Título XI. Sanciones

Any natural person or legal person, national or foreign, who, without being expressly authorized in accordance with this Law or specific laws to carry out operations of such nature, habitually engages, publicly or privately, directly or indirectly, by itself or in combination with one or more other natural persons or legal persons, for its own benefit or for the benefit of third parties, in activities consisting of, or relating to, the raising of money from the public or of any instrument representative of money, whether through receipt of monetary specie, checks, deposits, advances, loans, placement of bonds, securities or other obligations, including contingent operations, allocating such funds raised to credit or financing businesses of any nature, regardless of the legal form of formalization, documentation or accounting record of the operations, commits the crime of financial intermediation. In the case of legal persons, the administrators, managers, directors and legal representatives are responsible for this crime.

The person or persons responsible for this crime shall be punished with non-commutable imprisonment of five to ten years, *which excludes the application of any of the substitute measures contemplated in the Code of Criminal Procedure, and with a fine of not less than ten thousand nor more than one hundred thousand "fine units", which shall also be imposed by the competent criminal tribunal.

Simultaneously with the imposition of the aforementioned fine, said tribunal shall order the cancellation of the commercial patent of the natural persons, as well as the liquidation of the legal persons referred to in this article in accordance with the procedure established by law; in the latter case, once its liquidation is concluded, it shall order the Mercantile Register to cancel the respective registration.

Any company that, without being a member of a financial group, acts as if it were part thereof shall be sanctioned by the Superintendency of Banks with a daily fine of five hundred to five thousand fine units, from the date of notification of the sanction and until it regularizes its situation, without prejudice to the application, if after two months have elapsed without it regularizing its legal situation, of the regimes of suspension of operations and/or liquidation established in this Law.

The violations committed by banks, finance companies and the member companies of financial groups, against any of the provisions of this Law and others applicable to them, the provisions issued by the Monetary Board, their law or articles of incorporation, regulations or bylaws, administrative orders or provisions of the Superintendency of Banks, as well as the submission of false or fraudulent information, statements or documents, obstruction or limitation of the supervision by the Superintendency of Banks, and when they carry out or record operations to evade the bank reserve requirement, or entailing non-compliance with capital requirements, shall be sanctioned by the supervisory body, in observance of the principles of due process and the right of defense, as provided in this Law.

The violations referred to in the preceding article shall be sanctioned as follows:

a)To banks, financial companies and offshore entities:

1.In the first violation, a pecuniary sanction of five hundred to forty thousand fine units according to the seriousness of the violation.

2.In the second violation concerning an act of the same nature as the act already sanctioned, a sanction equal to twice the fine units imposed in the first violation; and,

3.In the third violation concerning an act of the same nature as the act already sanctioned, a sanction equal to twice the fine units indicated in the preceding numeral.

b)To other companies forming part of financial groups, whose specific laws do not establish sanctions for the violations referred to in article 98 of this Law, a sanction of one hundred to ten thousand fine units shall be applied according to the seriousness of the violation.

The imposition of the foregoing sanctions is without prejudice to the power of the Superintendent of Banks to adopt any preventive measures that, in his judgment, are necessary for the readjustment of operations to the limits and conditions set forth in the legal provisions.

Income from fines imposed under this article shall increase the Fund for the Protection of Savings.

The Monetary Board shall regulate matters concerning the seriousness of the violations and the cycle of recurrence thereof, for purposes of the provisions of this article, as well as the number of fine units to be applied according to the seriousness of the violation.

Once the decision is issued by the Superintendency of Banks imposing the corresponding fine, if the affected entity does not file an appeal or if, having filed it, the Monetary Board declares it without merit, the following procedure shall be followed: in the case of banks and financial companies, the decision shall be brought to the knowledge of the Bank of Guatemala, which without further proceedings shall debit the respective reserve account or legal deposit account for the amount of the fine; in all other cases, the fines shall be paid within a maximum time limit of ten days, counted from the date of notification of the decision imposing them, which constitutes an enforceable title.

If not paid within the established time limit, they shall be collected by the Superintendency of Banks through economic-coercive proceedings.

The members of the board of administration, the general manager, manager, deputy managers, legal representatives, agents under a mandate, auditors and other executives who are found liable for violations that affect the financial situation, endanger the solvency or liquidity of their respective entities, that tend to conceal information, distort the figures of the financial statements of the entities, or prevent aspects thereof from becoming known or that affect interests of third persons, without prejudice to bringing the corresponding legal actions, shall be sanctioned, with observance of the principles of due process and the right of defense, at the request of the Superintendency of Banks, by the board of administration, board of directors, or whoever acts in its stead, of the entity in question, in the following manner:

a)On the first violation, written warning;

b)On the second violation, concerning an act of the same nature as the act already sanctioned, it shall disqualify them for one month from exercising their functions in the entity;

c)On the third violation, concerning an act of the same nature as the act already sanctioned, it shall disqualify them for six months from exercising their functions in the entity; and,

d)On the fourth violation, concerning an act of the same nature as the act already sanctioned, it shall remove him from his office.

Notwithstanding the foregoing, if the seriousness of the offense committed so warrants, the Superintendent of Banks may require the board of administration, board of directors, or whoever acts in its stead, to immediately remove the persons to whom this article refers.

The sanctions imposed by the board of administration, board of directors, or whoever acts in its stead, shall be reported to the Superintendency of Banks within a time limit of three days counted from the notification to the sanctioned person.

Any natural person or juridical person that uses in its razón social or denomination, trade name or description of its business, as applicable, the words “banco”, “banquero”, “financiera”, “financiadora”, “operaciones bancarias”, “grupo financiero” or others derived from such terms, without being authorized in accordance with this Law, shall be sanctioned by the Superintendency of Banks with a daily fine of not less than one hundred nor more than five hundred fine units from the date of notification of the sanction and until it regularizes its situation.

The value of each “fine unit” shall be one dollar of the United States of America, or its equivalent in quetzales at the reference exchange rate established by the Bank of Guatemala, in effect on the date of the imposition of the sanction.