Secondary legislation to the Law to Regulate the Financial Technology Institutions (Fintech Law).
In accordance with the terms specified for such effect in the Law to Regulate the Institutions of Financial Technology (“Fintech Law”), published in the Official Federal Gazette on March 9th of the current year, on September 10th, 2018, the General provisions applicable to the Institutions of Financial Technology, the General provisions referred to in Article 58 of the Law to Regulate the Institutions of Financial Technology (the “Provisions”), and the Circular 12/2018 destined to the Electronic Funds Transfer Institutions, regarding the General provisions applicable to the operations of the Electronic Funds Transfer Institutions (the “Circular”) were published in the Official Federal Gazette.
The Provisions seek to establish a regulatory framework applicable to the organization of Financial Technology Institutions (the “ITF”), as well as to the operation of the institutions of collective funding (better known as “Crowd funds”), in order to grant legal certainty and protection to the financial stability of their users.
Having said that, the Provisions regulate matters that are applicable to the ITFs, such as: (i) requirements to request its authorization; (ii) the minimum capital they must have; (iii) the limits of the reception of cash resources and transference of funds; and (iv) matters related to their accounting.
On the other hand, aspects related to the institutions of collective funding are regulated, such as: (i) matters related to the electronic record of risks; (ii) the methodology to evaluate, select and rate the applicants and the projects; (iii) the limits to the resources this institutions can held on behalf of their clients; (iv) the written powers of attorney (mandatos) and commissions they enter into; and (v) matters related to their Business Continuity Plan, as such term is defined in the Provisions.
Additionally, the Provisions establish rules that the ITFs must follow in the subject of prevention of operations with resources from unlawful origin and financing of terrorism, recognizing that nowadays financial services based on technological innovations are rendered, which may ease the operations with resources from unlawful origin. For this purpose, the Provisions establish obligations on behalf of ITFs such as, among others: (i) the design and implementation of methodology to evaluate the risks derived from the services they render; (ii) an effective methodology to identify their clients and classify the risk level of each one of them, as well as to; (iii) modify its internal structure in order to have a “Compliance Officer” and a “Commission for Communication and Control” specialized in matters of prevention of operations with resources from unlawful origin and financing of terrorism.
Finally, the Circular has the purpose of securing the good functioning of the payment systems and the healthy development of the financial system, as well as to protect the interests of the general public, in a way that such Circular establishes a regulatory framework in order to take advantage of the benefits of the efficiency that the Institutions of Electronic Funds Transfer may contribute. For this reason, the Circular establishes the requirements that these institutions must fulfil, specifically regarding subjects related to the issuing and administration of these Institutions.
At Acedo Santamarina we have a solid regulatory practice and we are ready to assist our clients regarding the operation of ITFs and the prevention of operations with resources from unlawful origin and the financing of terrorism. If you need more information, please contact Andrés Acedo at firstname.lastname@example.org or Laura Gabriela Castillo at email@example.com.