Public Call Notice 90/2022, of May 12, 2022

The Central Bank of Brazil (“BACEN”) published Notice of Public Consultation 90/2022 (Edital de Consulta Pública 90/2022 – “Notice 90/2022”), on May 12, 2022, which  encompasses drafts of the specific normative acts concerning the regulation of the foreign exchange market in Brazil, in connection with Law No. 14,286/2021.

According to BACEN, the draft normative acts circulated with the Notice are aligned with the purposes of Law No. 14,286/2021, including the modernization, simplification and higher level of legal certainty of the foreign exchange market in Brazil. The Notice also takes into consideration international standards and practices and is aimed at improving the business environment in Brazil, as well as increasing integration of Brazilian companies into international markets.

The main amendments regarding the current regulation, proposed in Notice 90/2022, are:

(i)        Permission for the financial institution authorized to operate in the foreign exchange market (“FI”) to adopt its own criteria for requesting or waiving ancillary documentation required for carrying out foreign exchange transactions, subject to an analysis of the risks, the client’s profile and further characteristics of each transaction;

(ii)       Simplification of the classification process of the foreign exchange operations, considering that the purpose of the foreign exchange operation must be informed by the client of the FI. The goal is to reduce to 10 the number of classification codes for foreign exchange operations involving amounts of up to USD 50,000.00 and to reduce by approximately 30% the number of codes concerning transactions involving amounts greater than USD 50,000.00.

(iii)      Possibility to carry out foreign exchange operations in free format, provided that (i) the minimum required information and conditions of the foreign exchange transaction are observed, and (ii) the FI  is able to prove to BACEN that the parties are aware of and consent to the terms and conditions of the foreign exchange operation;

(iv)       Lifting of the prohibition of financial institutions headquartered in Brazil from carrying out loan transactions outside of Brazil using funds raised within the Brazilian market, provided that the legal and prudential requirements are met. Such measure will repeal Rule 24/1966, in force since the 1960s;

(v)        Standardization of non-resident and resident bank accounts concerning requirements for opening, maintenance and transfer of funds (Brazilian Reais), except that the non-resident bank account in Brazilian Reais will still require: (a) the need to maintain such accounts in banks authorized to operate in the foreign exchange market; (b) the disclosure of information on a monthly basis concerning operations exceeding BRL 1,000,000.00 (one million reais) and operations that are subject to foreign capital registration; (c) observing the limit of BRL 100,000.00 (one hundred thousand reais) in operations involving a ‘payment account’ opened with a ‘payment institution’; and (d)  compliance with the restriction to use the account on behalf of third parties, except in the case of local accounts held by foreign financial institutions. Additionally, the requirement for prior registration of non-resident accounts will be removed; and 

(vi)       Replacement of the current external interest rate indicator for the calculation of financial costs accruing over Brazilian reais advanced to the client, if the foreign exchange operation for the acquisition of foreign currency is cancelled. Additionally, payment will be waived in the event that there is cancellation of operations involving a maximum of USD 10,000.00 (ten thousand US Dollars), provided that it does not exceed 10% of the total amount of the purchasing price of the foreign currency.

 

BACEN stated that the proposed rules are not intended to amend the rules concerning non-resident accounts denominated in foreign currencies in Brazil. Currently, accounts denominated in foreign currency in Brazil are permitted only to specific segments, such as credit card issuers, agents authorized to operate in the foreign exchange market, tourism agencies authorized to operate in the foreign exchange market, mail carriers, insurance and reinsurance entities, among others.

Finally, Notice 90/2022 does not deal with interbanking foreign exchange transactions, private compensation of credits, elimination of the deadlines for the settlement of foreign exchange transactions, nor with denomination of payments performed in Brazil in foreign currency. According to BACEN, these matters will be discussed from 2023 onwards.

Participants can submit contributions to amend the text of the proposed drafts of normative acts to BACEN until July 01, 2022.

Notice 90/2022 can be read in full here.

Demarest’s Banking and Finance practice area is available to assist its clients in connection with the matter.