The Central Bank of Brazil (BCB) published, on June 29, 2023, the Normative Instruction BCB 397 (IN BCB 397/23), which amended IN 103/21, to disclose the procedures, documents, deadlines and information necessary for the investigation of authorization requests related to the operation of payment institutions, in addition to providing for other topics.

The edition of IN BCB 397/23, which entered into force on July 1, 2023, constitutes an important advance in the flexibility of the foreign exchange market in Brazil and is part of the list of measures that have been adopted by the Central Bank since the reform of the legal framework of the foreign exchange market, approved in 2021 with the edition of Law 14,286/21.

By promoting changes in IN BCB 397/23, the Central Bank took the opportunity to regulate requests for authorization by payment institutions to operate in the foreign exchange market, in line with the provisions of article 29, item III, of Resolution BCB 277/22.

With the regulation, payment institutions authorized to operate by the Central Bank as issuers of electronic money, issuers of postpaid payment instrument and / or accreditation can request authorization to operate in the foreign exchange market.

However, payment institutions that obtain authorization to operate in the  foreign exchange market in the form of Resolution BCB 277/22 will be subject to the limitations established in the regulations.

According to article 29, item III, of BCB Resolution 277/22, payment institutions authorized to operate in the foreign exchange  market may only execute:

  • foreign exchange operations with clients for prompt settlement of up to US$100,000[1] or its equivalent in other currencies, and transfers relating to the trading of derivative financial instruments abroad are not permitted; and
  • operations for ready settlement in the interbank market, arbitrations in the country and arbitrations with abroad.

According to IN BCB 397/23, payment institutions that wish to request authorization from the Central Bank to operate in the foreign exchange market must submit, within 15 days of the respective act or resolution, the following documents:

  • application; and
  • reasoned justification that proves the economic and financial viability of the enterprise, which must contain, at least:
    • the impacts of a strategic nature, explaining, if applicable, the new strategic objectives and market opportunities that justify the operation;
    • the impacts of an operational nature, explaining, if applicable, the changes in the standards and structure of corporate governance, internal controls, risk management, and in the procedures and controls for the detection and prevention of operations whose characteristics may indicate the existence of the practice of the crimes typified in Law 9,613/98, as amended;
    • the impacts of an economic-financial nature, explaining the estimates for the critical variables such as rates and average values of operations, service tariffs, as well as the expected results;
    • the impact of the operation on the operational limits established in the regulations in force; and
    • the deadline for the start of activities with the operation, after authorization.

In the same way that IN BCB 397/23 regulated requests for authorization of payment institutions to operate in the foreign exchange market, the same standard also regulated requests for cancellation of authorization for payment institutions to operate in the foreign exchange market.

Such request for cancellation must be instructed within 15 days of the respective act or resolution, with the following documents:

  • application; and
  • a statement that the exchange operations that are private or permitted to the institution have been settled or transferred.

 

[1] The mentioned value limit: (a) does not prevent the execution of an exchange operation related to payment or receipt installments provided for in a business disbursement schedule with a total value higher than the aforementioned limits; and (b) does not apply when the payment institution authorized to operate in foreign exchange is the buyer and seller of the foreign currency and is acting to fulfill obligations arising from the operations of its customers.