CBBH Has Legal Basis and Technical Prerequisites for Establishing Natural Persons Accounts Registry!

In order to eliminate dilemmas about the existence of the Central Bank of Bosnia and Herzegovina (CBBH) powers to establish and maintain a Registry of Accounts of Natural Persons, we use this opportunity to briefly introduce you with all aspects of the legal basis, reasons and other important issues regarding the establishment of this Registry, which is one of the topics in the current negotiations related to the new arrangement with the International Monetary Fund (IMF).

In the previous period, various media tried to politicize this issue, and through such pressure on the independence of the CBBH in its operations, to impair and diminish the significance and role of this institution in performing its legal goals and powers.

a) Lawful and legal basis for establishing and maintaining of a single Registry of Accounts of Natural Persons

Regarding the legal basis for the establishment of the Registry, the existence of which is disputed and sought to show through the fact that such a registry can be established "exclusively by law", in the way it was done at the Entity level, by amending the Law on Domestic Payments of Republika Srpska, we remind herein of the provisions of Article 2, paragraph (3), point c) and point i) of the Law on the Central Bank of Bosnia and Herzegovina (“Official Gazette of BiH”, 1/97, 29/02, 13/03, 14/03, 9/05, 76/06 and 32/07), one of the basic tasks of the CBBH performed within the competences of its Governing Board is:

- "to support or establish and maintain appropriate payment and accounting systems" and

- "to carry out actions in helping to combat money laundering, anti-terrorist measures and measures against obstruction of the implementation of the General Framework Agreement for Peace in Bosnia and Herzegovina, which apply to banks."

Article 59 of the Law on the Central Bank reads: "The Central Bank may establish and maintain an information network for the financial system of Bosnia and Herzegovina."

Also, according to provisions of Article 70 of the Law on the Central Bank, which reads: “In carrying out its tasks, the Central Bank shall enjoy autonomous regulatory powers. All regulations, guidelines and instructions issued by the Central Bank that apply to more than one institution shall be published in the Official Gazettes of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina and the Republika Srpska and shall take effect on the date of such publication or on such later date as such regulation, guideline or instruction shall specify. Such regulations, guidelines and instructions shall have the force of law throughout Bosnia and Herzegovina. The Central Bank shall maintain a public register of such regulations, guidelines and instructions.”

Therefore, the authorization to pass regulations with the force of law, by the CBBH, which has been its practice for many years, cannot be questioned.

b) Data on the established Central Registry of Credits of Legal Entities and Natural Persons and the Single Registry of Accounts of Business Entities

Central Registry of Credits of Legal Entities and Natural Persons

The Central Credit Registry has been established and maintained by the CBBH since 2006.

The valid Decision on Central Registry of Credits of Legal Entities and Natural Persons in Bosnia and Herzegovina (“Official Gazette of BiH”, 44/19), was adopted by the Governing Board pursuant to Article 2, paragraph (3), point i), Article 7 paragraph (1) point b) and Articles 59 and 70 of the Law on the Central Bank of Bosnia and Herzegovina (see point a) of this information), as well as, Article 6 paragraph (1) point a) and d) of the Law on Personal Data Protection (“Official Gazette of BiH”, 49/06, 76/11 and 89/11), reading: “The controller may process data without the consent of the data subject if one of the following conditions is met:

a) if it processes personal data in accordance with the law or the processing is necessary in order to fulfill the competencies established by the law,

………

d) if the processing of personal data is necessary in order to fulfill a task performed in the public interest; "

Therefore, data processing would be performed on the same legal basis, in the same way and under the same conditions as data processing in the Central Credit Registry.

Single Registry of Accounts of Business Entities

The Single Registry of Accounts of Business Entities has been established and maintained by the Central Bank of Bosnia and Herzegovina since 2004.

The current Decision on the Single Registry of Accounts of Business Entities stipulates that, in order to upgrade the payments systems, the Central Bank establishes Single Registry of Accounts of Business Entities, performing payment operations in Bosnia and Herzegovina through accounts opened in a commercial bank and accounts in Central Bank. The same Decision lists business entities performing payment operations in Bosnia and Herzegovina, through accounts opened in a bank and the Central Bank such as: institutions, administrative bodies, local self-government communities, other forms of organization whose establishment is registered with the competent authority or established by law, legal entities or parts of legal entities, companies, public enterprises, banks and other financial organizations, associations, natural persons, who independently perform a registered business activity and other business entities to which a unique identification number has been assigned.

We also take this opportunity to emphasize that the first Decision from 2004, which established the Single Registry of Accounts in the Central Bank of Bosnia and Herzegovina, contained the following provision:

"Entities that perform payment operations in Bosnia and Herzegovina through commercial banks in terms of this Decision are: legal entities, authorities, judiciary and administration bodies at the level of the state of Bosnia and Herzegovina; Entities’ authorities, their judiciary and administration authorities; judiciary and administration bodies of Brčko District, cantons authorities, their judiciary and administration bodies, cities’ and municipal authorities, their judiciary and administration bodies, natural persons performing registered activity, other persons performing activity in accordance with publicly published regulations, as well as, other persons (citizens) who open an account in a commercial bank for the purpose of performing payment transactions in internal payment operations."

It is clear from the above that the first Decision establishing a Single Registry defined that the Registry includes data on accounts of citizens (natural persons), but due to the then hardware and software inability of the Single Registry to monitor really what this Decision provided for, this part of the provision have been amended.

We remind that from 2004 until today, the legal competencies and authorities of the CBBH have not been changed, so it is unclear on what basis the said authority is being challenged today.

c) Continuity of work on the establishment and maintenance of the Single Registry and the current situation

From the allegations highlighted in the previous item of this information, it is clear that the CBBH has continuity in the activities conducted in the direction of establishing and maintaining the Single Registry of Accounts, including accounts of natural persons, for which the intention, commitment and legal basis to be included in this Registry has existed since 2004, and it is still indisputable. To be more specific, according to the currently valid Decisions, in addition to the Central Registry of Credits of Legal Entities and Natural Persons, the Single Registry of Accounts of Business Entities is in function, and in order to complete and round up the entire process, it is necessary to put the Registry of Accounts of Natural Persons into operation, for which the CBBH has now all technical preconditions, provided through valid contracts with its business clients.

Furthermore, following the Letter of Intent signed in 2016, which clearly defines the following: "In order to improve the supervision of the payments operations, the CBBH will expand the scope of its Registry of Accounts and include additional information, including data on main accounts and natural persons’ accounts", the CBBH has continued to act in the direction of its legal powers with the aim of fulfilling the undertaken obligations from the Letter of Intent.

d) Relationship with Entities’ Laws and other regulations

As already stated under item a) of this information, the CBBH independently adopts regulations. All regulations, guidelines and instructions issued by the Central Bank, related to several institutions, shall be published in the Official Gazettes of Bosnia and Herzegovina, the Federation of Bosnia and Herzegovina and the Republika Srpska and enter into force on the day of the publication or later, if so specified by regulations, guidelines and instructions thereof. Such regulations, guidelines and instructions have legal force throughout Bosnia and Herzegovina.

It is indisputable that the Law on Domestic Payment Operations of RS, more precisely its latest amendment from 2019, defines the establishment of the Registry of Accounts of Natural Persons at the Entity level, under the jurisdiction of AFPIF, and the CBBH does not dispute the existence of such a Registry at the Entity level, such is the case with the Registries of Accounts of Business Entities. However, it is clear that an Entity Law cannot limit or diminish the powers that the Central Bank has under the Law on the Central Bank of Bosnia and Herzegovina, when it comes to establishing and maintaining registries, and which is explained above in details, more precisely, the Entity laws cannot restrict, or prevent the state and other authorities to perform and implement their legally defined competencies.

The reference in certain media to the Law on Banks of the RS and to the business secret, which is regulated by this Law, has not big importance in this context. To be more specific, these very media articles do not mention that the Laws on Banks, in both RS and FBiH, envisage an exception to bank secret protection.

Concretely, Article 104, paragraph (1) of the Law on Banks of the FBiH and 128 (paragraph) (1) of the Law on Banks of the RS, exhaustively enumerate the exceptions to bank secret protection. More precisely, in that case, the obligation to protect bank secret, among other things, does not exist if they are disclosed to…. the Central Bank, i.e., another competent authority, in accordance with the regulations governing the supervision of payment systems, i.e. payment operations, within their competence…

In its public appearances and press releases, the CBBH has repeatedly emphasized the fact that Bosnia and Herzegovina is a single indivisible economic space, and this time, too, we emphasize that the establishment, i.e. putting the Registry of Accounts of Natural Persons into operation is a law-based Decision, in accordance with the legal powers of the Central Bank of Bosnia and Herzegovina, and its adoption is motivated only and exclusively by impartial and rational reasons.

Finally, we recall the provision of Article 4 of the Constitution of Bosnia and Herzegovina, which reads:

"BH and the Entities will not interfere with the full freedom of movement of persons, goods, services and capital throughout Bosnia and Herzegovina. No Entity shall exercise any control at the border between the Entities".

In this context, having in mind the overall legal framework, any activity going in the direction of restricting any participant performance in payment operations, in economic and financial terms, only to the framework of one Entity, could be characterized as unconstitutional.

Communications Office