BRAZIL Law and Practice Contributed by: Thomas Gibello Gatti Magalhães, André Dágola Brostoline and Luisa Grespan Danhoni Neves, Magalhães & Zettel
1. Legal Framework 1.1 Key Laws and Regulations
are based on technical studies and recommen - dations from multilateral entities that formulate financial standards, often through public con - sultations. Law No 4,728/1965 is another important mile - stone, regulating the financial and capital mar - kets, while Law No 6,385/1976 regulates the securities market and creates CVM. The Brazilian Payment System (SPB) is an inte - grated and computerised system that allows financial transactions between economic agents. It is supervised by BCB and regulated by BCB Resolution No 150/2021. The Instant Payment System (SPI) is regulated by BCB Resolution No 195/2022, and has processed and settled instant payments in specific accounts at BCB since 2020. The regulatory framework that governs the banking sector in Brazil is complex and com - prehensive, reflecting the need to ensure the stability and efficiency of SFN. The main leg - islation establishes the basis for the operation of financial institutions, while entities such as CMN, BCB and CVM act as primary regulators in supervising the system. The evolution of SFN, coupled with the implementation of innovations such as SPI and the future digital currency (Drex), demonstrates the continuous improve - ment of the country’s financial infrastructure, in line with the best international practices. 2. Authorisation 2.1 Licences and Application Process CMN Resolution No 4,970/2021 establishes the normative guidelines to regulate the authorisa - tion procedures related to the operation of finan - cial institutions that depend on prior authorisa -
Law No 4,595/1964, also known as the Law on Policy and Monetary, Banking and Credit Institu - tions, established the National Financial System (SFN) and outlined the structure and attributions of the National Monetary Council (CMN). The pri - mary purpose of the law is to regulate the activi - ties of the banking sector, seeking to ensure the stability and security of the financial system and to promote transparency and consumer protec - tion. In addition, the legislation seeks to align with international standards and guidelines, rein - forcing Brazil’s commitment to the integrity and efficiency of the financial system. The Brazilian SFN comprises a set of institutions, rules and regulations that structure and regulate the country’s financial activities. The operation of SFN is based on the guidelines established by CMN, the Central Bank of Brazil (BCB), the Brazilian Securities and Exchange Commission (CVM) and insurance and social security regula - tory bodies, aiming to ensure efficiency in the allocation of resources and promote the stability of the financial system. SFN regulation is applied to financial institutions in a segmented manner, considering the size of their exposure to risks and the relevance of their international transactions. Therefore, insti - tutions with greater exposure to risks or with significant international transactions are subject to a more extensive and complex set of regula - tions (S1/S2), while those with less exposure to risks or with reduced external performance fol - low fewer complex rules, without prejudice to prudential requirements in both cases (S3/S4). The rules governing SFN are established by col - lective decisions of CMN, BCB and CVM. The proposals submitted to these collective bodies
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