Central Bank of Libya Banking Supervision Circular No. 7 of 2020 regarding the necessary procedures and measures when contracting with electronic payment companies (منشور رقم 7 لسنة 2020 بشأن الإجراءات والتدابير اللازمة عند التعاقد مع شركات الدفع الإلكتروني)

Circular No. 7 of 2020, issued by the Banking Supervision Department of the Central Bank of Libya (CBL), sets out the procedures and measures that banks must observe when contracting with electronic payment companies. It is a key part of the CBL's framework for regulated electronic payments, governing the relationship between licensed banks and the specialised electronic-payment service providers, e-wallet issuers, card issuers and acceptance processors, and mobile-payment operators, that deliver digital payment services to the market. The Circular responds to the rapid growth of Libya's electronic-payments sector and the need to ensure that, when banks rely on third-party electronic-payment companies, the arrangements are sound, transparent and consistent with the CBL's supervisory expectations. It establishes the due-diligence, contractual and risk-management requirements applicable to these relationships. Banks must verify that the electronic-payment company is duly licensed by the CBL and operating within the scope of its authorisation; assess the company's technical, operational and financial soundness before contracting; and ensure that contracts allocate responsibilities, liabilities and data- and fund-protection obligations clearly between the parties. The Circular addresses the security and reliability of the systems used, the protection of customer funds and data, business-continuity and operational-risk considerations, and ongoing monitoring of the outsourced or contracted activity. By imposing these controls at the point of contracting, the CBL seeks to prevent the build-up of operational, fraud and consumer-protection risks as electronic payment activity is delivered through a widening network of specialised providers. Compliance is a supervisory requirement for banks, and the contracting arrangements must remain consistent with the CBL's licensing of electronic-payment companies and with related instruments such as Circular No. 10 of 2017 on mobile electronic payment. Supervision and enforcement are exercised by the CBL's Banking Supervision Department, which licenses electronic-payment companies, reviews banks' contracting practices, and may impose corrective measures. (Original language: Arabic.)

1. 1Sets procedures and measures banks must follow when contracting with electronic payment companies
2. 2Requires verification that the e-payment company is CBL-licensed and operating within its authorisation
3. 3Requires due diligence on the company's technical, operational and financial soundness before contracting
4. 4Requires contracts to clearly allocate responsibilities, liabilities and data/fund-protection obligations
5. 5Addresses systems security, customer fund and data protection, business continuity and ongoing monitoring
6. 6Enforced by the CBL Banking Supervision Department as a supervisory requirement for banks