BC opens public consultation to regulate the denomination of authorized institutions

On February 13, 2025, the Central Bank of Brazil (“BC”) published Public Consultation Notice No. 117, which proposes enacting a joint resolution with the National Monetary Council (“CMN”) providing for the denomination of institutions authorized to operate by the BC (“ECP No. 117/2025”).

As announced, the measure aims to provide greater transparency and facilitate public access to financial, consortium, and payment services.

The draft resolution placed for public consultation includes a provision stipulating that institutions must adopt, in their denominations, expressions that unequivocally indicate their business scope, ensuring that they are aligned with the activities authorized by the BC. The definition of “denomination” in the proposal encompasses not only the corporate name but also trade names, trademarks, and internet domains.

Regarding the denomination of entities authorized to operate by the BC, the regulation intends to prohibit using terms and expressions that refer to activities for which the institution does not have authorization or suggest that the institution is engaged in activities other than those authorized by the BC. However, prudential conglomerates would be allowed to use terms in their public identifications that refer to the activity, the authorized category, or even the name of one of the institutions that make up the conglomerate. These institutions can incorporate the conglomerate’s name into their names as long as they include a specific term indicating the operating authorization granted by the BC.

A significant issue for the service provision market in partnership with authorized institutions concerns the prohibition proposed by the BC that such institutions carry out activities involving financial and payment products and services for entities not regulated by the BC, by using denominations that refer to activities subject to prior authorization by the BC or that convey the impression to the public that these are activities carried out by regulated entities.

The resolution proposed by ECP No. 117/2025 also suggests that authorized institutions must clearly inform, in their communication and service channels, the specific activities for which they have been authorized to operate, in addition to the financial, consortium, or payment services authorized and the prudential conglomerate to which they belong (if applicable).

Finally, ECP No. 117/2025 establishes that institutions in non-compliance with the proposed new regulations must submit a transition plan to be analyzed by the BC within 180 days of the resolution’s entry into force. It is worth noting that the resolution still must specify, among other topics, the individual deadline for complying with the proposed regulations.

Suggestions and comments can be submitted to the BC through the Participa Mais Brasil portal by May 31, 2025.

Demarest’s Banking and Finance team is monitoring developments regarding this topic and remains available to assist our clients and partners with any clarifications that may be necessary.