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11. Identification
Dominican Republic  Dominican Republic

There are no social or political reservations. The climate is indifferent.



Legal Affairs


To provide identification services, in accordance to Law 172-13 which regulates the comprehensive protection of personal data set up in archives, public records, data banks or other technical means of data processing for reporting, whether public or private, a license must be requested through the Superintendence of Banks and approved by the Monetary Board. After approval, the entity will be supervised by the Superintendence of Banks and must follow all regulations set forth by the Superintendence of Banks and the Monetary Board.



Economic Conditions


There are two identification services entities in the market since the mid-1990’s, , these services are used by all Financial Intermediation Entities and by other private entities in order to obtain general information about their clients.



Miscellaneous


Because of the relatively small size of the Dominican financial market, it would be hard for incoming firms to launch a new identification services platform successfully.



KYC Requirements


I. Regulatory Framework

Law 155-17 Against Money Laundering and Terrorism Financing, dated 1 June 2017, becoming effective on 3 June 2017; Decree 408-17 on Rules for the Implementation of Law 155-17 dated 16 November 2017, becoming effective on 18 November 2017.

National regulator: The Financial Analysis Unit (Unidad de Análisis Financiero -UAF-), a unit within the Ministry of the Treasury (Ministerio de Hacienda) is the entity in charge of receiving suspicious activity reports and currency transaction reports in the Dominican Republic.

Depending on the industry that the regulated entity participates, it may have different regulators for AML controls, supervision and sanctions, such as the Superintendency of Banks (Superintendencia de Bancos), for banking institutions; the Superintendency of Insurances (Superintendencia de Seguros), for Insurance entities; the Superintendency of Securities (Superintendencia del Mercado de Valores), for entities participating in the Securities Market; and the General Agency of Internal Taxes (Dirección General de Impuestos Internos -DGII-) for most non-financial entities considered as Obliged Subjects under Law 155-17.


II. Customer Due Diligence (Know your customer identification)

Process: Law 155-17 mandates all Obliged Subjects to perform a KYC process. Depending on the risk profile of the client or potential client, the KYC process may consist of a regular due diligence, a simplified due diligence or an extended due diligence.

Article 38 of Law 155-17 sets forth the following minimum requirements for a regular due diligence of individuals:

  1. Identify the client, natural and/or legal person, and verify their identity on the basis of documents, data or information obtained from reliable and independent sources.

  2. Identify and verify the person who claims to act on behalf of the client and verify that they are authorized to do so.

  3. Identify the final beneficiary and take reasonable measures to verify the identity of the final beneficiary using the relevant information or data obtained through reliable sources, in such a way that the Obliged Subject obtains adequate knowledge of who the final beneficiary is.

  4. Understand and, when appropriate, obtain information about the purpose and nature of the commercial and financial relationship.

  5. Complete the verification of the identification of the client according to the level of risk defined by the Obliged Subject, in accordance with its due diligence policies and procedures.

Article 40 of Law 155-17 sets forth the following the minimum requirements for a regular due diligence of entities:

  1. Identify and verify the company name, tax identification number, legal form and proof of its existence.

  2. Understand the structure of ownership, ownership and control of the client, as well as the names of the relevant persons who occupy a position in senior management within the legal entity or legal entity.

  3. The address of the main commercial office or establishment.

  4. Identify and verify the final beneficiary.

All documents and registries of the KYC process must be updated on a yearly basis and kept by the regulated entity for at least 10 years.


It is not possible to meet customer due diligence requirements by relying on third parties who are obliged by law themselves to comply with AML regulations.

It is legally permitted to outsource customer due diligence by contract to other third parties who are not obliged by law to meet AML regulations and rely on these.

License or registration requirement: Under Law 155-17 and Decree 408-17 the Obliged Subjects may only delegate on other entities of its same economic group or outsource the following aspects of the due diligence process:

  1. Identify and verify the client and the final beneficiary using documents, data or reliable information, from independent sources.
  2. Understand and, when appropriate, obtain information about the purpose and nature of the business or professional relationship.

However, the Obliged Party remains liable before the authorities with regards to the information provided by the outsource entity, as set forth by article 47 of Law 155-17.

Article 22 of Decree 408-17 provides that when the due diligence is delegated to a third party that resides in another country and that complies with the conditions defined in Law 155-17, the information available on the level of risk in that country shall be taken into account and take the necessary mitigation measures so that the due diligence information is as complete and up-to-date as possible.



Signature Requirements


I. Specific Form Requirements

Under articles 13 and 14 of Law 126-06 on Electronic Commerce and Digital Signatures dated of September 2002, and general principle of law (referring to Dominican legal system), when obligations are consensual and require no formalisms, any evidence (whether through a digital message or recording, or any other means that allow posterior consultation) is a valid replacement for a written form of declaration of intention.

However, certain types of contracts and obligation are statutorily mandated to comply with particular formalities. Typical formalities include written documents, authentic acts before a Notary Public and/or certain wording or phrases in order to be legally binding.

Conclusion of loan agreement: There are no specific requirements to effectively conclude a loan agreement. Under articles 1875 and 1892 of the Dominican Civil Code, loan agreements are considered contracts in res, meaning the contract is typically considered as executed and legally binding as soon as the lender delivers the lent assets (whether they are money or a different asset) to the borrower. Although typically a written document is drafted, it is not legally required to be in writing.

Conclusion of contracts by electronic signature: Under articles 13 and 14 of Law 126-06, an electronic signature is not required for the conclusion of a contract.

If the parties choose to use one, an Electronic Signature Certificate must be acquired from an authorized vendor and use it in the desired electronic communications. This Electronic Signature Certificate can be validated by the issuing vendor. Relevant vendors include the Chamber of Commerce and Production of Santo Domingo, Inc.

An authorization to act as vendor is required from the Dominican Institute for Telecommunications (Instituto Dominicano de las Telecomunicaciones -INDOTEL-).

Conclusion of an electronic contract that has to match with specific formal requirements is convenient in the country.

Legal consequences if formal requirements are not fulfilled: Under article 13 of Law 126-06, contracts entered into through digital communication do not require any formalities. However, courts have proved notoriously resistant to accept moving away from such specific formal requirements.

The general principle in our legal system is that contracts are conventional, meaning they do not require a document to be drafted and are considered concluded as soon as the parties agree to the object and cause of the contract.

However, any obligation involving a sum greater than DOP 30.00 (approx. USD 0.50) can only be proved through a written document (this includes digital documents). As a result, Dominican legal culture has typically drifted towards formal written agreements. Courts have proved resistant to acknowledge the existence of contracts that do not meet such standard.


II. Procedure of Signing in Practice

Contractual agreements in B2B sector: The majority of contractual agreements in the Dominican Republic are concluded with a handwritten signature.

Contractual agreements in B2C sector: The majority of contractual agreements in the Dominican Republic are concluded with a handwritten signature.



Contributing Authors

Jiménez Cruz Peña

José Cruz Campillo
Santo Domingo, Dominican Republic

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 August 2019