Credit Transfer AuditWorking File

Elaborated by: Cicanci Cristina Group:AFB-131m

Legal Basis:Regulation on credit transfer, approved by the Decision of the

Council of Administration of the National Bank Moldova no.373 of December 15, 2005, Official Monitor of the Republic of Moldova no.176-181/643 of December 30, 2005;

Regulation on automated interbank payments system, approved by the Decision of the Council of Administration of the National Bank of Moldova no.53 of March 2, 2006, Official Monitor of the Republic of Moldova no.39-42/144 of March 10, 2006;

The Law Nr.548-XIII regarding the National Bank of Moldova, 21 July 1995. Chapter I:General provisions Art.5. Basic functions; Art.11. Normative acts;

The law on financial institutions Nr. 550-XIII from 21.07.1995;

The Law on currency regulation Nr.62-XVI from 21 march 2008;

The Law regarding the prevention and combat of money laundering and terrorism financing in the context of credit transfer Nr.633-XV from 15.11.2001;

The enforcement code of the Republic of Moldova nr.443 from 24.12.2004;

Regulation on suspension of operations, seizing and the controversial perception of funds in bank accounts;

Accounting chart of accounts;

The internal guidelines of the commercial bank: politics, regulations, instructions, procedures and nomenclature of analytical and syntetical accounts.

Audit Objectives: Identifying the subjects of credit transfer operations;

Verifying the compliance of issuing and submission of payment order with the legislation in force;

Accomplishment of credit transfer. The receipt of payment order by the beneficiary bank through the Automated Interbank Payment System(AIPS);

Determination of issuing credit transfer procedure on the basis of the Incaso order;

The detection of suspicious transactions, although the factors that lead to a reduced performance of credit transfer operations.

Control Methods:• Verification of the observance of the procedure for the

identification of clients;

• Signature authenticity analysis;• Verification of the compliance of transactions with the legal

norm;

• Checking the correctness of filling in payment orders accepted;

• Correct accounting within the operations of the credit transfer;• Verification of the correctness of the payment of commissions

for operations;• Detection of the uncompleted transactions and determination of

the reasons for refund, monitoring the process of correction;

• Control of credit transfer transactions in foreign currency;

• Control of transfer credit operations carried out by persons monitored by the Law regarding the prevention and combat of money laundering and terrorism financing in the context of credit transfer;

• The supervision of AIPS is organized in two levels. The first level is performed by the participants, and the second by the NBM;

• AIPS participant supervise the activity of the personnel responsible for the administration and operation of the software and hardware means of interaction with the AIPS, as well as the personnel responsible for managing liquidity risk;

• On the Incaso order are applied the signature and the bank’s footprint stamp that serves the issuer;

• The Incaso order is accompanied by the original enforcement document on which basis was drafted.

Legal limits:

3.3. The payment order used upon performance of credit transfer

both in national currency and foreign currency, shall contain the

mandatory elements specified in Attachment 4 and5;

3.6. The payment order shall be issued in the state language. Upon

issuing the payment order for national and international credit

transfer in foreign currency, the information used within

international payments systems shall be filled in a foreign language,

according to the international practice. No corrections /erasures shall

be admitted in the payment order.

3.8. The payment order on paper shall be presented to the paying bank

in the number of copies required by the parties.

4.5. The paying bank shall accept and execute the payment order

related to urgent transfer in accordance with the conditions established

and disclosed in advance to the payer. These conditions shall include at

least the time limit in which the payment order will be accepted and

executed by the bank after its receipt from the client (the time needed

for verification, authorization, writing off and its transmission to the

beneficiary bank through the AIPS or to the beneficiary through the

bank's internal system).

• The Incaso order must be presented no later by one working day

after the date of issue either in two or three copies;

• The Incaso order is drawn on the open account in national or

foreign currency, depending on the account and currency

indicated in the document state;

• The Incaso order shall contain all mandatory elements specified

in Annex 3 of Regulation on suspension of operations, seizing

and the controversial perception of funds in bank accounts;

Issues requiring special attention: Is complying with the procedure of customer identification at

each presentation? The signatures on the payment order are confronting with the

bank specimens? Are correctly rendered credit transfer transactions? The accepted payment orders are correctly done according to the

requirements of NBM? Are respected the NBM requirements and those of the internal

execution of the order for payment? On the basis of which documents is charging the transfer of funds

from clients bank accounts? The transfer procedure on the basis of Incaso order is complying?

The received Incaso order is recorded in the register of evidence? It is enrolled on the reverse side of the document in case of

partial execution of the Incaso order? Are registered correctly credit transfer operations in accounting? It is correct collected the amount of commission for transfer? There are returned the amount from automated interbank

payments system? What is the cause of returned? Who and when it will be the correct operation?

Are verifying the purpose and the documents certifying the transfer of amounts in foreign currency?

Are reported the movements of the person’s account being monitored?

   

Examination Procedures:• Check if it complies with the procedure for identifying the customer

presentation, including the signature of specimen bank;• Verify the correctness of the operations of the credit transfer;• Determine and check if it complies with the term of execution of

payment orders;• Check on the basis of which documents the transfer of funds is done

from bank client’s accounts;• Check if it is respected the transfer procedure according to the Incaso

order;• Check if all the required marks are applied on the reverse side of the

document in case of partial execution of the Incaso order;• Examine if the participant has opened an account in the NBM book-

keeping system in accordance with the legislative and normative acts in effect of AIPS;

• Participating licensed bank shall cease its activity in AIPS on the day of:a) revocation of bank licence of financial activity in accordance with the provisions of the Law on Financial Institutions no.550-XIII of July 21;b) termination of the Contract on participation in AIPS in other cases than that mentioned above.• Check if incoming orders are registered in the register; • Check if it is registered correctly credit transfer operations in accounting;• Check the correctness of the payment of commissions for credit transfers;• Determine the causes return of amounts reimbursed. Check the correction procedure;• Determine if there are documents certifying the transfer of the amounts in national and foreign currency. Determine if these operations are allowed by the legislation;

The audit results:• Identification. Identify whether or not the subjects credit transfer

operations according to customer identification policy;

• Legality. It is matched or not credit transfer operations and the procedure of provision of these legal requirements;

• Correctness. It is executed correctly or not credit transfer operations based on the documents received for execution and commissions receivable;

• The correctness of the payment accounts. It is registered well or not in accounting terms credit transfer operations;

• Compliance. Corresponds to the bank's activity, whether or not the legal framework according to the execution code and regulation on the suspension of the activity and charging in undeniably;

• Detection. Whether or not are returned operations, executed without confirmative documents by persons being monitored, it is reported by executors or not.

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