BRAZIL Law and Practice Contributed by: Alessandra Martins and Amanda Blum Colloca, Machado, Meyer, Sendacz e Opice Advogados
2.4 Variations Between the Regulation of Fintech and Legacy Players Traditionally, the regulation applicable to fintech industry participants is lighter than the regulation applicable to legacy players, such as traditional banks. However, there is currently a tendency in the Brazilian regulatory framework towards making the regulation more similar, and to apply criteria based on risk instead of focusing on whether the institution is a traditional bank or a fintech. One example of this is the rules for management compensation, which used to be applicable only to financial institutions but are also now applica - ble to payment institutions. Another example is the licensing process. The licensing of financial institutions usually requires evidence and proof, while the licensing of payment institutions is a more declaratory process, where the BCB asks for evidence as needed. However, changes were recently made to make these processes more similar, and there are now very few differences between them. 2.5 Regulatory Sandbox Brazil had a regulatory sandbox within the scope of the BCB, CVM and Superintendence of Pri - vate Insurance ( Superintendência de Seguros Privados; SUSEP) that had a selection process for innovative projects. Many of these projects are still ongoing, but the regulatory sandbox is no longer open for new participants. Now, the regulatory authorities commonly allow new mar - ket players to “touch base” and open dialogues about new business models and the potential
ments but not receiving funds from the issuer of the payment instrument – instead, they receive finds from acquirers (which are essen - tially payment institutions); • electronic foreign exchange (eFX) service providers collect Brazilian currency from end users that will acquire goods and services abroad and enter into foreign exchange trans - actions with regulated financial institutions; and • BaaS providers and banking correspond - ents leverage the regulatory licence of other financial or payment institutions to mediate the offer of financial products and services, such as loans, foreign exchange and payment instruments, through white-label or banking correspondence solutions. 2.3 Compensation Models The BCB establishes caps and baskets for charging fees for financial products and servic - es, and for payment services. Concerning the caps and baskets, financial and payments ser - vice providers are free to obtain compensation from their customers and partners. With respect to disclosure, the general rule observed in the Brazilian financial and payment systems is that the end user must be informed of the effective total amount of the transaction, which includes the spread charge, on top of any other fees and taxes incurred. Fintechs are subject to the Brazilian Consumer Protection Code, which requires them to disclose to the individuals – and sometimes the compa - nies – that are their end users clear information about the customer attendance service ( serviço de atendimento ao cliente SAC), for example.
regulatory requirements applicable. 2.6 Jurisdiction of Regulators
The Brazilian financial system is divided into the following areas: (i) currency, credit, capital and foreign exchange, with the CMN as the normative
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