BRAZIL Law and Practice Contributed by: Alessandra Martins and Amanda Blum Colloca, Machado, Meyer, Sendacz e Opice Advogados
the obligation for these entities to hire independ - ent auditors. Other players that conduct reviews or require associates to have their practices reviewed include the Brazilian Federation of Banks ( Feder- ação Brasileira de Bancos FEBRABAN), ANBIMA and the Brazilian Foreign Exchange Association ( Associação Brasileira de Câmbio ABRACAM). It should be noted that card scheme settlors must also conduct audits and monitor the practices of participants in their schemes, including issuers, acquirers, sub-acquirers and any other partici - pants. 2.13 Conjunction of Unregulated and Regulated Products and Services Usually, institutions regulated by the BCB can only conduct the activities listed in the specific regulation applicable to them in their corporate purpose statement. These institutions can only conduct activities that are supplementary to their core business – ie, the regulated activity. However, some industry players’ accounts offer additional services to their clients, such as the possibility of topping up their mobile phones and obtaining travel miles, amongst other services. Furthermore, some players include other entities as part of their economic group, offering ser - vices such as marketplaces. 2.14 Impact of AML and Sanctions Rules All Brazilian public and private entities, and individuals, must observe Law No 9,613 of 3 March 1998 (the “AML Law” ), which establishes money laundering crimes, and Law No 13,260 of 16 March 2016, which establishes terrorism crimes (the “CTF Law” ). These laws also pro - vide for the actions that must be taken whenever there is suspicion of money laundering or ter - rorism financing. The AML Law also created the Council for Financial Activities Control ( Conselho
de Controle de Atividades Financeiras COAF), which is the authority that oversees reporting in case of suspicion regarding money laundering and terrorism financing. For fintechs, the BCB issued Circular Letter No 4,001 on 29 January 2020( “Circular Letter 4,001” ), which specifies the operations and situations that could be seen as constituting money laundering or terrorism financing. Fintech companies must report sus - picions to COAF, regardless of whether they are regulated. Regulated entities report through the BCB’s system, and unregulated entities report directly to COAF. 2.15 Financial Action Task Force Standards In general, the AML and sanctions rules issued by the BCB and CMN follow the guidelines and standards provided by the Financial Action Task Force (FATF), including the risk-based approach and the overall standards. However, the specific thresholds and elements provided by FATF are not always followed. 2.16 Reverse Solicitation Brazilians are not restricted from sending funds to other jurisdictions to use however they please. It is possible to open accounts in other jurisdic - tions and use such funds as needed, including for investments, general payments, etc. Such accounts are usually marketed to Brazilian consumers as “global accounts” , enabling the account holder to maintain funds in many differ - ent currencies. The main requirements for Brazil - ians to top up their global accounts are to con - duct a foreign exchange transaction to remit the funds abroad, collect the applicable taxes and report the holding of accounts abroad through the Declaration of Brazilian Capital Abroad (DCBE). It should be noted that, in general, for public offerings of securities and investments to Brazilians, prior approval must be obtained
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