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Changes in FinTech: Exploiting Online Import Services and Improving Protection for Individual Tenants

Edict of the President of the Republic of Belarus No. 196 was issued “On Online Import Services and Leasing Activities” was issued on May 28, 2021. We have scrutinized the changes introduced by the document.

New legal framework for the operation of online import services

According to the edict, online import services are websites and software used by businesses and individuals to conclude loan contracts and ancillary contracts (pledge contracts, indemnification contracts, surety contracts). Here we will cover the key aspects of the operation of the services as specified by the edict, and the additional improvements that will be introduced by the National Bank as an authorized regulatory body.

Connecting a service under an agreement for a fee

In order to connect an import service online, customers (lenders, borrowers and persons providing collateral under loan agreements) must enter into with the operator of the service (a Belarusian commercial entity included by the National Bank of the Republic of Belarus in the register of operators of import services online) a contract for paid services and pay a fee to the operator. It is understood that the National Bank may set limits for service charges.

Services as a source of information available on financing conditions

The services allow clients to quickly and smoothly obtain complete and accurate data on the conditions of loan contracts and ancillary contracts (in particular on the methods of calculating the principal amounts owed by the parties, interest and penalties, as well as as cases of modification or early termination of contracts).

Individuals will not be allowed to obtain financing from businesses. Non-residents will not be able to act as borrowers.

Individuals will be able to attract funding from companies or IBOs through the Services (using Online Business Import Services) only if they are acting as IBOs. People involved in crafts and farming, self-employed people, business founders and owners, and others without IE status will not be allowed to use business loan funds otherwise available through the services. Thus, companies and IBOs will be allowed to attract financing from companies and individuals (including IBOs) without restriction. Non-residents of Belarus will also be allowed to transact through the platform, but only as lenders and finance providers.

Payments only via non-cash transfers are allowed, foreign currency settlements are limited.

All settlements on transactions through the Services (including payment of fees to the Services) will only be authorized by cashless transfer. Foreign currency loans can only be taken out from non-residents and only from accounts opened in a foreign bank.

Customer identification and transparency of transactions.

Customers of the services will be subject to mandatory identification as the services are subject to anti-money laundering and anti-terrorist financing requirements similar to those that apply to banks and other financial institutions.

Assessment of the financial solvency of the parties.

Before the date of the loan agreement or ancillary contract, a department should obtain a solid assessment of the client’s ability to meet its obligations and of the proposed project (if applicable). The methods of such an assessment should be defined by the service (perhaps, the National Bank will specify the mandatory requirements of the criteria / methods). Data on transactions settled through a service will impact the borrower’s credit history – all associated data will be provided by the services to the borrower. Credit register.

Payments to third parties are still prohibited.

Online import service operators cannot be party to loan agreements and ancillary contracts, as the services are only intermediaries. In addition, services are not allowed to withdraw and accumulate customer funds from their bank accounts in order to transfer them to borrowers – thus, the lawmaker does not exclude online import services from the general ban on online importation. payments to third parties existing in Belarus.

Long-term storage of transaction data.

Information on loan agreements (ancillary contracts) and their performance will be retained by a department for at least ten years from the date of discharge of all obligations under the respective agreement / contract.

Online import services and micro-finance.

Micro-finance laws impose limits on the obtaining of loans by companies and IBOs from natural persons who are not IBOs, – these loans can be taken out a maximum of 2 times per calendar month, regardless of the sum of the loan (a similar restriction applies to natural persons granting loans to companies and IEs). According to the edict, this limitation does not apply to loans made through online import services – this means that companies and IBOs can take loans from individual borrowers without restriction.

According to the edict, micro-finance institutions are allowed to engage in micro-finance activities through online import services.

Loans made through online import services to individuals are exempt from income tax.

Tax Agents – Belarusian and foreign entities and IEs are exempt from the obligation to pay income tax in this situation. Where the sums of loans taken out through the services are to be reflected in the income / property declarations (subject to the request of the tax authorities), income tax is also not levied by the tax authorities on these sums. loan.

The Edict fixes only the basic principles of the functioning of the services, while detailed regulations will be drawn up by the National Bank.

In particular, it is expected that the National Bank set size limits for айма loans, lump sums of loans raised (through all services), interest rates limits, requirements for documents compiled via services and mandatory financial capacity requirements and the qualification of lenders, borrowers and persons providing guarantees.

The rules will come into force on November 29, 2021.

Loan agreements entered into before the entry into force of the Online Import Services Regulations (November 29, 2021) will not be harmonized with the edict and will come into force until the parties have fulfilled their respective obligations in full (even if these obligations must be fulfilled after 29 november). Loan contracts concluded on or after 29 november must comply with the new rules.

The operations of online import services are similar to the activities of equity lending platforms and online lending platforms operated in many countries. The creation of such services is expected to streamline the financing of Belarusian small and medium-sized enterprises as well as individuals.

Increased legal protection for individual tenants.

Edict No. 196 sets requirements for leasing contracts involving natural persons (not acting as individual entrepreneurs (IE) in the conclusion and execution of such a contract).

Thus, according to the Edict, (1) a maximum size for exceeding the total sum of the rent paid and the reimbursement value of the leased object over the actual value of the leased object (including VAT) cannot be greater than:

  • actual value of the rental object – when the duration of the rental agreement does not exceed 1 year;
  • twice the actual value of the object of the lease – under other leases (except residential leases).

(2) A maximum amount of penalty invoiced to the tenant due to a breach of his obligations cannot exceed half of the real value of the leased object. (3) Also, the edict restricts the cases in which a rental agreement, at the request of the tenant, can be terminated early (in particular, when the tenant does not respect the rental payment dates), and (4) prohibits the application of penalties to donors for early termination of rental contracts or early return of the lease subject to the tenant’s request.

There were no such legislative requirements before the adoption of the edict: the terms and conditions could be specified at the discretion of the parties (in practice – mainly at the discretion of the lessor, while the lessee adhered to a agreement without the possibility of modifying it).

Fight against money laundering in leasing entities.

In addition to the increased protection of individuals, the new edict also requires leasing entities to appoint agents responsible for ensuring compliance with laws relating to the fight against money laundering and the financing of terrorism (ML / FT). ML / FT rules have been applied to companies that have been carrying out financial operations for several years now, and the legislator is gradually setting more detailed rules in this area. In addition, it is expected that the National Bank, in accordance with the edict, will soon set out business reputation and qualification requirements of founders / participants and CEOs of leasing companies.

The rules come into force on November 29, 2021.

The new rules for rental activities will come into effect on November 29, 2021. Leases concluded before the date are harmonized with the new rules at the latest January 29, 2022. Thus, relationships based on rental contracts will be subject to the new rules as of 29 november regardless of whether these agreements have been modified respectively.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

Ms. Polina Koulachenko
TO DREAM
8 Oboynaya Street,
Minsk
BELARUS
Phone. : 44500-15-10
Email: [email protected]
URL: www.revera.by

© Mondaq Ltée, 2021 – Tel. +44 (0) 20 8544 8300 – http://www.mondaq.com, source Company briefing


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