Regulation of the Foreign Exchange Houses Law

This Regulation develops the norms and procedures related to the authorization, operation, and supervision of currency exchange houses, which shall have as their sole purpose the purchase and sale of foreign currency in the extrabancary market, in banknotes, traveler's checks, bank transfers, and other payment instruments denominated in foreign currency, at their own risk, at the price determined by the market. Only establishments organized in accordance with the Law of Currency Exchange Houses and this Regulation may use the designation of "Currency Exchange Houses". Furthermore, the company name may not include any reference that would lead to the assumption that the currency exchange house acts on behalf of or in connection with banking establishments, the State, or any of its agencies. Article 2. Currency exchange houses must be constituted as corporations with fixed capital, divided into registered shares that shall be owned exclusively by natural persons of Honduran nationality, of recognized solvency, honorability, and competence. The ownership of shares may not be transferred without prior authorization from the Board of Directors of the Central Bank of Honduras. Article 3. The subscribed and paid-in capital of currency exchange houses may not be less than one hundred thousand lempiras (L.100,000.00). No establishment may begin operations if its initial capital authorized by the Central Bank of Honduras has not been fully paid. Article 4. The application for authorization of a currency exchange house must be submitted to the Central Bank of Honduras with the corresponding legal formalities and addressed to its Board of Directors, with information on the name, nationality, and domicile of each shareholder, together with the documents detailed in Article 5 of the Law of Currency Exchange Houses. Once the application is known by the Board of Directors, it shall be passed to the departments and technical offices of the Bank for study and opinion. The Board of Directors shall issue a resolution authorizing or denying the application within a period not exceeding thirty (30) days, counted from the date of the admission order of the application, which shall be signed by the Secretary of the Board of Directors. Article 5. Once authorization for the opening of a currency exchange house is granted, the respective resolution shall be certified by the Secretary of the Board of Directors and shall be published in the Official Gazette, La Gaceta, at the expense of the interested party. The Notary Public who authorizes the execution of the Constitutive Public Deed and Bylaws shall attest to having reviewed the aforementioned certification. Once the Public Deed of Constitution is executed, as a prerequisite to its registration with the competent Public Registry, together with its Bylaws, it must be submitted to judicial qualification, in accordance with what is established in Article 15 of the Commercial Code. Article 6. Any modification of the Public Deed of Constitution of a currency exchange house and its bylaws, merger, transfer, and dissolution shall require prior authorization from the Board of Directors of the Central Bank of Honduras, for which the procedure established in the preceding Articles 4 and 5 must be observed. Article 7. The corporation authorized to operate a currency exchange house shall have a period not exceeding ninety (90) business days for the commencement of its operations, counted from the date of the resolution of the Board of Directors. If at the end of that period the currency exchange house is not operating, the Board of Directors of the Central Bank of Honduras shall revoke the authorization granted. Only in case of force majeure, duly proven, may the Board of Directors, at its discretion, extend such period. Article 8. Prior to the commencement of its operations, the Central Bank of Honduras shall require currency exchange houses to provide a bank guarantee for an amount equal to the subscribed and paid-in capital. The Central Bank of Honduras, through the Superintendency of Banks, shall periodically review the amount of the guarantee, taking into consideration the volume and quality of the operations carried out by the currency exchange houses during the three months prior to the review. If the amount of such guarantee is found to be less than what is considered necessary, the Superintendency shall inform the Board of Directors, who shall require the currency exchange house to present the complement of the guarantee within a maximum period of fifteen (15) business days, counted from the date of the respective Resolution. In case of noncompliance, the currency exchange house shall be subject to the sanctions contemplated in Article 14 of the Law. Article 9. Currency exchange houses may purchase foreign currency that the private sector receives from any source, except for currency that by legal provision or by Resolution of the Board of Directors of the Central Bank of Honduras, must be negotiated in the national financial system. Article 10. Currency exchange houses may sell foreign currency for all foreign payments, for which purpose they may open deposit accounts with first-class foreign banks, and must immediately inform the Superintendency of Banks. Currency exchange houses shall authorize the depository banks to send a copy of their monthly account statement to the Superintendency of Banks. Article 11. The Central Bank of Honduras shall supervise the operation of currency exchange houses and may intervene in their operations to promote conditions of banking stability and competition. Among other means and for this purpose: a) The Central Bank of Honduras may establish maximum limits on the holding of foreign currency by each currency exchange house, which shall be determined based on the capital and reserves and volume of operations of each authorized entity, as well as any other variable that is considered relevant. b) The Central Bank of Honduras may also establish a minimum limit for the holdings of foreign currency by currency exchange houses. Any deficiency with respect to such minimum limit shall be restored through purchases from the public or other currency exchange houses, no later than the next business day following the day the deficiency is recorded. In case of noncompliance, currency exchange houses shall be subject to the sanctions in Article 14 of the Law of Currency Exchange Houses. c) Any surplus that currency exchange houses show in their holdings shall be sold to the public or other currency exchange houses within the two business days following the day the surplus is recorded. If at the close of the second business day any excess in holdings over the limit persists, it must be transferred immediately to the Central Bank of Honduras at the exchange rate prevailing in the interbank market. d) When the Central Bank of Honduras decides to intervene in the extrabancary market through the purchase or sale of foreign currency from currency exchange houses, equal option shall be granted to each of them at the prices authorized by the Board of Directors, which in no case shall be less than those prevailing in the interbank foreign currency market. Currency exchange houses shall have a period to exercise such option, in whole or in part, through the corresponding payment. Article 12. Currency exchange houses shall permanently display in visible form in their establishments: a) A sign placed on the exterior of the company name identifying their business line with the phrase "CURRENCY EXCHANGE HOUSE". b) The certification issued by the Central Bank authorizing it to conduct purchase and sale operations of foreign currency. c) The daily prices for the purchase and sale of foreign currency. Article 13. For the purchase and sale of foreign currency, currency exchange houses are obligated to deliver to their customers a receipt of the transaction containing at minimum the following information: a) The name of the currency exchange house and its national tax registration number. b) Name of the buyer or seller. c) Class of currency, quantity, and payment instrument. d) Exchange rate and date of the operation. Different formats shall be used for purchase and sale operations of foreign currency. Article 14. Currency exchange houses must report with the frequency determined by the Central Bank of Honduras on the operations carried out, including the following:

• a)

  The opening balance by class of currency.

• b)

  The total value of the transactions carried out, indicating the price.

• c)

  The closing balance by class of currency. This information and any other information that may be required shall be delivered in the forms designated for such purpose within the period indicated by the Central Bank of Honduras. The Central Bank may publish the information it considers to be of interest to the public. Article 15. The Superintendency of Banks shall supervise the operations of currency exchange houses, verifying compliance with the Law and other applicable regulations. For this purpose, it may conduct all inspections and require all documents it deems appropriate. Article 16. Currency exchange houses shall maintain their accounting in accordance with the norms established for such purpose by the Superintendency of Banks, and must submit their financial statement to such agency within the first ten days of the month following that to which their operations correspond. Financial statements shall be signed by two officials with duly authorized signatures and may be verified at any time. Currency exchange houses shall publish their financial statements with the frequency and in the form established by the Superintendency of Banks. Article 17. The Central Bank of Honduras shall apply the sanctions established in Articles 14 and 15 of the Law of Currency Exchange Houses, taking into consideration the classification of the violations made by the Superintendency of Banks. Article 18. Fines applied to currency exchange houses shall be credited to the General Treasury of the Republic. In case they are not paid within the term established by the Board of Directors of the Central Bank of Honduras, they shall be enforced by the Attorney General of the Republic through summary proceedings, with the certification extended by the Central Bank serving as the executive title of the obligation. Article 19. Any natural or legal person that does not have authorization to conduct purchase and sale operations of foreign currency and that engages in such activities shall be subject to what is stipulated in Article 29 of the Law of the Central Bank of Honduras and Article 11 of the Law on Income from Foreign Currency Proceeds from Exports. Article 20. Any situation not provided for in this Regulation shall be resolved by the Board of Directors of the Central Bank of Honduras.