Circular Letter CVM/SIN 05/15

SECURITIES COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5th and 23-34th Floors – Center – Rio de Janeiro - RJ – ZIP: 20050-901 – Brazil Tel.: (21) 3554-8686 - www.cvm.gov.br Circular Letter No. 5/2015/SIN/CVM Rio de Janeiro, July 16, 2015.
To portfolio administrators, credit risk rating agencies, consultants, and providers of representation and custody services to non-resident investors.
Subject: Guidelines on internal routines and controls related to the prevention of money laundering and terrorist financing (PLDFT) – CVM Instruction No. 301/99 and amendments.

Dear Sir/Madam,

1. The dissemination of this Circular Letter has as its main objective to expose the interpretation of this technical area regarding the best way to comply with the determinations imposed by CVM regulation for the prevention of money laundering and terrorist financing (“PLDFT”), in the activities of portfolio administration, credit risk rating agencies, consulting, and provision of representation and custody services to non-resident investors.

2. The document will begin with a presentation of general considerations regarding the scope and applicability of PLDFT regulation to market participants supervised by this Superintendency, and on the compliance with obligations provided in the regulation, such as, for example, the communications provided for in articles 7 and 7-A of the aforementioned Instruction.

3. In the sequence, details related specifically to the compliance with the regulatory requirements by each of these activities will be exposed.

GENERAL CONSIDERATIONS
SCOPE AND APPLICABILITY

4. The crime of money laundering can be defined as a set of commercial or financial operations that seek the incorporation, into the country's economy, in a temporary or permanent manner, of resources, assets, and values of illicit origin, through a dynamic process that involves, theoretically, three independent phases that, not infrequently, occur simultaneously, namely 1:
   Placement, Concealment, and Integration.

5. Thus, by the very nature and objective of the illicit activity that is intended to be combated, the agent who makes use of a money laundering process always seeks to avail themselves of complex and opaque legal and operational structures and operations, to hinder their detection by the persons obliged by Law 9.613/98, with regard to their preventive action, and by the competent authorities responsible for their investigation.

http://www.coaf.fazenda.gov.br/pld-ft/sobre-a-lavagem-de-dinheiro

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6. In this sense, it is natural to assume that, precisely because of having knowledge of the supervision and inspection activities exercised by participants in the financial system, the criminal has a preference for fragmented operations and structures to ensure that none of the obliged persons and respective supervisors can have complete visibility of the money's path (follow the money), in order to hinder the satisfactory accomplishment of supervision activities over such illicit activities.

7. Therefore, much less than reporting an illicit operation, an act that would require an inconceivable conclusive assessment regarding the illicit nature of the operation, the duty of article 7 of CVM Instruction No. 301/99 deals with a communication of a suspicious operation, that is, operations that, under the terms of that norm, present merely “serious indications of money laundering crimes”, in accordance with the hypotheses provided for in article 6 of the same Instruction.

8. Therefore, it is not a condition for the communication of a suspicious operation that the communicating institution has conviction of its illicit nature. It is sufficient, for this purpose, that it can establish a consistent and well-founded conviction of its atypicality, under the terms of article 6 of the norm.

9. In this context, the role of the Financial Activities Control Council (“COAF”), as the Financial Intelligence Unit, is to receive, analyze, and disseminate, when appropriate, such atypical events originating from all persons obliged by Law No. 9.613/98, including those obliged by CVM Instruction No. 301/99, for the competent authorities to take the appropriate measures regarding the criminal sphere.

10. Thus, CVM has identified, in its supervision efforts, that market participants, when carrying out communications involving several market segments (for example, the banking and capital markets), often opt to make only a single and exclusive communication, usually to the Central Bank of Brazil (“BACEN”), with all the information regarding the suspected case consolidated.

11. We emphasize that such a procedure is incorrect and should be avoided by institutions, as it is well known that market segments regulated by their own entities (as is the case, in the example brought, of the banking and capital markets, regulated, respectively, by BACEN and CVM) are assigned an institutional mission of inspection regarding the adequacy and sufficiency of the structures maintained for PLDFT by their regulated entities, work that is made unfeasible when the institution consolidates its communications through an exclusive channel and, consequently, omits the due communication to some other regulator(s).

12. We also alert that, under the terms of article 7, § 5, of CVM Instruction No. 301/99, the records of the conclusions of the analyses regarding operations or proposals that underpinned the decision to make, or not, the communications of suspicious operations must be kept for a period of 5 (five) years, or for a longer period by express determination of CVM, in case of administrative proceedings.

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13. In this sense, whenever a suspicious communication involves, even partially, operations with investment funds, stocks, derivatives, or other securities, this communication must necessarily also be made to COAF through the “CVM Segment”, as identified in the reporting system.

14. For this purpose, we understand it is important for institutions to maintain control and monitoring systems for the identification of atypical operations that are not only effective and efficient, but also designed in a rational and proportional manner, in the sense of prioritizing verification regarding operations that have a higher probability of revealing themselves as atypical. In this sense, we cite throughout this document some non-exhaustive examples of situations where, in our view, the PLDFT control systems of market participants should be particularly attentive.

ON SELF-REGULATION

15. As is known, self-regulation, in its various spheres of action and segments of competence, has also been acting in initiatives of orientation and clarification to market participants on the subject.

16. Thus, we encourage the reading of the document titled “Guide for the Prevention of Money Laundering and Terrorist Financing in the Brazilian Capital Market”, published by the Brazilian Association of Financial and Capital Market Entities (“ANBIMA”) in 2014, which sought to bring general clarifications regarding the minimum structure necessary to be maintained for obliged persons, mainly those supervised by this Superintendency.

17. The full compliance with the mentioned Guide must necessarily be aligned with the obligations provided for in CVM Instruction No. 301/99, in particular, with the points highlighted in this Circular Letter.

SPECIFIC CONSIDERATIONS

18. In this item of the Circular Letter, the SIN will try to make some comments specifically related to the service providers regulated by the Superintendency. These considerations are the result of the main doubts and issues brought to the knowledge of the technical area, and also are the result of some perceptions and conclusions arising from ongoing supervision actions.

SECURITIES CONSULTANTS AND CREDIT RISK RATING AGENCIES (“RATING AGENCIES”)

19. As is known, article 9, XIV, “e”, of Law No. 9.613/98, in the wording given to it by Law No. 12.683/12, provides that persons obliged to the provisions of that law also include “physical or legal persons who provide... advisory, consulting,... counseling or assistance... services... in financial operations”, a concept that includes, in the interpretation of this technical area, securities consultants and credit risk rating agencies.

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20. As is known, in the typical activities of these market participants there is involvement with the carrying out of operations in the capital market, or the structuring of products and financial assets offered therein, either under the form of advisory (case of consultants), or in the form of an evaluation and of the credit risk associated with fixed income products (case of rating agencies).

21. Thus, it is natural to expect that, many times, the operations object of analysis or advisory are not concluded or brought to market, or still, that the knowledge of such fact does not reach the consulting firm or the rating agency.

22. However, we emphasize that such circumstance does not prevent consultants or rating agencies from making a communication to COAF, whenever the operation under study presents any degree of connection with the alert signals provided for in article 6 of CVM Instruction No. 301/99, given that the respective article 7 of the Instruction expressly provides that “all transactions, or proposals of transaction... that can be considered serious indications of ‘money laundering’ or concealment of assets, rights, and values resulting from a penal offense” must be the object of communication.

23. It follows from this that a mere proposal, even if it is not in fact converted into a processed or registered event in the securities market, can indeed be the object of reporting to COAF.

PROVIDERS OF REPRESENTATION AND CUSTODY SERVICES FOR NON-RESIDENT INVESTORS

24. A noteworthy observation concerns the service providers contracted by non-resident investors to act in the Brazilian financial and capital markets, under the terms of CMN Resolution No. 4.373/14.

25. As provided for in CVM Instruction No. 325/00, as well as in the new CVM Instruction No. 560/15, non-resident investors must contract, to operate under the terms of CVM regulation, at least one representative and one custodian, services that usually, as a rule, are provided by a single and same financial institution.

26. Furthermore, when carrying out operations in the market that depend on a securities intermediary, the non-resident investor may avail themselves of the faculty provided for in article 9 of CVM Instruction No. 505/11 to carry out a simplified registration, provided that the conditions provided for in that norm are met.

27. At this point, we underline that the registration of a non-resident investor in a certain intermediary under these conditions does not mean nor allows assuming that PLDFT routines are also “simplified” in any aspect, either by the intermediary in which the investor obtained their registration, or by the providers of representation and custody services of these investors.

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28. Quite the contrary, the alert in article 6, § 1, of CVM Instruction No. 301/99 remains equally valid, that obliged persons “shall pay special attention to operations in which... non-resident investors participate, especially when constituted in the form of trusts and companies with bearer shares”.

29. To reinforce the need for special routines for this market participant, we also recall the wording of article 1, § 1, XII and XIII, of Annex I to CVM Instruction No. 560/15, which, by disciplining the informational content of the non-resident investor registration, already began to require the identification of those characterized as “entities constituted in the form of trusts or other fiduciary vehicles” or “companies constituted with bearer shares”, as the case may be.

30. On the other hand, we also alert that, if the intermediary or the custodian representative of the investor encounters any suspicious situation that may suggest a communication, the absence of complete registration information regarding this non-resident investor cannot serve as a basis for not proceeding with the usual inquiries practiced by the financial institution, and it must, if necessary, proceed to obtain complementary information indispensable for the formation of a conclusive judgment on the licitness of the operation.

31. In short, the simplified possession of the content of registration information, within the scope of the simplified registration provided for in CVM Instruction No. 505/11, cannot be interpreted as synonymous with simplified monitoring of this investor's operations in the securities market, as provided for in articles 3-A, 6, and 7 of CVM Instruction No. 301/99.

32. We recall, moreover, that many of the hypotheses of monitoring and detection of alert signals provided for in article 6 do not necessarily depend on the completeness of the non-resident investor's registration information.

PORTFOLIO ADMINISTRATORS OF SECURITIES

33. Initially, we recall here the content of the document “Guide for the Prevention of Money Laundering and Terrorist Financing in the Brazilian Capital Market”, issued by ANBIMA, as already mentioned in the item “ON SELF-REGULATION” of this Circular Letter.

34. In the specific case of portfolio administrators, we make special mention to Annex I of that document, which is intended for the activity of management of third-party resources, and whose reading and knowledge, by all portfolio administrators of securities accredited at CVM, we consider indispensable.

35. Without prejudice to what is stated there, we deem it relevant to make some additional comments regarding this specific activity, which arise from perceptions of this technical area regarding the supervision work on the subject in portfolio administrators.

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OPERATIONS PROCESSED ON EXCHANGES

36. We recall that the fact that the resource management activity is limited to the carrying out of operations on exchange markets (as, for example, in the case of some investment funds in stocks) does not exempt the participant from maintaining, also for this case, its own routines for the verification of suspicious operations and those subject to communication to COAF.

37. Thus, there is no way to endorse an argument in the sense that money laundering would be impossible for exchange operations (given the impossibility of determining the counterparty of the deals), either because (i) the direction of the counterparty of the deals is indeed possible in certain circumstances (for example, for papers with very low liquidity), or because (ii) we already live with the sending of communications to COAF – founded and consistent – by obliged persons involving exchange operations.

38. Indeed, such an argument, far from justifying that controls and the due monitoring for exchange operations are not maintained, especially those in which the condition described in the previous paragraph is presented, only reinforces the greater care that the fund manager or administrator must have in operations processed on organized over-the-counter markets, where the possibility of determining the counterparty (and consequently, the possibility of determining a direction to gains and losses, for example) represents the general rule.

TRUSTEE ADMINISTRATION MODEL

39. Nor can one agree with the – sometimes alleged – unnecessary maintenance of PLDFT routines or internal processes for portfolio administrators who intend to act exclusively under the model of fiduciary administration of investment funds.

40. As is known, this model provides that the manager is hired by an investment fund administrator, who in turn usually offers complementary support services to the management itself, such as asset controller (treasury, and control and processing of the financial assets of the portfolio), liability controller (bookkeeping of the fund's shares), distribution of shares, as well as the administration of the fund itself, of course.

41. In this sense, as all controller activity, as well as via rule the distribution of shares itself, usually would be the responsibility of the fund administrator, the argument arises that it would be exclusively up to him to comply with the duties imposed by CVM Instruction No. 301/99.

42. However, it is worth recalling the obligation of article 2 of CVM Instruction No. 301/99, which is imposed on all portfolio administrators of securities registered at CVM, regardless of whether they act as managers or administrators of investment funds; as well as the finding that an understanding of this kind would make unfeasible the verification of the occurrence of some of the hypotheses provided for in article 6 (presumably suspicious operations) of CVM Instruction No. 301/99, such as those listed in their respective items II, III, and IV.

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43. Indeed, it is pertinent to stress in this context the critical role that the fiduciary administrator seems to assume in the verification of operations carried out by the manager, which gains even greater relevance in the face of the duty imposed on him to “inspect the contracted services”, as required by article 65, XV, of CVM Instruction No. 409/04, which has its equivalent in article 90, X, of CVM Instruction No. 555/14.

44. In this sense, we highlight in the items below examples of situations where the coordinated action of both the fiduciary administrator and the manager seems essential to comply with the requirements imposed by Law and Regulation with regard to PLDFT.

NEED FOR SPECIFIC ROUTINES FOR INVESTMENTS MADE BY FUNDS (ASSETS)

45. Under the terms of Law No. 9.613, of 1998, and CVM Instruction No. 301/99, it is our understanding that, just as the liabilities of clients and investors, the negotiation of assets and financial securities in Investment Funds and administered portfolios must also be analyzed and monitored for PLDFT purposes.

46. In this line, the manager of the Fund or Administered Portfolio is responsible for the analysis for the purposes of prevention of money laundering and terrorist financing of the counterparties when acquiring assets, and must therefore possess, implement, and maintain an adequate PLDFT Program.

47. Furthermore, the Fiduciary Administrator must ensure that the manager has the technical capacity and resources to carry out this type of analysis, which must include the monitoring and evaluation of the price range of the assets and securities negotiated by the investment funds or administered portfolios under their management vis-à-vis market parameters.

48. As well addressed by ANBIMA's PLDFT Guide, in the active operations carried out by investment funds and administered portfolios, the “client” must be understood as the counterparty of the operation, with the manager responsible for their registration and monitoring.

49. Thus, taking into account the reasonableness and proportionality of the institutions' internal controls, we understand that any suspicious action regarding the counterparty must be communicated to COAF, even if it has theoretically already passed through a PLDFT process.

NEED FOR SPECIAL ROUTINES FOR INVESTORS PROVIDED FOR IN ARTICLE 6, § 1

50. Another discussion that has gained space in the market concerns the need for maintenance of special and more rigorous routines for the verification of hypotheses of suspicious operations for the categories of investors provided for in article 6, § 1, of CVM Instruction No. 301/99, a point already explored in part in the item “PROVIDERS OF REPRESENTATION AND CUSTODY SERVICES FOR NON-RESIDENT INVESTORS”.

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51. We emphasize that it does not seem possible to defend that the treatment afforded to funds invested exclusively or predominantly by persons classified as politically exposed, Private Banking investors, and non-resident investors, especially societies constituted with bearer shares and trusts, can be subject to the same generic scrutiny given to other clients, investors, and funds, no matter how rigorous the routines adopted by obligated persons for their clients in general are.

52. In this sense, an investment fund destined for retail, for example, by having thousands of dispersed unitholders without any link between them, reflects a management model independent of influences from the owners of the resources (in this case, the unitholders) that would already make it more difficult, given these characteristics, to use the vehicle as an instrument for money laundering, although, of course, even in these cases it may occur.

53. However, in those funds structured exclusively or predominantly for the persons provided for in article 6, § 1, of CVM Instruction No. 301/99, the suspicion of using the investment fund as a tool for such illicit activity will certainly be present in several additional circumstances compared to those provided for retail funds, considering that in this hypothesis there is a new critical ingredient present in the industry, which is an expected influence of these unitholders on the fund's management.

54. Thus, the example of funds constituted for investors typified in article 6, § 1 of CVM Instruction No. 301/99 evidences the need for a more rigorous (or broader) verification posture of suspicious operations, even by admitting the occurrence of some of the situations provided for in the items of article 6 that objectively do not occur, in our example again, in retail funds.

NEED FOR COMMUNICATION OF OPERATIONS RESULTING FROM DECISIONS TAKEN BY THE MANAGER ITSELF

55. Another recurring point of discussion in the supervision actions conducted by SIN is based on the reasonableness of the requirement, by the norm, to notify regulatory bodies of a suspicious operation that would have been carried out by the notifier itself.

56. However, we understand that there is no room for such an allegation, as one must not confuse the figure of the administrator or manager, a legal entity, which is responsible both for the communication of suspicious operations and for maintaining the AML/CFT structure, with that of operators and managers, natural persons, who work in its name and may eventually fail to comply with the norms applicable to their activity, even entirely against the will and knowledge of the companies that hire them.

57. Thus, it is worth remembering that administrators and managers of resources are already obliged to maintain an adequate structure to guarantee the verification of the permanent compliance with the duties imposed on them resulting from the activities exercised ("compliance"), with the respective assessment and investigation of any illicit acts and, at the limit, the appropriate punishment of those involved

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(suspension, dismissal, filing of lawsuits, etc.), a duty that, naturally, also extends to the routines for combating and preventing money laundering.

58. Even for this reason, the communication of suspicious operations carried out by a certain market participant, even when involving its employees, does not represent evidence of the practice of irregularities by the communicator, but, quite the contrary, only reinforces and corroborates the existence and maintenance of robust, effective, and adequate internal controls to what the Law provides.

EXCLUSIVE FUNDS

59. Since exclusive investment funds are investment vehicles that have a single unitholder, it is natural to expect that they participate more actively in the fund's investment decision-making process, provided that, in any case, the responsibilities of the administrator and manager in decisions taken in the name of the fund are preserved, as well as the governance structures required by regulation 2.

60. Thus, from the perspective of AML/CFT routines, such funds present contours that require particular attention and care on the part of the fund's administrators and managers, as already addressed also in item "NEED FOR SPECIAL ROUTINES FOR INVESTORS PROVIDED FOR IN ARTICLE 6, § 1" of this Circular Letter.

61. This is because, in exclusive funds, the analysis of the exclusive unitholder's personal profile and investment objectives cannot be overlooked in the general verification of the regularity of operations carried out by the fund, unlike an investment fund with a dispersed base of unitholders, precisely due to the possibility of the unitholder's participation in the fund's management.

62. Thus, for example, supervision routines in exclusive funds must be reinforced to identify "operations carried out between the same parties or for the benefit of the same parties, in which there are repeated gains or losses with respect to any of those involved" (article 6, II), considering the perspective of the unitholder as the ultimate beneficiary of these operations.

63. Other non-exhaustive examples of points of attention that we can cite are "operations whose outcomes contemplate characteristics that may constitute a device to circumvent the identification of the effective parties involved and/or respective beneficiaries" (article 6, IV), from the perspective of the use of the fund as a vehicle for such circumvention; or "operations carried out with the purpose of generating loss or gain for which there is objectively no economic foundation" (article 6, VII).

64. Finally, given the highly sensitive nature of the issue in question, this Superintendency reinforces that AML/CFT must be a permanent and priority concern of all market participants mentioned in this Circular Letter, as well as that the

2 Verify, in this sense, the result of the judgment of Administrative Sanction Process No. 15/08.

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
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recommendations and interpretations explicitly stated here should be the object of careful and diligent reflection and implementation.

Sincerely,

FRANCISCO JOSÉ BASTOS SANTOS
Superintendent of Institutional Investor Relations

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ANNEX I
ON THE QUALITY OF SUSPICIOUS COMMUNICATIONS

Within the scope of Law No. 9613/98, especially in CVM Instruction No. 301/99, and with a view to the permanent increase in the efficiency of the Brazilian system for preventing money laundering and terrorist financing (AML/CFT), as well as the supervision of the securities market, we present below some issues for the improvement of communications of suspicious operations originating from the securities market, which shall, whenever applicable, be explored by the obligated persons subject to SIN supervision when sending reports to COAF.

Initially, it is important to recall that, unlike what occurs with some of the communication hypotheses provided for in the norms of the Central Bank of Brazil, CVM Instruction No. 301/99 does not bring hypotheses of automatic communications. On the contrary, article 6 of the Instruction lists only events that must be worked as suspicious communications, and which always demand the punctual analysis of the event to be communicated, or not.

It is worth noting that the aforementioned article 6 brings a merely exemplary, and not exhaustive, list, that is, if any situation not provided for in the device is identified, but which constitutes an atypicality capable of being communicated to COAF, such communication shall be carried out, with the detailed description of the situation then identified.

In this line, each report shall be worked individually and justified in the most detailed way possible, and from it shall always contain, whenever applicable, the following information:

• Date of start of client relationship with the institution;
• Date of the last registration update;
• Value declared by the client of income and assets on the date of their last registration update;
• Operational modalities carried out by the client that led to the identification of the atypical event, if applicable;
• Within the scope of the "Know Your Customer" policy, any supplementary information obtained when applying item I of article 3-A of CVM Instruction No. 301/99;
• Data that allow identifying the origin and destination of the resources that were the object of the client's business, and of its counterparty, if applicable;
• Additional information that may better explain the suspicious situation identified (without prejudice to the description of the item of article 6 of CVM Instruction No. 301/99 that relates to the atypical event detected), that is, the reason why the event was considered atypical by the institution.

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It is worth remembering here that, when carrying out the report, one or more of the segments listed there (shares, derivatives, investment funds, or other securities) may be indicated, as well as one or more classification hypotheses, within the items of article 6 of CVM Instruction No. 301/99.

Still on this subject, when the eventual detection of an event related to item I of article 6 (operations whose values appear objectively incompatible with the professional occupation, income, and/or asset or financial situation of any of the parties involved, taking as a basis the respective registration information) the possibility of this event also being associated with other classifications, especially items XIV, XV, and XVI:

“XIV – situations in which it is not possible to keep client registration information updated; XV – situations and operations in which it is not possible to identify the ultimate beneficiary; and XVI – situations in which the diligence provided for in article 3-A cannot be concluded”.

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ANNEX II
ON NEGATIVE COMMUNICATIONS

As already described in item "SCOPE AND APPLICABILITY" of this Circular Letter, the obligations provided for in CVM Instruction No. 301/99 related to AML/CFT must be observed by all portfolio administrators, credit risk rating agencies, consultants, and providers of custody and representation services to non-resident investors who maintain registration with the CVM for the provision of any of these services.

In this context, we remind you that natural or legal persons obliged who have not submitted any communication of suspicious operation to COAF, as provided for in article 7 of Instruction No. 301/99, in a certain calendar year, are obliged to send, by the end of January of the following year, the non-occurrence in the previous calendar year of transactions or proposals for transactions capable of communication, under the terms of article 7-A of the same Instruction ("negative declaration").

We remind you that the negative declaration must be effectively sent to COAF through the Siscoaf system, already available for such communications, and not to the CVM, as already subject to clarifications provided by several Circular Letters from this Superintendency together with SMI, such as No. 04/2013, No. 01/2014, and No. 01/15.

For the necessary qualification and respective access to Siscoaf (maintained available by COAF on its website on the worldwide web) that allows the realization of positive and negative communications, the following clarifications apply:

(i) To obtain general guidelines on the use of Siscoaf Access the COAF portal at URL: http://www.coaf.fazenda.gov.br Option: OBLIGATED PERSONS  Frequently Asked Questions.

(ii) For qualification in the Siscoaf system
Access the COAF portal at address http://www.coaf.fazenda.gov.br, option OBLIGATED PERSONS  Access to Siscoaf  Click on the option "First Access". The screen for selecting the Type of Obligated Person will be displayed: Legal Entity or Natural Person. After selecting one of the Types of Obligated Person, i.e., CNPJ (legal entity), or the CPF of the obligated person, if it is a natural person. The system will lead to the filling in of the basic data of the obligated person and definition of the respective responsible user. Before the conclusion of the qualification, the system will allow the definition/choice of the responsible user's password to access Siscoaf. For more information, use the Siscoaf registration and qualification Manual, available in the option OBLIGATED PERSONS  Siscoaf Manuals.

(iii) Access profiles – Siscoaf will make two access profiles available to the Obligated Person. One of the profiles refers to the responsible user who is qualified at the time of the qualified person's qualification. The responsible user, once qualified, may include new users in the user profile.

(iv) To carry out communications related to article 7 to COAF, Access the COAF portal at address http://www.coaf.fazenda.gov.br, option OBLIGATED PERSONS  Access to Siscoaf  use the CPF and Password or the Digital Certificate of the user of type E-CPF. After access validation, opt for the segment "CVM – Securities Market". Select the option Communicate. The aforementioned system has functionalities to administer users, send/consult communications, batch send communications, as well as access via webservice.

(v) To carry out communications related to article 7-A to COAF, Access the COAF portal at address http://www.coaf.fazenda.gov.br, option OBLIGATED PERSONS  Access to Siscoaf  use the CPF and Password or the Digital Certificate of the user of type E-CPF. After access validation, opt for the segment "CVM – Securities Market". In addition to the functionalities above, the aforementioned system also has the option of sending the "negative declaration", PEP Registration Query.

(vi) To access all system functionalities, the responsible user must use a digital certificate of type E-CPF. If digital certification is not used, the system will only allow the sending of communications, user registration (for the person in charge of the institution), and consultation of the protocol of the communications sent.

(vii) To access the Siscoaf Test and Training environment:
Access the URL: http://treina.siscoaf.serpro.gov.br

Observation:
The FOLDER OBLIGATED PERSONS, which is made available on the COAF portal www.coaf.fazenda.gov.br, concentrates the functionalities and information regarding Siscoaf – Financial Activities Control System, pertinent to Obligated Persons.
Such as:

• Access to Siscoaf
• Siscoaf Manuals
• Siscoaf Communications
• Query Obligated Persons
• Frequently Asked Questions

There are still some additional clarifications regarding the aforementioned negative communications, and the first refers to market participants who, by the very dynamics of the regulation to which they are subject, in one way or another inform the CVM whether they exercise the activity or not.

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
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This is the case of portfolio administrators, who, under the still in force 3 article 12 of CVM Instruction No. 306/99, must send, by May 31 of each year, a registration report ("ICAC") in which, among other information, it confirms whether it "has resources under its management".

Naturally, with regard to the scope of this Circular Letter, the market participant that expressly declares not exercising its activity, there is no sense or logic that justifies demanding any communication to COAF, since there are no operations in the capital market on which it could manifest itself. Thus, portfolio administrators who communicate, through the ICAC, that they do not exercise the activity are also exempt from sending the negative communication referred to in article 7-A of CVM Instruction No. 301/99.

A similar situation to this is that of portfolio administrators of securities, natural persons, who, under article 7, II, of CVM Instruction No. 306/99, have accreditation with the exclusive purpose of acting as responsible for the activity in a legal entity portfolio administrator.

Considering that the director responsible for the portfolio administration activity of legal entities is prohibited from accumulating any other activities, inside or outside the portfolio administrator for which they are responsible (article 7, § 5, of the Instruction), it is possible to assume that this director acts in the function of portfolio administration exclusively through the society for which they are responsible, hence not being obliged to send, in their capacity as a natural person accredited with the CVM, the aforementioned negative communication, although it continues to be obliged to this communication, of course, the legal entity for which they are responsible.

In the same way, the market participant who is in a registration situation that indicates the non-exercise of the activity, for any reason, is also not obliged to send the communication, such as, for example, the registration situations of "suspension", "in extrajudicial liquidation" or "paralyzed".

It is also worth saying that the obligated person, under article 7-A of CVM Instruction No. 301/1999, must send a single negative declaration, regardless of the number of registrations or authorizations they have with this Commission.

Finally, it is worth emphasizing that any report to Siscoaf, whether suspicious communication or negative declaration, should not be carried out in the name of the investment fund, but rather in the name of the respective service provider, in this case, the administrator, the manager, the custodian, etc.

3 On 1/1/2016, CVM Instruction No. 306/99 will be replaced by the already issued, but still not in force, CVM Instruction No. 558/15.