Translation

EESTI PANK
GOVERNOR'S DECREE No 2

14 May 2001

Confirmation of Instructions for the Settlement of Payments

Proceeding from §2 subsection 1, §14 clause 3, §15 subsection 3 of the Law of the Central Bank of the Republic of Estonia (RT I 1993, 28, 498; 30, p. 743, amendment; 1994, 30, 463; 1998, 64/65, 1006; 1999, 16, 271), §87 subsection 2 of the Credit Institutions Act (RT I 1999, 23, 349; 2000, 35, 222; 40, 250) and Decision No 5-1 of the Board of Eesti Pank of 7 May 1996 "Time for the settlement of payments and amount of bank charge for overdue payments" (RTL 1996, 55, 340; 1999, 149, 2113)

Eesti Pank ordains:

1. To confirm the instructions for the settlement of payments (enclosed).
2. To declare invalid
   1. Regulation No 45 of Eesti Pank of 17 June 1992 "Procedure for non-cash payments" (RTL 1993, 26/27, p. 716; 28, p. 812, 813; 1994, 10, p. 311; 1996, 146, 725);
   2. Eesti Pank Governor's Decree No 20 of 26 June 1996 "Establishing the time for executing settlement of payments" (RTL 1996, 75, 436; 146, 724).
3. To enforce the present Decree beginning from 1 July 2001.

Vahur Kraft
Governor

Confirmed by
Eesti Pank Governor's
Decree No 2 of
14 May 2001

INSTRUCTIONS FOR THE SETTLEMENT OF PAYMENTS

The present set of instructions establish the procedure and deadlines for processing domestic and cross-border payments settled by intermediation of the credit institutions having a licence to operate in the Republic of Estonia.

I Definitions

Force Majeure: unpredictable events or circumstances over which the Payer, Originator, Payee or credit institution has no control (natural disaster, fire, war, strike, lockout, mass disturbances, occupation, change of laws, etc.) and which obstructs or makes it impossible for the aforementioned persons or institutions to perform one or more obligations arising from the present instructions.

Payment: settlement in money between the Payer and the Payee.

Payment Order: an order from an Originator given to a credit institution, which includes all the data necessary for the credit institution to unambiguously identify the will of the Originator.

Originator: a person who issues an initial Payment Order.

Acceptance of a Payment Order: a declaration of a credit institution's will by which it acknowledges its obligation to execute a payment according to a Payment Order's instructions. As a result of accepting a Payment Order, the credit institution accepts the responsibility for processing the Payment Order.

Payer: a person who transfers or from whom money within the amount stated in the Payment Order is transferred for the benefit of a Payee.

Payment System Administrator: a person who administers a payment system.

Payment Intermediary: each credit institution that participates in the processing of Payments and is neither the payer's credit institution nor beneficiary's credit institution.

Banking Day: a calendar day except a Saturday, Sunday, or a national or state holiday.

Payee: a person to whom the Payer's money is to be transferred as stipulated in the Payment Order.

Domestic Payment: a payment in which the Payer's Credit Institution and Beneficiary's Credit Institution are located in the Republic of Estonia and no Payment Intermediary or payment system located outside the Republic of Estonia is used when processing the Payment. Domestic Payments are divided into two types:

1. a credit institution's internal payment - Payment where a single the same credit institution is the credit institution of both parties;
2. a payment between credit institutions - Payment where the payer's credit institution and the beneficiary's credit institution are different credit institutions.

Compulsory Collection: a Payment which originates from a third person and is based on the decision of a competent administrative body and does not need to be accepted by the Payer.

Cross-border Payment: A Payment where

1. the credit institution of one party is located outside the Republic of Estonia;
2. the credit institutions of both parties are located in the Republic of Estonia and a Payment Intermediary or payment system located outside the Republic of Estonia is used to execute the Payment.

II Payment Orders and the Acceptance of a Payment Order

1. A Payment Order may be:
   1. A Credit Order - the Originator is the Payer;
   2. A Debit Order - the Originator is the Payee or a third party who by law or agreement has the right to originate a payment.
2. As a precondition for accepting a payment order, the credit institution is entitled to demand the presentation of at least the following information from the Originator:
   1. name of the Payer;
   2. name or code of the payer's credit institution;
   3. Payer's current account number;
   4. name of the Payee;
   5. name or code of the beneficiary's credit institutions;
   6. Payee's current account number;
   7. registration number/registration code or personal identification code of an Originator residing in the Republic of Estonia;
   8. amount and currency of the payment;
   9. date when the Originator's credit institution is obliged to begin processing the Payment Order;
   10. purpose of the Payment expressed in words or a reference number;
   11. for the purpose of executing a cross-border payment the data of the Payment Intermediary (beneficiary's credit institution's correspondent bank) used by the beneficiary's credit institution, if necessary.
If any of the above information is missing or contradictions occur in interpreting the data, the will of the Originator is not considered to be explicitly expressed and the credit institution is not obliged to accept the Payment Order.
3. A credit institution is obliged to accept a Payment order if all the following conditions are met:
   1. the Payment Order is submitted to the credit institution according to the conditions agreed upon;
   2. the money necessary for executing the Payment has been transferred or handed over to the credit institution;
   3. the credit institution has agreed with the Originator of a Payment Order on the payment of the fees accompanying the execution of a payment;
   4. the execution date stated in the Payment Order allows the credit institution accepting the Payment Order to observe the settlement deadlines for payments.
4. In accepting a cross-border Payment Order, a credit institution acting as a payer's credit institution or as a beneficiary's credit institution, is entitled to request from the Payer or Payee respectively, any information related to the Payment and necessary for state statistics.

III Origination and Finality of Payments

1. A payment is regarded as originated if the Payment originator's credit institution has accepted the Payment Order.
2. Credit institutions are obliged to establish the conditions stipulating the irrevocability of an accepted Payment Order. Unless the conditions established by the credit institution for accepting Payment Orders stipulate otherwise, Payment Orders accepted by the credit institution are irrevocable.
3. The Payment is considered executed at the moment the Payee has received the money. The Payee has received the money if the credit institution:
   1. has paid the Payee the sum stated in the Payment Order in cash;
   2. has credited the Payee's account by the amount stipulated in the Payment Order;
   3. has paid the Payee the sum stated in the Payment Order in some other way if there is a respective agreement with the Payee.

IV Information on the Terms and Conditions of Payment Execution

1. A credit institution has to provide each person/institution with the following information at its own expense:
   1. as an originator credit institution - the time within which the beneficiary's credit institution account is credited with the sum sent by the originator's credit institution and also when this time begins;
   2. as a beneficiary's credit institution - the time within which the Payee receives the money that the beneficiary credit institution has collected for the Payment made in favour of the Payee;
   3. the method of calculation and amount of fees the Payer or Payee has to pay in connection with the execution of a Payment;
   4. as an originator's credit institution for the Payer and as a beneficiary's credit institution for the Payee - the possibility of presenting complaints and restitution claims and the procedure for resolving them;
   5. the conditions stipulating the irrevocability of a Payment Order accepted by the credit institution;
   6. the procedure for the use of exchange rates if conversion of the sum to be paid is necessary for the execution of a Payment.
2. Upon acceptance of a Payment Order the payer's credit institution is obliged to provide the Payer and the beneficiary's credit institution the Payee with the following information:
   1. requisite(s) allowing identification of the Payment;
   2. the Payment sum at the moment of its origination, if the respective information is available;
   3. any service fees paid for the processing of the Payment by the Payer and/or Payee's credit institution;
3. If, in the case of a Credit Order, the Originator has ordered that the payment processing fee is to be partly or fully paid by the Payee, the beneficiary's credit institution is obliged to inform the Payee of it.
4. If for the processing of a Payment it is necessary to convert one currency to another currency, the payer's credit institution is obliged to inform the Payer and/or the beneficiary's credit institution the Payee of the exchange rate(s) used.

V Processing Payment Orders

1. When processing a Payment Order the payer's credit institution, Payment Intermediary and beneficiary's credit institution are obliged to execute the Payment in full, unless the Originator has ordered otherwise in the Payment Order.
2. When processing a Payment Order the payer's credit institution and the beneficiary's credit institution may use a Payment Intermediary or a payment system.
3. When transmitting a Credit Order in the course of executing a Payment:
   1. either from the payer's credit institution to the beneficiary's credit institution or;
   2. from the payer's credit institution to a Payment Intermediary or to the Payment System Administrator or;
   3. from a Payment Intermediary to another Payment Intermediary or to the Payment System Administrator or to the beneficiary's credit institution or;
   4. from the Payment System Administrator to a Payment Intermediary or to the beneficiary's credit institution, the Payment Order has to be transmitted so that the explicitly expressed will of the Originator reaches each credit institution accepting the Payment Order in its original form and the beneficiary's credit institution can inform the Payee of the Payment Originator and the purpose of the Payment.
4. When transmitting a Debit Order in the course of executing a Payment:
   1. either from the beneficiary's credit institution to the payer's credit institution or;
   2. from the beneficiary's credit institution to the Payment Intermediary or to the Payment System Administrator or;
   3. from one Payment Intermediary to another Payment Intermediary or to the Payment System Administrator or to the payer's credit institution or;
   4. from the Payment System Administrator to a Payment Intermediary or to the payer's credit institution, the Payment Order has to be transmitted so that the explicitly expressed will of the Payment Originator reaches each credit institution accepting the Payment Order in its original form and the payer's credit institution can inform the Payer of the Payment Originator and the purpose of the Payment to be made.

VI Settlement Deadlines for Payments

Unless the Payment Originator has established a later deadline in the Payment Order:

1. for executing a Domestic Payment of an accepted Credit Order, the payer's credit institution has to process the Payment Order so that the Payment is collected by the beneficiary's credit institution no later than on the first banking day following the banking day on which the Payment Order was accepted.
2. for executing a Cross-border Payment of an accepted Credit Order the payer's credit institution has to process the Payment Order so that the Payment is collected by the beneficiary's credit institution no later than on the seventh banking day following the banking day on which the Payment Order was accepted.
3. for executing a Domestic Payment of an accepted Credit Order the beneficiary's credit institution has to process the Payment Order so that the Payment is collected by the payee no later than on the banking day the Payment Order is accepted.
4. for executing a Cross-border Payment of an accepted Credit Order, the beneficiary's credit institution has to process the Payment Order so that the Payment is collected by the Payee no later than on the first banking day following the banking day on which the Payment Order was accepted.
5. the payer's credit institution has to process an accepted Debit Order so that the Payment is collected by the beneficiary's credit institution no later than on the banking day established in the Payment Order.
6. for executing a Domestic Payment of an accepted Debit Order, the beneficiary credit institution has to process the Payment Order so that the Payment is collected by the Payee on the same banking day the respective Payment was collected by the beneficiary's credit institution.
7. for executing a Cross-border Payment of an accepted Debit Order the beneficiary's credit institution has to process the Payment Order so that the Payment is collected by the Payee on the first banking day following the banking day on which the Payment Order is accepted.
8. Unless the Originator has ordered otherwise, the Payment Intermediary and the Payment System Administrator have to process an accepted Payment Orders on the same Banking Day the Payment Order is accepted.
9. If a Debit Order does not explicitly express the will of the Originator, the credit institution which has received the Payment Order has to, unless the Originator has ordered otherwise, inform the following parties of the ambiguity no later than on the next Banking Day:
   1. the Originator if the credit institution which has received the Payment Order is the Originator's credit institution;
   2. the Originator's credit institution or a Payment Intermediary or the Payment System Administrator if the credit institution which has received the Payment Order is not the Originator's credit institution.
10. If a Credit Order does not explicitly express the will of the Originator, then the credit institution is obliged to return the Payment Order with respective comments and also return the money transferred to it for processing the Payment Order unless there is an agreement in place between the Originator and the credit institution:
    1. in the case of a credit institution-internal payment - to the Payer no later than on the next Banking Day after the Banking Day the Payee was supposed to collect the money;
    2. in the case of a Payment between credit institutions:
       2.1 to the Payer if the credit institution accepting the Payment Order is the payer's credit institution - no later than on the next Banking Day after the day the payer's credit institution was supposed to process the Payment Order;
       2.2 to the Payer's credit institution if the credit institution accepting the Payment Order is the beneficiary's credit institution - no later than on the next Banking Day after the Banking Day the Payee was supposed to collect the money. The Payer's credit institution executes the returned Payments on an equal basis with other collected Payments.
    3. in the case of a cross-border payment, non-observance of the deadlines established in Part VI Clause 10 Sub-clauses 1 and 2 is justified if observance of the deadlines could cause a loss to the Payer or the Payee and non-observance is in harmony with good banking practice.
11. If there is a violation of settlement deadlines and if the Payer or the Payee demands, the credit institution which has violated the settlement deadline is obliged to pay a bank charge for each day the payment is overdue to the extent established in Clause 2 of Decision No. 5-1 of the Board of Eesti Pank (Time for the settlement of payments and the amount of bank charges for overdue payments) of 7 June 1996. If both the Payer and the Payee demand the payment of a bank charge for an overdue payment, the credit institution which has violated the settlement deadline is obliged to pay a bank charge for the overdue payment in equal parts to both the Payer and the Payee.
12. A credit Institution is not obliged to pay a bank charge for an overdue payment as stipulated in Clause 11 of Part VI if the delay of the Payment was caused by the Payer or the Payee.
13. A credit Institution is not obliged to pay a bank charge for an overdue payment as stipulated in Clause 11 of Part VI, if the delay of the Payment was caused by the circumstances of Force Majeure and if using such circumstances as a basis for diminishing or eliminating the responsibilities of the credit institution does not violate the laws in force.

VII Specifics of Cross-border Payments

The following provisions of the present set of instructions do not apply to cross-border payments where the payer's credit institution or the beneficiary's credit institution is a non-member country of the European Union:

1. Sub-clause 1 of Clause 1 of Part IV 'Information on terms and conditions of Payment execution'
2. Clause 2 of Part VI 'Settlement Deadlines for Payments'.

VIII Specifics of Compulsory Collection

1. In the case of a compulsory collection the provisions of the present set of instructions shall be in force with the specifics arising from the law on which compulsory collection is based.
2. In the case of a conflict between the law on which compulsory collection is based and the clauses of the present set of instructions, the present set of instructions will not be applied to the extent where it would contradict the law on which compulsory collection is based.