Central Bank of Brazil Instruction Normative No. 444 of December 21, 2023

INSTRUCTION NORMATIVE BCB NO. 444, OF DECEMBER 21, 2023

Amends Instruction Normative BCB No. 33, of October 29, 2020, which establishes the procedures for sending Document 5050 (DRO – Operational Risk Statement) as provided for in Circular No. 3,979, of January 30, 2020.

The Heads of the Department of Financial System Monitoring (Desig), the Department of Strategic Management and Specialized Supervision (Degef), the Department of Supervision of Cooperatives and Non-Bank Institutions (Desuc), and the Department of Banking Supervision (Desup), in the exercise of the authority conferred upon them by Article 23, item I, letter “a”, of the Internal Regulations of the Central Bank of Brazil, annexed to Resolution BCB No. 340, of September 21, 2023, based, respectively, on Articles 85, item I, letter “b”, 82, item III, letter “b”, 91, item I, letter “a”, and 88, items I and II, of the aforementioned Regulations, and considering the provisions of Resolution CMN No. 4,557, of February 23, 2017, Circular No. 3,979, of January 30, 2020, and Resolutions BCB Nos. 197, of March 11, 2022, 265, of November 25, 2022, and 306, of March 23, 2023,

R E S O L V E

Art. 1º Instruction Normative BCB No. 33, of October 29, 2020, shall enter into force with the following alterations:

“Art. 1º Financial institutions and other institutions authorized to operate by the Central Bank of Brazil classified in Segment 1 (S1) and Segment 2 (S2), in accordance with Article 2º of Resolution No. 4,553, of January 30, 2017, and prudential conglomerates classified as Type 3 classified in S2, in accordance with Resolution BCB No. 197, of March 11, 2022, must send to the Central Bank of Brazil the information contained in the operational risk database as provided for in Circular No. 3,979, of January 30, 2020, semi-annually, through document 5050 - Operational Risk Statement (DRO), observing the conditions described in the annex to this Instruction Normative BCB.

§ 1º For institutions that are part of a prudential conglomerate, defined in accordance with Resolution CMN No. 4,950, of September 30, 2021, and Resolution BCB No. 168, of December 1, 2021, the submission referred to in the caput must be carried out in a single file, by the lead institution of the conglomerate.

§ 2º The provisions of this Instruction Normative do not apply:

I - to payment institutions not belonging to a prudential conglomerate; and

II - to Type 2 prudential conglomerates.” (NR)

“Art. 2º
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II - from the June 2021 base date, by institutions belonging to S2; and

III - from the June 2024 base date, by lead payment institutions of prudential conglomerates classified as Type 3 classified in S2.” (NR)

“Art. 4º
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§ 1º For prudential conglomerates and for institutions not belonging to conglomerates, constituted after the above dates, the submission of document 5050 is due from the date of registration of the activation status of the said conglomerate or institution in the Information System on Entities of Interest of the Central Bank (Unicad), as provided for in Resolution BCB No. 209, of March 22, 2022.

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“Art. 5º
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§ 1º The “retail” business unit includes operations classified in the credit portfolio corresponding to retail in accordance with Resolution BCB No. 229, of May 12, 2022, and residential real estate credit.

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“Art. 9º
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I - Article 5º:

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d) the identification, when applicable, of operational losses linked to: credit risk, market risk, social risk, environmental risk, climate risk, and cyber risk, provided for in item IX;

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“Art. 10.
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Sole paragraph. The indication referred to in the caput must be recorded and kept updated in the Information System on Entities of Interest of the Central Bank (Unicad), as provided for in Resolution BCB No. 209, of 2022.” (NR)

Art. 2º The Annex to Instruction Normative BCB No. 33, of October 2020, shall enter into force with the following alteration:

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Institutions obliged to submit:
Financial institutions and other institutions authorized to operate by the Central Bank of Brazil classified in Segment 1 (S1) and Segment 2 (S2), in accordance with Article 2º of Resolution No. 4,553, of January 30, 2017, and prudential conglomerates classified as Type 3 classified in S2, in accordance with Resolution BCB No. 197, of March 11, 2022.

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Art. 3º The sole paragraph of Article 1º of Instruction Normative BCB No. 33, of 2020, is hereby repealed.

Art. 4º This Instruction Normative enters into force on January 1, 2024.

GILNEU FRANCISCO
ASTOLFI VIVAN ADALBERTO FELINTO
DA CRUZ JÚNIOR

Head of Desig Head of Degef

HAROLD PAQUETE
ESPÍNOLA FILHO BELLINE SANTANA

Head of Desuc Head of Desup

NOTE

Circular No. 3,979, of January 30, 2020, established that financial institutions and other institutions authorized to operate by the Central Bank of Brazil, classified in Segment 1 (S1) and Segment 2 (S2), in accordance with Resolution CMN No. 4,553, of January 30, 2017, must constitute and update the Operational Risk database and send to this Autarchy the information relating to operational risk events. Instruction Normative BCB (IN BCB) No. 33, of October 29, 2020, in turn, establishes the procedures for the semi-annual submission of this information through document code 5050 - Operational Risk Statement (DRO).

2. On March 11, 2022, Resolution BCB No. 197 was published, which classifies the prudential conglomerate integrated by at least one institution that performs payment services and establishes segmentation for prudential conglomerates classified as Type 3 for the purposes of applying proportional prudential regulation. With the issuance of Resolution BCB No. 265, of November 25, 2022, which provides for the risk management structure, the capital management structure, and the information disclosure policy of a prudential conglomerate classified as Type 3 classified in Segment 2 (S2), Segment 3 (S3), or Segment 4 (S4), on March 23, 2023, Circular No. 3,979, of 2020, was amended by Resolution BCB No. 306 to include conglomerates classified as Type 3 classified in S2 in the list of institutions that must constitute and update the Operational Risk database and send to the Central Bank the information relating to operational risk events.

3. In light of this, the present Instruction Normative aims to:

I - adapt Instruction Normative BCB No. 33, of 2020, to the alterations of Circular No. 3,979, of 2020, made by Resolution BCB No. 306, of 2023, in order to:

1. include the Type 3 conglomerate classified in S2 in the list of institutions that must send the DRO;
2. separate socio-environmental risks linked to operational losses into social risk, environmental risk, and climate risk.

II - update normative references, without alteration of merit.

4. Decree No. 10,411, of June 30, 2020, regulates the carrying out of regulatory impact analysis (AIR) as a prerequisite for the issuance of normative acts. However, in its Article 4º, the aforementioned decree establishes the hypotheses for exemption from carrying out AIR. The present IN BCB falls under the hypotheses provided for in items II, normative act intended to regulate rights or obligations defined in a hierarchically superior norm that does not allow, technically or legally, different regulatory alternatives; III, normative act considered low impact; and IV, normative act that aims at the update or repeal of norms considered obsolete, without alteration of merit.

5. Given the inclusion of the Type 3 conglomerate in the list of entities that must send information relating to operational risk events to the Central Bank, as established in Resolution BCB No. 306, of 2023, the Central Bank has no alternative but to establish a procedure for the submission of this information, which justifies the classification under item II of Article 4º of Decree No. 10,411, of 2020. Furthermore, as the DRO is the Document used by other institutions to send this type of information, it was concluded that the inclusion of Type 3 conglomerates in the list of institutions required to submit the DRO is the simplest and least burdensome implementation approach, both for the institutions and for this Central Bank, which also justifies its classification under item III of Article 4º of the aforementioned Decree. Finally, considering the separation of socio-environmental risks linked to operational losses into social risk, environmental risk, and climate risk, as well as the normative updates, all without alteration of merit, we understand that the present IN BCB also falls under item IV of Article 4º of the aforementioned Decree.

6. Thus, based on items II, III, and IV of Article 4º of Decree No. 10,411, of 2020, we understand that the issuance of the present IN BCB is exempt from carrying out AIR.

GILNEU FRANCISCO ASTOLFI VIVAN ADALBERTO FELINTO DA CRUZ JÚNIOR Department of Monitoring of the Department of Strategic Management and Financial System (Desig) Specialized Supervision (Degef)

HAROLD PAQUETE ESPÍNOLA FILHO BELLINE SANTANA Department of Supervision of Department of Supervision Cooperatives and Non-Bank Institutions (Desuc)