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Settlement Policy

Legal Requirements

We expect to see a set of legal agreements to be executed between various parties in this initiative:

  1. Agreement between DFSPs and MMD Scheme Owner & Hub Operator

  2. Agreement between Settlement Bank and the MMD Scheme Owners & the Hub Operator

  3. Agreement between each DFSP and Settlement Bank for funds management

Settlement Requirements

  • DFSPs will be assigned with Liquidity Accounts, used to fund their settlement obligations.

  • Liquidity Accounts will be Settlement Bank’s special operation accounts which will not hold funds of DFSPs for the settlement purpose. DFSPs can freely deposit and withdraw funds between their Business Account and their Liquidity Accounts. Balances ff Liquidity Accounts will be communicated to the Hub Operator after each settlement via email.

  • DFSPs will authorize Settlement Bank to manage funds inflow and outflows of their respective Liquidity Accounts from their designated Business Accounts, through a formal arrangement.

  • Settlement Account will be Settlement Bank’s internal operation account through which the funds from liquidity accounts of DFSPs will flow during the settlement window.

  • Liquidity Accounts are special operation accounts used for settlement andn not suitable to receive funds from CBMNet directly. There is a requirement from the perspective of Anti-money Laundering (AML)and Know-Your-Customer (KYC) Compliance, to have all the funds and accounts to go through proper due diligence. DFSPs can use Business Accounts which are at other banks as their primary accounts but it is a mandatory requirement for Settlement Bank to comply with prevailing AML/KYC guidelines, that DFSPs open Business Account with CB Bank, from which funds can be deposited into Liquidity Accounts.

Withdrawal from Liquidity Accounts

  • DFSPs shall request the Settlement Bank to withdraw funds from their Liquidity Accounts.

Deposit Liquidity Accounts

  • DFSPs can deposit funds into their designated Liquidity Account either from the Settlement Bank’s online banking or by means of cheques at bank branches.

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