BRAZIL Law and Practice Contributed by: Eduardo Castro, Pedro Nasi and Gabriel Libanori, Machado, Meyer, Sendacz e Opice
4.3 Sources of Funds for Fiat Currency Loans Funding structures vary by type of regulated institu - tion. Pursuant to 2.1 Predominant Business Models and 2.2 Regulatory Regime , P2P loans are funded by the lenders themselves, without any credit risk underwrit - ing by the P2P lending company (SEP). On the other hand, direct lending companies (SCDs) have fundraising strategies that are basically limited to equity and credit assignment structures, being the latest type of credit fintech and the most common in the market. Traditional financial institutions (such as commercial banks) may raise funds via myriad alternatives, includ - ing deposit taking and debt issuance. 4.4 Syndication of Fiat Currency Loans Brazilian law and regulations admit the structuring of syndicated loans. Such transactions are typically driven by contractual structuring that follows the cred - it policy of each institution. Guarantees given under syndicated loans are usually shared by the creditors. Syndicated loans may also be cross-border and involve payments in foreign currency. Brazilian resi - dents are free to contract cross-border loans in any currency provided that the relevant reporting obliga - tions with the BCB are complied with by the borrower resident in Brazil. 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails Payment processors may either settle new payment rails (eg, closed-loop payment schemes, limited- purpose payment schemes) or participate in existing payment rails (eg, Pix, Mastercard, Visa) to operate in Brazil. The settlement of payment rails may imply the need for authorisation from the BCB to operate as a pay - ment institution in Brazil, either as an acquirer or as an e-currency issuer, depending on the functionalities
ver, compliance with CVM rules obliges intermediaries to implement internal controls, risk management pro - cedures and suitability assessments. Challenges remain, however – particularly in balancing technological innovation with regulatory safeguards. Automated trading tools and digital platforms must be integrated into existing regulated activities, ensur - ing that customer trades continue to benefit from the protections afforded by CVM oversight and the opera - tional reliability of B3. Regulatory attention is required to address new market practices and maintain inves - tor confidence. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities Generally, there are no major differences in the regula - tion of loans granted to individuals, small businesses and others, barring certain informational requirements that must be complied with in the context of transac - tions with consumers and certain small-sized compa - nies (eg, prior disclosure of the CET and VET), as well as certain limitations imposed on specific transactions (eg, interest rate limitations on payroll loans extended to retirees). On 3 January 2024, the interest rates and fees on rolling credit card debts of individuals were limited to 100% of the original amount of the debt by Law No 14,690 of 3 October 2020. 4.2 Underwriting Processes The BCB and CMN establish the requirements that must be observed by industry participants to eval - uate the credit rights and liquidity risk that may be incurred by each player. CMN Resolution No 4,557, of 23 February 2017 establishes the guidelines that must be observed with respect to the risk policy and measures that must be taken by financial institutions in Brazil. Following these guidelines, each institution has its own underwriting process.
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