BRAZIL Law and Practice Contributed by: Alessandra Martins and Amanda Blum Colloca, Machado, Meyer, Sendacz e Opice Advogados
4.4 Syndication of Fiat Currency Loans For Brazilian lenders, syndicated loans are not as common as cross-border loans. For national credit transactions, the regulation applicable is the credit policy of each institution. For cross- border loans, the applicable regulations are Resolution No 277 and Resolution No 278 of 31 December 2022( “Resolution 277/22” and “Resolution 278/22” , respectively). Pursuant to Resolution 278/22, Brazilians are free to con - tract loans in any currency. These loans must be reported to the BCB whenever they exceed USD1 million. There is no restriction on payment processors with respect to producing new payment rails. However, the Pix payment rails are typically used because of the payment transaction initiator, a payment institution regulated as explained in 2.2 Regulatory Regime . 5.2 Regulation of Cross-Border Payments and Remittances Cross-border remittances and payments can only be executed by institutions authorised by the BCB, namely banks (without limit), foreign exchange brokers, securities brokers/distribu - tors (up to USD500,000 per transaction) and payment institutions (up to USD100,000). Reso - lution 277/22 governs remittances and provides that institutions authorised to operate in foreign exchange must collect support documentation pertaining to their clients’ economic/financial capacity and the legality of the transaction, as well as provide all such information to the BCB. The focus areas of the regulation are control of 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails
the potential to reduce the debt of the average Brazilian citizen. 4.2 Underwriting Processes The BCB and CMN establish the requirements that must be observed by industry participants to evaluate the credit rights and liquidity risk that may be incurred by each player. CMN Resolu - tion No 4,557 of 23 February 2017( “Resolution 4,557/17” ) establishes the guidelines that must be observed with respect to the risk policy. Fol - lowing these guidelines, each institution has their own underwriting process. However, it should be noted that a common practice, especially for fintechs, is to assign their credit rights to credit rights investment funds ( fundos de investimento em direitos creditórios FIDCs) and securitisation companies, which acquire credit rights from fin - techs and financial institutions and assume the credit risk. 4.3 Sources of Funds for Fiat Currency Loans Pursuant to 2.1 Predominant Business Models and 2.2 Regulatory Regime , P2P loans involve funds that are deposited by one “investor” and taken by another market player, while for an SCD funds are deposited by the SCD’s controlling shareholders themselves. Also, as discussed in 4.2 Underwriting Processes , it is common for fintechs to assign their credit rights to FIDCs. Therefore, funds arising from credit rights owned by fintechs usually come from their own con - trolling shareholders, or from FIDC investors. Credit issued by traditional banks comes from the general public, where collecting funds from the general public and using such funds to grant additional loans are private activities, as provid - ed in Law No 4,595 of 31 December 1964( “Law 4,595” ).
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