Client Alerts 25/08/2021

New Brazilian Central Bank resolution on anti-money laundering will be effective next week

On July 27, 2021, Central Bank Resolution N. 119 (“BCB Resolution No. 119/2021“)[1] was published promoting amendments to Circular N. 3,978, effective as of October 1, 2020 (“BCB Circular N. 3,978/2020 “or “Circular“)[2], which provides for the policy, procedures and internal controls to be adopted by institutions regulated by the Central Bank, with the purpose of preventing the usage of the financial system to commit the crimes of “laundering “or concealment of assets, rights and values, and terrorism financing (and financing of weapons of mass destruction, as per the most recent global nomenclature already adopted by COAF – collectively, “PLD-FTP[3]).

The amendments made to BCB Circular N. 3,978/2020, whose effectiveness is still recent, are intended to facilitate compliance with the obligations introduced for regulated institutions. The Circular was published with the intention of improving PLD-FTP practices with specific requirements for obligated entities. Naturally, due to have only been recently in effect (since October 2020), the market is currently seeking to meet the new requirements and practices in development, which results in constant dialogue with the authorities.

The main change was the transfer of the requirement to identify residential addresses or headquarters of Clients from the registration to the qualification phase. Brazilian Central Bank opted to respond to requests after reported difficulties in obtaining addresses information in the initial registration phase, and the concern by regulated entities in adequately complying with the new rules introduced by the Circular[4]. This amendment will make it especially easier for operations where the level of interaction with the customer at the registration stage is lower, or whose associated value is low.

The Resolution also excluded the need to determine the final beneficiary of certain types of investment funds, such as those constituted as a closed condominium and whose shares are traded in an organized market, in addition to other hypotheses. The intention was to avoid difficulties in determining the final beneficiary and taking into account that such funds are also subject to PLD-FTP routines by their asset managers in accordance with CVM Instruction N. 617/2019.

Also, cash/valuables-in-transit (CVIT) companies shall now be considered as the carrier of funds for transport operations with an individual value greater than BRL 2,000.00 (two thousand Reais), provided that the company is duly registered and authorized for the activity.

Resolution BCB N. 119/2021 will be effective as of September 1, 2021.

[1], access on august 10, 2021, at 2:27 p.m.

[2], access on august 10, 2021, at 2:27 p.m.

[3] According to COAF Resolution No. 36/2021, access on august 10, 2021, at 4:35 p.m.

[4], access on august 11, 2021, at 10:52 a.m.

Author: partner Bernardo Viana