Capital Markets | 5 Compliance Policies For Fund Managers, Financial Institutions and Fintechs Doing Business in Brazil

The “unbanking” process that Brazil is experiencing over the last 5 years is causing the accelerated growth of the business of fund raising, managing and investing third parties’ funds by fund managers, financial institutions and fintechs. 

With such boom in the asset allocation, there has been the need of close attention to the Compliance of each sector’s regulations to avoid the risk of fines, liabilities and criminal charges.  

We list below 5 of the key Compliance Policies and Codes that market players must pay attention to: 

1. Know Your Client Policy (KYC): Supervised with close look by the Brazilian Central Bank (BACEN) and the Brazilian Securities and Exchange Commission (CVM), the KYC Policy must establish the procedures to be followed by the Fintech to know its clients, including due diligence in their identification, qualification and classification. The procedures must include the obtention, verification and authenticity validation of the client’s identity information, including, when necessary, through confrontation of such information with private and public data base;

2. Data Protection Privacy Policy: Framed by the Brazilian Data Protection Law, the Data Protection Privacy Policy is a key item for financial and capital markets institutions and must establish the rules for collection, registration, storage, use, sharing and elimination of data collected from customers, employees and third parties related to the institution; 

3. Anti-Corruption Policy: Required by Federal Law, the Anti-Corruption Policy is another high level guidance and must prevent the institution, including shareholders, management, employees and outsourced service providers, from practicing harmful acts against domestic or foreign public administration; 

4. Code of Ethics and Conduct: Based on the Brazilian Anti-Corruption Law, Administrative Misconduct Law and certain resolutions, the Code of Ethics and Conduct must provide for the ethical principles and standards of conduct that are part of the way of acting and conducting the institution’s business with the most diverse stakeholders related to the company;

5. Money Laundering Prevention and Terrorism Financing Policy (PLDFT): Regulated especially by Brazilian Central Bank regulations and Federal Money Laundering Prevention, the PLDFT must provide that the institution, including shareholders, management, employees and outsourced service providers must adopt the best practices in contracting with customers and to prevent and combat money laundering and terrorist financing.

The Policies and Codes above are examples as to call the attention of fund managers, financial institutions and fintechs for the importance of the Compliance and risk assessment of requirements and regulations from BACEN, CVM and the other regulator of the Brazilian financial and capital markets.


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