How To Do Crossborder Banking Operations In Brazil - Introduction

The banking activity is severely regulated in the Federative Republic of Brazil ("Brazil"). The legal framework is basically contained in Law No. 4595 of December 31, 1964 (the "Banking Law"), as amended by Decree No. 1089 of March 17, 1994, and Decree-Law No. 2627 of September 26, 1940. The matter is also governed by a complete set of resolutions, circular letters, instructions and rulings of the Central Bank of Brazil ("Banco Central do Brasil", hereinafter referred to simply as "Bacen"). Bacen has consolidated all the rules applicable to financial institutions into A Manual of Rules and Instructions ("Manual de Normas e Instrucoes - MNI").

The Brazilian Financial System consists of the National Monetary Council ("Conselhho Monetario Nacional - CMN"), Bacen, Banco do Brasil SA, the National Economic and Social Development Bank ("Banco Nacional de Desenvolvimento Economico e Social - BNDES") and all other public and private financial institutions duly authorised by Bacen.

The CMN is the senior agency of the Brazilian Financial System and is responsible for the currency and credit policies. The role of Bacen is to implement the policies laid down by the CMN. Bacen is responsible for controlling and supervising all public and private financial institutions and its approval is required before any such institution may set up or transfer its principle place of business or any of its branches (whether in Brazil or abroad) or effect any corporate reorganization such as merger or consolidation.

Financial institutions are defined as public or private corporations whose principle or secondary business is the collection, brokerage or investment of financial resources belonging to themselves or to third parties (Article 17 of the Banking Law). Individuals who undertake any such business, either regularly or sporadically, are regarded as financial institutions for the purposes of the Banking Law.

The content of this article is intended to provide a general guide to the subject matter. A specialist's advice should be sought in order to provide professional advice on a case to case basis which will meet specific circumstances.

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