper regulation and supervision of money transfer services.

The NRP-12 is applicable to legal entities providing money transfer services, systematically or substantially, by any means, directly or through an intermediary, at a national and international level, whose country of origin is the Republic of El Salvador. The Standard classifies such entities in Money Transfer Companies (“ETD” for its acronym in Spanish), agents and subagents (together referred to as "Entities"), according to the activity performed thereby within the remittance process.

The major change introduced by the new Standard is the compulsory registration of ETD and Agents in the Public Registry of the SSF set up for this purpose, upon the submission of the relevant application and the compliance with the corresponding legal requirements. Once the information is submitted, the SSF has 60 working days to analyze and approve the registration or request additional information as to continue with the registration process. The importance of this registration relies on that only duly registered entities may offer money transfer services in El Salvador.

Furthermore, NRP-12 introduces rigorous reporting requirements among which are: 

i) Sending daily reports to the SSF on the operations performed the previous business day; ii) Sending reports to the External Sector Department of BCR containing the statistical information of the operations;

iii) Reporting to the SSF on the compliance with legal and regulatory framework on Money Laundering and Financing of Terrorism, within the first ten working days of February and August each year;

iv) Reporting to the SSF any change in the registration information within 30 working days from their occurrence;

v) Reporting to the SSF and the BCR the establishment and termination of contracts with subagents, within the first 7 working days of the following month.

Regarding those entities which were formerly operating as money transfer service providers, the Standard established a term of 120 days from its entry into force, for these companies to submit the documentation pertaining to their registration before the SSF, whose term expired on May 3rd this year. Moreover, August 31st this year was the date scheduled to send the first daily information report to the SSF. Otherwise, the entities that are still pending in their compliance with the above are not currently authorized to operate. On the other hand, with regard to banks, cooperative banks, savings and credit corporations, federations and other institutions regulated by special laws, supervised and authorized to engage in money transfer operations, which are interested in providing money transfer services as ETD or Agents, are required to inform the SSF at least 30 working days before they start operations and comply with applicable legal requirements as to perform this activity.Regarding those entities which were formerly operating as money transfer service providers, the Standard established a term of 120 days from its entry into force, for these companies to submit the documentation pertaining to their registration before the SSF, whose term expired on May 3rd this year. Moreover, August 31st this year was the date scheduled to send the first daily information report to the SSF. Otherwise, the entities that are still pending in their compliance with the above are not currently authorized to operate. On the other hand, with regard to banks, cooperative banks, savings and credit corporations, federations and other institutions regulated by special laws, supervised and authorized to engage in money transfer operations, which are interested in providing money transfer services as ETD or Agents, are required to inform the SSF at least 30 working days before they start operations and comply with applicable legal requirements as to perform this activity.

The breach of the previous obligations can result in penalties ranging from written warnings to fines, disqualifications, suspensions, cancellations in the respective register and/or revocation of authorizations, if any. Fines can be up to two percent of the assets of the Entities involved.

Please do not hesitate to contact us for more information on this or any other matter.