5th February 2020
João Claudio De Luca Junior & Paula Mariozzi - DDSA - De Luca, Derenusson, Schuttoff & Advogados
In recent years, the Brazilian securities market experienced a significant growth. Last year (2019), the foreign direct investment (FDI) in Brazil registered a 26% increase, as per the data provided by the United Nations Conference on Trade and Development (UNCTAD). MSI's Brazilian law member DDSA - De Luca, Derenusson, Schuttoff & Advogados takes a look at the newly issued guidelines for the prevention of money laundering and terrorist financing in the Brazilian securities market.
On 5ht December 2019, the Brazilian Securities Exchange Commission (Comissão de Valores Mobiliários – “CVM”) enacted a new instruction No. 617 (“ICVM 617”) (http://www.cvm.gov.br/legislacao/instrucoes/inst617.html) providing new guidelines for the prevention of money laundering and terrorist financing in the Brazilian securities market, revoking the previous ruling related to this matter (i.e., CVM Instruction No. 301/1999).
Note that ICVM 617 is applicable for individuals and legal entities which render securities market services related to the distribution, custody, intermediation or portfolio management; organized market managing entities and infrastructure operators of the financial market; securities market independent auditors; and capital markets advisors, rating agencies, securitization companies, non-resident investors’ representatives and bookkeeping agents, as per its Article 3 (“Agents”).
The main purpose of ICVM 617 is to establish the adoption of a risk-based approach, a new parameter of customer identification and registration – “know-your-client” – KYC rules, monitoring and reporting of suspicious transactions provided at ICVM 617 to competent authorities (i.e., CVM, Ministry of Justice and Public Security and Unidade de Inteligência Financeira – UIF, formally COAF), provision of sanctions and internationally cooperation by using the recommendations of Financial Action Task Force on Money Laundering and Terrorist Financing (FATF) (https://www.fatf-gafi.org/) – that Brazil has been a member of since 1999.
Additionally, ICVM 617 provides for certain new rules and definitions related to anti-money laundering and terrorist financing policies, as follows:
Finally, ICVM 617 will become effective on July 1st, 2020, except for the Articles 27 and 28 of ICVM 617 that provide sanctions imposed by United Nations Security Council Resolutions, as per the Law No. 13,810 of March 8, 2019, which became effective on the date of its publication.
DDSA - De Luca, Derenusson, Schuttoff & Advogados (DDSA) is a full service law firm based in Sao Paulo, Brazil with a deep knowledge of our clients’ businesses and different markets.
Our firm has adopted a global, multidisciplinary client management model, which addresses all of the areas required to solve our clients' varied demands. Our core values include quality, professionalism and ethics, always striving to offer a customised client service.
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