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Banks, Financial Services, Fintechs and Digital Assets Newsletter No 2 – February 2023
March 13th, 2023
Central Bank of Brazil
BCB Resolution No. 289, January 25, 2023
Amends BCB Resolution No. 150, of October 6, 2021, which consolidates rules on payment arrangements, approves the regulation that provides for payment services within the scope of payment arrangements that are part of the Brazilian Payments System (“SPB“), and establishes the criteria that prevents such payment arrangements from integrating the SPB.
The Resolution entered into force on March 01, 2023.
BCB Resolution No. 290, February 08, 2023
Amends Resolution BCB No. 200, of March 11, 2022, which provides for the minimum requirements of Reference Equity (“PR”), Level I and Core Capital and for the Core Capital Increase of a prudential conglomerate classified as Type 3.
The Resolution entered into force on March 01, 2023.
BCB Resolution No. 291, February 08, 2023
Establishes procedures for the calculation of risk-weighted assets (“RWA“) linked to exposures to the risk of variation in the value of financial derivatives as a result of variation in the credit quality of the counterparty (“RWACVA“), and amends Circular No. 3,646, of March 04, 2013.
The Resolution will enter into force on July 01, 2023.
BCB Resolution No. 293, February 08, 2023
Amends the Regulation attached to BCB Resolution No. 1, of August 12, 2020, which governs the operation of Brazilian Instant Scheme (“Pix”) payment arrangements, in order to provide for the establishment of partnerships between Pix participants, as well as to regulate transitional provisions relating to criteria and conditions for outsourcing activities and for establishing partnerships between Pix participants; and amends Annex I of BCB Resolution No. 177, of December 22, 2021, which establishes the conditions and procedures to apply penalties within the scope of Pix, in order to adapt provisions regarding offenses that are subject to penalty.
The Resolution entered into force on March 01, 2023.
BCB Resolution No. 294, February 23, 2023
Amends BCB Resolution No. 32, of October 29, 2020, which establishes the technical requirements and operational procedures for the implementation of the Open Finance System in Brazil.
The Resolution will enter into force on April 01, 2023.
BCB Resolution No. 295, February 23, 2023
Provides for exemption from mandatory participation in Open Finance.
Institutions are exempted from mandatory participation in the Open Finance System, provided for in art. 6, item II, subitem “a”, of Joint Resolution No. 1, of May 04, 2020, provided that such account institutions:
(i) do not hold regular bank accounts for their clients through electronic channels; or
(ii) does not have clients that are individuals, micro entrepreneur individuals (MEI), micro businesses and small businesses, under Supplementary Law No. 123, of December 14, 2006.
The Resolution will enter into force on April 01, 2023.
Read BCB Resolution No. 295
BCB Resolution No. 296, February 23, 2023
Amends BCB Resolution No. 80, of March 25, 2021, which provides for the formation and operation of payment institutions, in order to expressly exclude from the effects of this Resolution the payment institutions that provide payment services exclusively within the context of payment arrangements in which the payment instrument is intended for the use of food allowances, for the payment of meals in restaurants and similar establishments or for the purchase of foodstuffs in commercial establishments.
The Resolution will enter into force on April 03, 2023.
BCB Normative Instruction No. 345, January 27, 2023
Amends BCB Normative Instruction No. 77 of February 11, 2021, which establishes procedures relating to the submission of documents and information, of responses to requirements and of appeals; to the formalization of requirements; to the communication of the decision; and to other reports relating to the Instruction and to the evaluation of authorization procedures carried out by the Financial System Organization Department (“DEORF”) and establishes other provisions.
The Normative Instruction entered into force on February 01, 2023.
Read BCB Normative Instruction No. 345
BCB Normative Instruction No. 347, January 31, 2023
Discloses version 6.4 of the document “Minimum Requirements for User Experience”, which integrates the Pix Regulation, under art. 2 of the Regulation annex to BCB Resolution No. 1, of August 12, 2020.
Changes in the new version include wording adjustments in chapters 9 and 10, Annex I of the document, as well as changes in illustrated examples and formatting.
The Normative Instruction entered into force on March 01, 2023 regarding the repeal addressed in item II of art. 2, and will enter into force on July 03, 2023 for the remaining provisions.
Read BCB Normative Instruction No. 347
BCB Normative Instruction No. 350, February 15, 2023
Amends provisions of BCB Normative Instruction No. 243, of March 16, 2022, which announces procedure requirements for direct participation in the Instant Payment System (“SPI”), for opening the Instant Payment Account (“PI Account”) and defines the maximum terms for validation and settlement of instant payment orders, provided for in the Regulation attached to BCB Resolution No. 195, of March 3, 2022.
The Normative Instruction will enter into force on March 01, 2023.
Read BCB Normative Instruction No. 350
BCB Normative Instruction No. 352, February 15, 2023
Amends BCB Normative Instruction No. 291, which establishes the required procedures to become a Pix participant, in order to adjust provisions referring to the registration stage, the confirmation stage, and the restricted operation stage; to include provisions regarding the transition regime; and to adjust the participation forms.
The Normative Instruction entered into force on March 01, 2023.
Read BCB Normative Instruction No. 352
BCB Normative Instruction No. 353, February 16, 2023
Provides for the procedure that must be followed by a certain credit union before such institution initiates operations within the Agricultural Activity Guarantee Program, relating to the use of Bank Reserve accounts.
The Normative Instruction entered into force on March 01, 2023.
Read BCB Normative Instruction No. 353
BCB Normative Instruction No. 354, February 16, 2023
Establishes procedures to report daily information to the Central Bank of Brazil regarding credit and debit balances and the financial volume of payment transactions carried out on the same day, as per art. 2, items I and III of BCB Resolution No. 208, of March 22, 2022.
In accordance with art. 1 of BCB Resolution No. 208, of 2022, the provisions of this Normative Instruction apply to:
(i) financial institutions; and
(ii) other institutions that are authorized to operate by the Central Bank of Brazil: (a) framed under Segment 1 (S1), Segment 2 (S2), no Segment 3 (S3) or Segment 4 (S4); or (b) virtual currency issuers.
The Normative Instruction will enter into force on July 01, 2023.
Read BCB Normative Instruction No. 354
BCB Normative Instruction No. 355, February 17, 2023
Establishes procedures to report daily information to the Central Bank of Brazil regarding savings deposits, provided for in art. 2, item II of BCB Resolution No. 208, of March 22, 2022.
In accordance with art. 1 of BCB Resolution No. 208, of 2022, the provisions of this Normative Instruction apply to:
(i) financial institutions; and
(ii) other institutions that are authorized to operate by the Central Bank of Brazil, framed under Segment 1 (S1), Segment 2 (S2), no Segment 3 (S3) or Segment 4 (S4).
The Normative Instruction will enter into force on June 01, 2023.
Read BCB Normative Instruction No. 355
National Monetary Council
CMN Resolution No. 5,060, February 16, 2023
Provides for the formation and operation of commercial banks and multiple-service banks.
The commercial bank is a financial institution whose main field of operation involves intermediating financial assets and custody of assets.
In turn, the multiple-service bank is a financial institution that provides at least two of the services below (one of them must be commercial or investment):
(i) commercial;
(ii) investment;
(iii) development;
(iv) mortgage;
(v) credit, financing and investment; and
(vi) lease-purchase agreement.
The Resolution entered into force on March 01, 2023.
CMN Resolution No. 5,061, December 16, 2022
Provides for the formation and operation of service confederations authorized to operate by the Central Bank of Brazil.
Service confederations are those formed exclusively by central credit unions to provide services that are relevant, supplementary or necessary for their subsidiaries or single cooperative subsidiaries, not including private services and operations provided by financial institutions.
The Resolution entered into force on February 16, 2023.
New foreign exchange law and technological innovations
Brazil’s new foreign exchange law (Law No. 14,286/21) entered into force in December 2022, after being approved and sanctioned at the end of 2021.
The new law was introduced by the Central Bank of Brazil (“BC”) and the National Monetary Council (“CMN”) in order to reduce red-tape procedures in equity and foreign exchange transactions. The new legislation is expected to:
(i) reduce expenses within the foreign exchange market;
(ii) increase the convertibility of the Brazilian real; and
(iii) ensure greater legal certainty in transactions.
In addition, the new foreign exchange law attracts foreign investors by reducing red-tape procedures to invest in shares or fixed-income in Brazil, which also simplifies the implementation of the international Pix – a resource that the BC has been evaluating, along with the digital Brazilian real. The latter is expected to be implemented over the next few years.
Law No. 14,286/21 is also expected to strengthen the participation of Brazilian institutions and the Brazilian real outside of Brazil, in addition to attracting foreign investment in Brazil, given that Brazilian legislation has been consistently updated according to technological innovations.
Registration of Quarterly Economic-Financial Statements (Declaração Econômico-Financeira) with the Central Bank – Base Date of December 31, 2022
Brazilian entities that receive foreign direct equity investment in any amount, and whose total assets amount to or exceed BRL 300 million must submit to the Central Bank of Brazil, by March 31, 2023, their economic-financial statements (Declaração Econômico-Financeira – DEF) as of the base date of December 31, 2022.
This submission is one of the obligations that are applicable to Brazilian entities that receive foreign direct investments, and any omission or delay to comply with such obligation may trigger the application of penalties by the Central Bank.
Declaration of Amounts, Property, Rights and Assets Held Abroad to the Central Bank
The annual declaration of Brazilian Capital held Abroad (“DCBE”) to the Central Bank, referring to the base date of December 31, 2022, must be submitted by April 05, 2023. The annual declaration must be submitted by all individuals and legal entities:
(i) that are resident, domiciled or headquartered in Brazil; and
(ii) that held, outside Brazil, amounts, property, rights and assets of any nature that amounted to or exceeded USD 1,000,000.00 on the base date of December 31, 2022.
WEBINAR – Means of Payment Information Statement
On March 21, 2023, we will host a webinar on the topic with our partners Christiano Chagas, Douglas Mota, Fabio Braga and Gisele Bossa. The specialists will address the Means of Payment Information Statement (“DIMP”), which will impact financial and payment institutions and agents, whether they participate or not in the Brazilian Payments System (“SPB”).
As of April 01, 2023, institutions must submit information through the DIMP regarding transactions carried out by individuals or legal entities that don’t pay the ICMS to tax authorities of respective state governments and the Federal District.
Subscribe and find out more here.
BC publishes guidelines for Digital Brazilian Real pilot project
The Central Bank of Brazil reviewed the Digital Brazilian Real guidelines through Vote 31/2023 and announced the development of the platform in order to carry out test transactions using the Digital Brazilian Real (“Piloto RD”). In this test phase, BC intends to evaluate the advantages of using the programming resources of multi-asset Distributed Ledger Technology (DLT) in tokenized asset transactions, taking into consideration the legal conditions of secrecy, data protection and prevention against money laundering. However, the test will be a simulation, which will not involve real operations.
Piloto RD plans for end users to participate through tokenized deposits, which are digital representations of deposits held by financial institutions (Ifs) or payment institutions (IPs). The Digital Brazilian Real pilot project will also involve Brazil’s National Treasury Secretariat (“STN”) and will include the issuance of Federal Government Bonds and the settlement of transactions involving these bonds with Delivery versus Payment (“DvP”) at the end-customer level.
Other highlighted guidelines include:
(i) Tokenized assets will follow their respective regulatory systems, so as to not generate asymmetry between the current and tokenized forms of these assets.
(ii) Emphasis on the development of a DLT that enables the registration of numerous types of assets and the incorporation of technologies such as smart contracts and programmable currency.
(iii) Goal of implementing rules regarding secrecy, data protection and prevention against money laundering.
Base requirements for Piloto RD tests are:
Multi-asset DLT – using a DLT-based platform that enables the registration of different types of assets (multi-asset funds), as well as the carrying out of transactions between such assets – the Piloto RD infrastructure will function as a “Multi-asset DLT”.
Assets: deposits from Bank Reserves, Settlement Accounts and the Treasury Single Account; demand deposits; payment accounts of payment institutions; and Federal Government Bonds. Access criteria regarding Bank Reserves or Settlement Accounts will be maintained according to the current regulations.
(i) Transactions: issuance, redemption and transfer of the assets mentioned above, as well as any financial activities resulting from negotiations. Transactions will include settlements in the (i) conditioned and (ii) simultaneous forms between registered assets, in order to ensure DvP at the end-user level (atomic settlement).
(ii) Essential functions: asset registration, settlement of transfers and protocols, as well as smart contracts required to carry out transactions proposed in Piloto RD.
The project will also include the creation of a forum to exchange information and manage expectations regarding the progress of Piloto RD and testing. The channel to be introduced during Piloto RD will also involve the Brazilian Securities and Exchange Commission (CVM) in the role of managing discussions regarding the tokenization of assets.
Open Finance completes two years with 15 million users and an established agenda
Two years after its launch, the Open Finance system has reached a milestone 15 million customers and 22 million active consents – and is set to progress in its development agenda. Currently, 800 institutions of all sizes, both mandatory and voluntary, participate in the Open Finance System, which was conceived as a medium to long-term project and aims to reduce information asymmetry and gradually stimulate competition.
According to the Central Bank, in 2023, participants of the Open Finance system are expected to:
(i) share data on new portfolios of products and services, such as investment, insurance, private pension and currency exchange;
(ii) implement functions tailored to legal entities; and
(iii) improve procedures involving data sharing and payment initiation.
It is worth highlighting, however, that the Open Finance system has already introduced numerous innovations, such as financial aggregators, which enable access to all banking products of an user through a single institution; improvement in the quality of customer credit scoring, thus improving credit portability; and payment initiators, which improve the customer’s payment experience in virtual platforms by automating certain steps of sharing process, such as switching from one cell phone application to another in order to to make a payment via Pix, for example.
Administrative and Judicial Decisions
Superior Court of Justice – STJ
Third Panel decides it is possible to suspend proof of claim until the existence of the debt and its amount are established in arbitration court
The Third Panel of the Superior Court of Justice decided that it is possible to suspend proof of claim in a judicial reorganization, until the existence of the credit itself and its respective value is defined in the Arbitration Court, in cases where there is a contractual clause providing for the resolution of the dispute through arbitration.
Such understanding was established after the confirmation of the appellate decision of the Court of Justice of São Paulo (“TJSP”), which suspended a company’s proof of claim in the reorganization process – with the subsequent denial of the company’s right to vote at the creditors’ meeting. The state court concluded that the documents attached to the records did not prove the claim, and that the debt still needed to be discussed in the arbitration court.
In a special appeal, the alleged creditor company claimed that there was indisputable proof in the records of the existence and value of its credit, which would dispense the initiation of arbitrationproceedings.
Justice Moura Ribeiro, in turn, highlighted that in repetitive appeal 1,051, the Second Section fixated the date of the credit triggering event as a reference to establish whether it should be included in the judicial reorganization. In addition, the rapporteur recalled that the STJ has already decided that, in addition to the jurisdiction of the court of reorganization over the enforcement of individual claims filed against companies in bankruptcy or judicial reorganization procedures, it is up to the court of cognizance (whether judicial or arbitration) to assess the existence, effectiveness and validity of the legal relationship established between the parties. The existence of such conditions was evaluated and, according to Moura Ribeiro, the São Paulo Justice, in a diligent manner, suspended the request for proof of claim and understood that it was necessary to prove the probability of the right in an arbitration court.
Read the appellate decision in REsp No. 1,774,649
Third Panel decides that CDC does not apply to working capital loan agreements
The Third Panel of the Superior Court of Justice unanimously decided that the Code of Consumer Protection (“CDC”) cannot be applied to the legal relationship established as a result of contracting of a loan to stimulate business activity.
The dispute – which originated in an action to review working capital loans, filed by a company against a credit union, aiming to review the charges agreed upon in bank credit bills – initiated through the claimant’s request based on art. 6, item VIII, of the CDC.
The Court of Justice of Mato Grosso (“TJMT”) maintained the first instance decision, ruling for the protection from CDC provisions, on the grounds that consumer law is applicable to credit unions, which are equal to financial institutions.
The rapporteur of the appeal, Justice Nancy Andrighi, recalled that the STJ understands that the CDC applies to credit unions, given that they are part of the National Financial System and, therefore, are equal to financial institutions. Andrighi emphasized, however, that although the appellant is a credit union, the defendant cannot be considered a consumer, given that the enforcement of CDC provisions would require the demonstration of vulnerability to the contracting business company, which was not proven. In addition, the loan was contracted for working capital, with the purpose of increasing productivity and profit, thus preventing the contracting company from being framed as a consumer, especially since taking into consideration that the contracting company is not the final recipient of the service.
Read the appellate decision in REsp No. 2,001,086
Third Panel decides in favor of issuing duplicate invoice calculated according to “take-or-pay” clause
The Third Panel of Brazil’s Superior Court of Justice (“STJ”) ruled for the possibility of issuing duplicate invoices in purchase and sale agreements calculating its value according to a take-or-pay clause. As a result, the collegiate board reversed the appellate decision of the Court of Justice of São Paulo, which annulled duplicate invoices issued based on such clause, on the grounds that it establishes a consumption threshold and does not consist in effective purchase and sale.
The take-or-pay clause consists in a contractual provision through which the buyer assumes the responsibility of paying for a minimum amount specified in the contract, regardless of whether the input is delivered or consumed, or not – in other words, one of the parties assumes the obligation to pay for the minimum quantity of goods or services made available, regardless of fluctuation in its demand.
According to the judge, unlike the penalty clause, the take-or-pay clause does not presume the non-performance of the main obligation, but is part of the obligation, given that it establishes the amount to be paid for the provision of a specific volume of products and services, and is therefore of obligatory nature. Notwithstanding the above, the purpose of the contracting parties in stipulating the clause must be evaluated in each case, under art. 112 of the Brazilian Civil Code.
In the case in question, Justice Nancy Andrighi stated that the duplicate invoice is a causal credit instrument, issued based on commercial purchase and sale or provision of services, as provided for art. 481 of the Civil Code, given that there is an obligation to supply a certain amount of gas in exchange for a certain amount of money. As such, taking into consideration obligatory nature of the take-or-pay clause, the insertion of this type of negotiating provision in the contract does not distort the legal business. Therefore, it is possible to issue a duplicate invoice based on a purchase and sale agreement according to the take-or-pay clause.
Read the appellate decision in REsp No. 1,984,655
São Paulo Court of Justice
Bank will indemnify victim of credit card fraud outside Brazil
The 21st Chamber of Private Law of the São Paulo Court of Justice maintained the judgment of the 5th Civil Court of the Regional Forum of Pinheiros, which sentenced a bank to pay pecuniary and non-pecuniary damages to a client due to credit card fraud.
Records show that, in February 2022, the claimant identified a debit balance resulting from purchase that was not carried out by such claimant. Such purchase involved a transaction in EUR in an establishment outside Brazil, resulting in a tax on financial transactions (IOF) being charged, which compromised such claimant’s overdraft limit.
According to the decision rendered within the scope of Appeal No. 1002473-40.2022.8.26.0011, the financial institution was expected to have identified such fraud, given that the amounts involved in the purchase diverged significantly from the claimant’s spending patterns. As such, the defendant’s error was made clear in the provision of services to the claimant – due to having failed to identify the suspicious transaction – thus violating the duty to provide services with security and care.
Due to the objective responsibility resulting from damage suffered by the claimant, pain and suffering damages were in order, given that the events extended beyond mere annoyance, ultimately resulting in a restriction in the claimant’s bank account, as the bill was set for automatic debit payment.
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