5. For purposes of this Article, without prejudice to other forms of prudential regulation, a Party may require that an investor of the other Party be engaged in the business of supplying financial services in the territory of that other Party.
6. For purposes of this Article, "numerical restrictions" means limitations imposed on the number of financial institutions whether in the form of a numerical quota, a monopoly, an exclusive service provider or the requirements of an economic needs test.
Article 16.5. CROSS-BORDER TRADE
1. Each Party shall permit, on terms and conditions that accord national treatment, cross-border financial service suppliers of the other Party to supply the services specified in Annex 16-A.
2. Each Party shall permit a person located in its territory, and its nationals wherever located, to purchase financial services from cross-border financial service suppliers of the other Party located in the territory of the other Party subject to paragraph 1. This does not oblige a Party to permit such suppliers to do business or advertise in its territory. Each Party may define "doing business" and "advertising" for the purposes of this Article provided that such definitions are not inconsistent with the obligations in paragraph 1.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration of cross-border financial service suppliers of the other Party and of financial instruments.
4. Without prejudice to other means of prudential regulation, a Party may require a certification issued by the competent authority of the other Party attesting to its status as a financial service supplier.
Article 16.6. NEW FINANCIAL SERVICES
1. A Party shall permit a financial institution of the other Party established in its territory to supply a new financial service that the first Party would, in like circumstances, permit its own financial institutions to supply under its law, a Party may:
(a) require the financial institution to apply for permission or to notify the relevant regulator for the purpose of obtaining such permission; and
(b) refuse to issue a permit if the introduction of the financial service requires the Party to adopt new laws or amend existing laws or regulations.
2. A Party may determine the legal and institutional form through which the new financial service may be supplied and may require authorization for the supply of the new financial service. Where a Party permits the new financial service and authorization is required to supply it, the decision shall be made within a reasonable period of time and the authorization may only be refused for prudential reasons.
3. This Article does not prevent a financial institution of a Party from requesting the other Party to authorize the supply of a financial service that is not supplied within the territory of either Party. Such a request shall be subject to the law of the Party to which the request is made and, for greater certainty, shall not be subject to the obligations of this Article.
4. Nothing in this Article prohibits a Party from requesting the issuance of a decree, resolution or regulation by the Executive, regulatory agencies or central bank, to authorize new financial services not specifically authorized in its legislation.
Article 16.7. TREATMENT OF CERTAIN TYPES OF INFORMATION
1. Nothing in this Chapter obliges a Party to disclose or allow access to:
(a) information relating to the financial affairs and accounts of an individual customer of a financial institution or cross-border financial service provider; or
(b) any confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of a particular company.
2. Without prejudice to the Memoranda of Understanding subscribed between the supervisory authorities of the Parties, for purposes of consolidated supervision, the Parties undertake not to prohibit the submission of information of subsidiaries and affiliates established in their territory to the supervisory authorities of the Party where the parent company is established.
The information referred to in the preceding paragraph includes that which reflects the financial situation of the subsidiaries or affiliates, including that of their assets, risk management and corporate governance. (1)
Article 16.8. SENIOR EXECUTIVES AND BOARDS OF DIRECTORS
1. A Party may not require a financial institution of the other Party to employ persons of a particular nationality for senior executive positions or other key personnel.
2. A Party may not require that the board of directors of a financial institution of the other Party be composed of nationals of the Party, residents of its territory, or a combination of both.
Article 16.9. NON-CONFORMING MEASURES
1. Articles 16.2, 16.3, 16.4, 16.5 and 16.8 do not apply to:
(a) any existing non-conforming measure maintained by a Party at the central level of government, as indicated in Section I of its Schedule in Annex II;
(b) the continuation or prompt renewal of a nonconforming measure referred to in subparagraph (a); or
(c) an amendment to any nonconforming measure referred to in subparagraph (a) provided that such amendment does not diminish the conformity of the measure, as in effect immediately before the amendment, with Articles 16.2, 16.3, 16.4, and 16.8.
2. Articles 16.2, 16.3, 16.4, 16.5 and 16.8 do not apply to a non-conforming measure that a Party adopts or maintains in accordance with Section II of its Schedule to Annex Il.
3. The Schedule of each Party to Annex 16-A sets out certain specific commitments of that Party.
4. Where a Party has entered a reservation to Article 14.3 (National Treatment), 14.4 (Most-Favored-Nation Treatment), 15.2 (National Treatment), or 15.3 (Most-Favored- Nation Treatment) in its Schedule to Annex I or IJ, the reservation also constitutes a reservation to Article 16.2 or 16.3, insofar as the measure, sector, sub-sector, or activity set out in the reservation is covered by this Chapter.
Article 16.10. EXCEPTIONS
1. Nothing in this Agreement shall be construed to prevent a Party, in a fair, non- discriminatory and good faith manner, from adopting or maintaining measures for prudential reasons including for the protection of investors, depositors, policy holders or persons to whom a financial institution or cross-border financial service supplier owes a fiduciary duty, or to ensure the safety, soundness, integrity and stability of the financial system, as well as the financial liability of individual financial institutions or cross-border financial service suppliers. Where such measures are not in conformity with the provisions of this Agreement, they shall not be used as a means of avoiding the Party's obligations and commitments under this Agreement.
2. Nothing in this Agreement applies to non-discriminatory measures of a general nature adopted by any public entity in pursuance of monetary and related credit or exchange rate policies.
Without limiting the other applications or meanings of this paragraph, this Agreement allows a Party to apply non-discriminatory exchange regulations of general application to the purchase by its residents of financial services from cross-border financial service suppliers.
3. Notwithstanding Article 14.9 (Transfers) and Article 15.10 (Transfers and Payments), a Party may prevent or limit transfers by a financial institution or cross-border financial service supplier to or for the benefit of a person affiliated or related to such institution or supplier through the equitable, non-discriminatory, and good faith application of measures relating to the maintenance of the safety, soundness, integrity, or financial responsibility of financial institutions or cross-border financial service suppliers. This paragraph is without prejudice to any other provision of this Agreement that allows the Party to restrict transfers.
4. A Party may adopt or apply measures necessary to secure compliance with laws or regulations that are not inconsistent with this Chapter, including measures relating to the prevention of deceptive and fraudulent practices or to address the effects of a breach of financial service contracts. A Party shall not apply such measures in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on investment in a financial institution or on cross-border trade in financial services.
Article 16.11. TRANSPARENCY
1. The Parties recognize that transparent regulations and policies governing the activities of financial institutions and financial service suppliers are important to facilitate the access of financial institutions and financial service suppliers and their operations in the market of the other Party. Each Party undertakes to promote regulatory transparency in financial services.
2. Each Party shall ensure that a measure of general application to which this Chapter applies is administered in a reasonable, objective and impartial manner.
3. Each Party shall ensure that its regulatory authorities shall make publicly available the requirements, including any necessary documentation, for completing applications relating to the supply ofa financial service.
4. At the request of the applicant, the regulatory authority shall inform the applicant of the status of its application. When such authority requires additional information from the applicant, it shall notify the applicant without undue delay.
5. The regulatory authority of a Party shall make an administrative decision on a complete application by an investor in a financial institution, a cross-border financial service supplier or a financial institution of the other Party relating to the supply of a financial service within 120 days, and shall notify the applicant of the decision in a timely manner. An application shall not be considered complete until all relevant hearings have been held and all necessary information has been received, in accordance with the regulatory requirements established for that purpose. When it is not feasible to make a decision within 120 days, the regulatory authority shall notify the interested party without undue delay and attempt to make the decision at a later date within a reasonable period of time.
6. Each Party shall maintain or establish appropriate mechanisms to respond to inquiries from interested parties regarding a measure of general application covered by this Chapter.
7. At the request of an applicant whose application has been denied, the regulatory authority that has denied an application shall, to the extent practicable, inform the applicant of the reasons for the denial of his application.
8. Each Party shall make its best efforts for the implementation and application in its territory of international standards for regulation and supervision in the financial services sector and for the fight against money laundering and terrorist financing. Such standards shall be those agreed by the following international bodies: Basel Committee on Banking Supervision, International Association of Insurance Supervisors, International Organization of Securities Commissions, Financial Action Task Force.
Article 16.12. SELF-REGULATORY ORGANIZATIONS
Where a Party requires a financial institution or cross-border financial service supplier of the other Party to be a member of, participate in, or have access to a self-regulatory organization in order to provide a financial service in or into its territory, the Party shall ensure that such self-regulatory organization complies with the obligations of Article 16.2.
Article 16.13. PAYMENT AND COMPENSATION SYSTEMS
Subject to terms and conditions that accord national treatment, each Party shall grant to a financial institution of the other Party established in its territory access to payment and clearing systems administered by public entities and to official financing and refinancing facilities available in the normal course of business. This Article does not confer access to the Party's lender of last resort facilities.
Article 16.14. FINANCIAL SERVICES COMMITTEE
1. The Parties establish the Financial Services Committee (the "Committee"). The principal representative of each Party shall be an official of the Party's authority responsible for financial services set out in Annex: 16.B (Authorities Responsible for Financial Services).
2. The Committee:
(a) supervise the implementation of this Chapter and its further development;
(b) consider financial services matters referred to it by a Party; and
(c) participate in dispute settlement procedures in accordance with Article 16.17.
3. The Committee shall meet annually, or as otherwise agreed, to evaluate the operation of this Agreement as it relates to financial services. The Committee shall report to the Commission on the results of each meeting.
Article 16.15. CONSULTATIONS
1. A Party may request consultations with the other Party with respect to any matter related to this Agreement affecting a financial service. The other Party shall give due consideration to the request. The Parties shall inform the Committee of the results of the consultations.
2. Consultations under this Article shall include officials of the authority specified in Annex 16-B (Authorities Responsible for Financial Services).
3. Nothing in this Article shall be construed to require a regulatory authority participating in consultations under paragraph 1 to disclose information or to act in a manner that would interfere with specific regulatory, supervisory, administrative or enforcement matters.
4. Where a Party requires information for supervisory purposes concerning a financial institution in the territory of the other Party or a cross-border financial service supplier in the territory of the other Party, the Party may apply to the competent regulatory authority in the territory of the other Party for the information.
5. Nothing in this Article shall be construed to require a Party to derogate from its relevant legislation relating to the exchange of information between financial regulators, or from the requirements of an agreement or arrangement between the Parties' financial authorities.
Article 16.16. SETTLEMENT OF DISPUTES
1. Chapter 21 (Dispute Settlement), as amended by this Article, applies to disputes arising under this Chapter.
2. Consultations held pursuant to Article 16.14 with respect to a measure or matter constitute consultations under Article 21.4 (Consultations), unless the Parties agree otherwise. If the matter has not been resolved within 45 days after the commencement of consultations under Article 16.14, or 90 days after the delivery of the request for consultations under Article 16.14, whichever is earlier, the complaining Party may request in writing the establishment of a panel.
3. The following procedures will replace Article 21.6 (Establishment of a Panel):
(a) the panel will be composed of three members;
(b) each Party shall, within 30 days of receipt of the request for the establishment of the panel, designate a panelist, who may be a national of that Party, and notify the other Party in writing of such designation. If a Party fails to designate a panelist within 30 days, the other Party may request that the Designating Authority designate, at its discretion, the panelist not designated under paragraph 4;
(c) the Parties shall endeavor to agree on the designation of the third panelist who shall chair the panel and, unless the Parties agree otherwise, such panelist shall not be a national of either Party. If the chair of the panel has not been designated within 30 days of the most recent designation under subparagraph (b), any Party may request the Designating Authority to designate, in its discretion, and subject to paragraph 4, the chair of the panel, who shall not be a national of either Party; and
(d) subparagraphs (b) and (c) shall apply when a panelist or the chair of the panel retires, is removed, or is otherwise unable to serve on the panel. In such a case, a term applicable to the panel proceeding shall be suspended for a period beginning on the date on which a panelist ceases to serve and ending on the date on which his or her replacement is appointed.
4. Each panelist on panels constituted for disputes arising under this Chapter shall have the qualifications required by Article 21.8 (Qualifications of Panelists) with the exception of Article 21.8.1(d) (Qualifications of Panelists). In addition, each panelist shall have expertise or experience in financial law or financial services practice, which may include the regulation of financial institutions.
5. In any dispute if a panel finds that a measure is inconsistent with the obligations of this Agreement and the measure affects:
(a) services sector only, the complaining Party may suspend benefits only in the financial services sector;
(b) to the financial services sector and any other sector, the complaining Party may suspend benefits in the financial services sector that have an effect equivalent to the effect of the measure on the Party's financial services sector; or
(c) only to a sector other than the financial services sector, the complaining Party may not suspend benefits in the financial services sector.
Article 16.17. FINANCIAL SERVICES INVESTMENT DISPUTES
1. Where an investor of a Party submits a claim to arbitration under Section B (Investor-State Dispute Settlement) of Chapter 14 (Investment) and the respondent Party invokes an exception under Article 16.10, the Tribunal shall refer the matter in writing to the Committee for a decision under paragraph 2. The Tribunal may not proceed until it receives a decision or report under this Article.
2. In a referral under paragraph 1, the Committee shall decide the issue of the extent to which Article 16.10 is a valid defense to the investor's claim. The Committee shall transmit a copy of its decision to the Tribunal and to the Commission. The decision shall be binding on the Tribunal.
3. Where the Committee has not decided the matter within 60 days after receipt of the referral in terms of paragraph 1, any Party may request, within 10 days thereafter, the establishment of a panel pursuant to Article 21.6 (Establishment of a Panel) to decide the matter. The panel shall be constituted in accordance with Article 16.16. In addition to the provisions of Article 21.10 (Reports of the Panel), the panel shall transmit its final report to the Committee and the Tribunal. The report shall be binding on the Tribunal.
4. Where a request for the establishment of a panel under paragraph 3 has not been filed within 10 days after the expiration of the 60-day period referred to in paragraph 3, the Tribunal may proceed to decide the matter.
Article 16.18. DEFINITIONS
For the purposes of this Chapter:
Appointing Authority means the Secretary-General or the Assistant Secretary-General or the next most senior member of the staff of the International Centre for Settlement of
Investment Disputes, who is not a national of any of the Parties;
cross-border trade or supply of financial services means the supply of a financial service:
(a) from the territory of one Party to the territory of the other Party,
(b) in the territory of a Party by a person of that Party to a person of the other Party, or
(c) by a national of a Party in the territory of the other Party,
but does not include the supply of a service in the territory of a Party for an investment in that territory;
public entity means a central bank, a monetary authority of a Party, or any financial institution owned or controlled by a Party;
For greater certainty, a public entity should not be considered a designated monopoly or a state enterprise for purposes of Chapter 13 (Competition Policy, Designated Monopolies and State Enterprises);
financial institution means a financial intermediary or other enterprise that is authorized to do business and that is regulated or supervised as a financial institution under the law of the Party in whose territory it is located;
financial institution of the other Party means a financial institution, including a branch, located in the territory of a Party that is controlled by a person of the other Party;
investment means "investment" as defined in Article 14.37 (Definitions), except that:
(a) a loan to a financial institution and a bond, debenture or other debt instrument referred to in paragraph (d) of that definition (a "debt instrument"), is an investment only when it is treated as equity for regulatory purposes by the Party in whose territory the financial institution is located; and
(b) a loan granted by a financial institution or a debt instrument owned by a financial institution, other than a loan to or a debt instrument of a financial institution referred to in subparagraph (a), is not an investment unless it is covered by subparagraph (a); and
for greater certainty:
(c) a loan to or debt instrument issued by a Party or a state enterprise of such Party is not an investment; and
(d) a loan made by, or a debt instrument owned by, a cross-border financial service supplier, other than a loan to, or a debt instrument issued by, a financial institution, is an investment if such loan or debt instrument meets the criteria for investments set forth in Article 14.37 (Definitions);
investor of a Party means "investor of a Party" as defined in Article 14.37 (Definitions);
new financial service means a financial service not supplied in the territory of the Party, but which is supplied in the territory of the other Party, and includes a new form of supply of a financial service or the sale of a financial product that is not sold in the territory of the Party;
self-regulatory organization means a non-governmental entity, including a securities or futures exchange or market, clearinghouse or other body or association, that exercises regulatory or supervisory authority, whether its own or delegated, over financial service providers or financial institutions; for greater certainty, a self-regulatory entity should not be considered a designated monopoly for purposes of Chapter 13 (Competition Policy, Designated Monopolies and State Enterprises);
person of a Party means a "person of a Party" as defined in Article 1.6 (Definitions of General Application) and, for greater certainty, does not include a branch of a company of a non-Party;
financial service supplier of a Party means a person of a Party engaged in the business of supplying a financial service in the territory of that Party;
cross-border financial service supplier of a Party means a person of a Party that is engaged in the business of supplying a financial service in the territory of the Party and that seeks to supply or does supply a financial service through the cross-border supply of such service; and
financial service means a service of a financial nature. Financial services include all insurance and insurance-related services, and all banking and other financial services (except insurance), as well as all services incidental or auxiliary to a service of a financial nature. Financial services include the following activities:
Insurance and Insurance-Related Services
(a) Direct insurance (including coinsurance):
(i) life insurance;
(ii) non-life insurance;
(b) Reinsurance and retrocession;
(c) Insurance intermediation activities, e.g., insurance brokers and agents; and
(d) Services auxiliary to insurance, such as consulting, actuarial, risk assessment and loss adjusting services.
Banking and Other Financial Services (excluding insurance):
(e) acceptance of deposits and other repayable funds from the public;
(f) loans of all types, including personal loans, mortgage loans, factoring and financing of commercial transactions;
(g) leasing services;
(h) All payment services and money transfers, including credit, charge and debit cards, traveler's checks and bank drafts;
(i) Guarantees and commitments;
(j) Trading for its own account or for the account of customers, whether on an exchange, in an over-the-counter market or otherwise, of the following:
(i) money market instruments (including checks, bills and certificates of deposit);
(ii) currencies;
(iii) derivative products, including, but not limited to, futures and options;
(iv) instruments in the foreign exchange and interest rate markets, including products such as swaps and forward rate agreements;
(v) transferable securities; (vi) other negotiable instruments and financial assets, including metal;
(k) Participation in issues of all kinds of securities, including underwriting and placement as agents (publicly or privately), and the provision of services related to such issues;
(l) Exchange brokerage;
(m) Asset management, such as cash or portfolio management, collective investment management in all its forms, pension fund management, depository and custodial services, and trust services;
(n) Payment and clearing services in respect of financial assets, including securities, derivative products and other negotiable instruments;
(o) Supply and transfer of financial information, and processing of financial data and related software by providers of other financial services; and
(p) Advisory, intermediation and other auxiliary financial services with respect to any of the activities indicated in subparagraphs (e) through (0), including credit reports and analysis, investment and portfolio research and advice, and advice on acquisitions and on corporate restructuring and strategy.
Annex 16-A. CROSSBORDER TRADE
Pursuant to the provisions of Article 16.5 (Cross-Border Trade)
Colombia
Insurance and Insurance-Related Services
1. Article 16.5.1 applies to the cross-border supply or trade in financial services, as defined in subparagraph (a) of the definition of "cross-border trade or supply of financial services" in Article 16.18, with respect to:
(a) Insurance covering the following risks:
(i) International maritime transport, international commercial aviation and space launch and transport (including satellites), including any or all of the following: the goods being transported, the vehicle transporting the goods and the civil liability that may arise therefrom.
(ii) Goods in international transit;
(b) reinsurance and retrocession;
(c) consulting, risk assessment, actuarial and claims adjustment; and
(d) insurance brokerage included in subparagraphs (a) and (b).
2. Article 16.5.1 applies to the cross-border supply or cross-border trade in financial services as defined in subparagraph (c) of the definition of cross-border supply of financial services in Article 16.18, with respect to insurance and insurance-related services listed in paragraph 1 above.
3. Colombia's commitments in paragraphs 1 and 2 with respect to risk insurance described in subparagraphs 1(a)(i) and (ii) and the brokerage of such risk insurance shall become effective no later than July 15, 2013.
Banking and other financial services (excluding insurance)
4. For Colombia, Article 16.5.1 applies only with respect to:
(a) provision and transfer of financial information referred to in subparagraph
(o) of the definition of financial service in Article 16.18;