FINANCIAL INSTITUTIONS LAW ( PART 31)

Section III
Supervision

Article 81
Supervisory procedures

In the execution of its supervisory duties, the responsible supervision entity is particularly responsible for:

a) follow up the activities of financial institutions under supervision and promote the evaluation of risks and it’s control, as well as the sufficiency of own funds to support those risks;
b) ensuring compliance with standards which govern the activities of financial institutions;
c) issuing recommendations for correcting any irregularities, deficiencies of control and management, or insufficiency of capital that may be detected;
d) taking extraordinary corrective measures;
e) sanctioning infractions.


Article 82
Sound and prudent management

1. If the conditions under which financial institutions carry out their activities are not in compliance with the rules of safe and prudent management, the responsible Supervisory Entity may notify them to take measures, within a period to be set, to re-establish or strengthen financial balance, or correct their management methods.

2. For the purposes of the previous number the responsible Supervisory Entity may determine the replacement of administrators or directors, in compliance with the requirements of suitability and technical capacity stipulated in this law.

3. Whenever the responsible Supervisory Entity has knowledge of a project operation for a financial institution that, in their understanding, may be susceptible of violation or aggravated violation of prudential rules or may infringe the rules for a sound and prudent management, it may notify the institution to stop such an operation.

Article 83
Obligation to supply information

1. Financial institutions are obligated to provide to the responsible Supervisory Entity, within the defined deadline, such information as it considers necessary for verifying levels of liquidity and solvency, of risks incurred, of compliance with the regulatory and legal standards of their administrative organization and of the efficiency of their internal controls, as well as safety and control procedures of computer systems.

2. Financial institutions should allow the responsible Supervisory Entity to inspect their premises and examine their books, in situ, and any other material that the responsible Supervisory Entity may consider relevant for the verification of the matters referred to in the previous number.

3. The responsible Supervisory Entity may extract copies and transcripts of all relevant documentation, preparing minutes signed by the representative of the responsible Supervisory Entity and by the representative of the institution in question, where the documents copied or transcripts made are registered.

4. Entities not covered by the preceding numbers and which hold qualified shareholdings in the capital of financial institutions are obliged to supply to the responsible Supervisory Entity all elements or information that it may consider relevant for its supervision of the institution in which they have an interest.