BRAZIL Law and Practice Contributed by: Eduardo Castro, Pedro Nasi and Gabriel Libanori, Machado, Meyer, Sendacz e Opice
• adopt internal policies, procedures and controls compatible with the size of the company and the volume of its operations, allowing it to comply with the AML Law; • register itself (and maintain such registration) with the competent regulatory entity, or in its absence, with the Council for Financial Activities Control ( Conselho de Controle de Atividades Financeiras COAF); • comply with requests made by the COAF in a timely manner, as set forth by the COAF; and • report to the COAF in a timely manner suspicious transactions or transactions that reach certain thresholds (in the latter case, regardless of the suspiciousness of the transaction). According to the AML Law, the rendering of specific services or offering of specific products – including the issuance of credit cards, the rendering of custody services and financial intermediation – triggers the need to comply with AML obligations and regulations enacted by the competent authority. Fintechs authorised to operate by the BCB are subject to BCB Circular No 3,978/20 and related rules enacted by the BCB, while non-regulated fintechs must com - ply with COAF Resolution No 36/21 and other key rules depending on their business model. 2.15 Financial Action Task Force (FATF) Standards AML and sanctions rules issued by the BCB are generally aligned with the guidelines and standards provided by the Financial Action Task Force (FATF), especially the adoption of a risk-based approach and the overall standards. 2.16 Reverse Solicitation The offering of banking products and services by for - eign financial institutions to residents of Brazil on a cross-border basis (ie, without a local presence) is not entirely regulated yet, leading to uncertainties as to the limits within which such activity may be conducted in a safe and risk-free manner. For the time being, experience shows that any foreign financial institution engaged in such activities should take into account the need:
• to comply with the rules governing the offering of securities in Brazil; • to perform banking activities in consistency with sound market practices; • to comply with foreign exchange, tax and money laundering regulations, as applicable, particularly when the investments require the conversion of Brazilian currency into foreign currency; and • for such activity to be conducted in a manner that avoids incentivising the outflow of local savings, which could be viewed as potentially harmful to the local economy or financial system. 3. Robo-Advisers 3.1 Requirement for Different Business Models Robo-advisers are not directly regulated by Brazilian authorities as standalone entities. Therefore, different regulatory implications may arise depending on the regulated activities performed by the automated tool. Consequently, legal and regulatory responsibility falls on the entities supervised by the CVM and their statu - tory officers when using robots, including for any non- compliance with applicable rules enacted by the CVM related to portfolio management, investment advice and suitability in respect of product distribution. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Incumbent institutions that choose to use automated tools and robot solutions typically have to implement them within the framework of existing regulated activi - ties and ensure compliance with current regulations, as mentioned in 3.1. Requirement for Different Busi - ness Models . 3.3 Issues Relating to Best Execution of Customer Trades Intermediary institutions regulated by the CVM are generally required to act in the best interest of their clients, ensuring that trades are carried out at market prices in a manner that is efficient, transparent and secure. The centralised trading and clearing mecha - nisms of B3 provide an infrastructure that reduces set - tlement risk and enhances investor protection. Moreo -
106 CHAMBERS.COM
Powered by FlippingBook