Circular No. 3,910 of 17 August 2018 Amending Circular No. 3,857 of 14 November 2017 on the Administrative Sanctioning Process, Penalties, Commitment Agreement, Precautionary Measures, Coercive Fine and Administrative Agreement in a Supervisory Process

CIRCULAR No. 3,910, OF 17 AUGUST 2018

Amends Circular No. 3,857, of 14 November 2017, which provides for the procedure of the administrative sanctioning process, the application of penalties, the commitment agreement, precautionary measures, the coercive fine and the administrative agreement in a supervisory process provided for in Law No. 13,506, of 13 November 2017.

The Collegiate Board of the Central Bank of Brazil, in a session held on 15 August 2018, based on art. 36 of Law No. 13,506, of 13 November 2017,

R E S O L V E S :

Art. 1 The Circular No. 3,857, of 14 November 2017, and its Annex I, shall come into force with the following amendments:

“Art. 8-A The citation by postal service shall be carried out with a notice of receipt and sent to the address of the accused contained in databases existing at the Central Bank of Brazil.” (NR)

“Art. 8-B When the place where the accused is located is unknown, uncertain or inaccessible, or in case of evasion, the citation shall be carried out by means of publication of a notice on the website of the Central Bank of Brazil.” (NR)

“Art. 11. The notification of procedural acts shall preferably be carried out by making them available on the website of the Central Bank of Brazil, without prejudice to the other forms provided for in Law No. 13,506, of 2017.” (NR)

“Art. 11-A. The system through which the citation and notification by electronic means shall be carried out is BC Correio.” (NR)

“Art. 18. .......................................................................................................... Sole paragraph. The deadlines shall be counted in a simple manner.” (NR)

“Art. 19. .......................................................................................................... Sole paragraph. The first day of the counting of the deadline and the day of the expiration of the deadline shall be extended to the first business day following, if they coincide with a weekend, holiday, optional point or day on which the expedient is closed before or started after the normal hour in the place where there is a representation of the Central Bank of Brazil in which the act is performed or the documentation is received or there is unavailability of the electronic process system of the Central Bank of Brazil.” (NR)

“Art. 23. The Central Bank of Brazil shall forward the appeal filed against a condemnatory decision to the Board of Appeals of the National Financial System within thirty days.” (NR) “Art. 36. The penalized party may submit a request for the appeal filed against a decision that imposed the penalties provided for in subparagraphs “d”, “e” or “f” of item II of art. 1 of this Circular to also be received with suspensive effect, in accordance with § 5 of art. 29 of Law No. 13,506, of 2017.

Sole paragraph. The request referred to in the caput shall be submitted at the time of filing the appeal.” (NR)

“Art. 37. ..........................................................................................................

§ 1 The appreciation of the request for suspensive effect shall take place in separate records from the original process.

§ 2 For the granting of suspensive effect, the authority issuing the decision and the specific collegiate body mentioned in the sole paragraph of art. 38 shall take into consideration the public interest involved, especially the risk to the stability of the National Financial System, the Brazilian Payment System or the Consortium System.” (NR)

“Art. 39-A. The notification referred to in § 1 of art. 8 of Law No. 13,506, of 2017, shall be forwarded to the disqualified person and to the supervised institutions in which he holds a position subject to authorization by the Central Bank of Brazil.

Sole paragraph. The notification referred to in the caput shall be issued within up to five days, counted from the date on which the first-instance decision begins to produce effects or on which the records of the Board of Appeals of the National Financial System are returned.” (NR)

“Art. 40. The penalty of public admonition consists of the publication, on the website of the Central Bank of Brazil, of the news about the imposition of the penalty and of the text specified in the condemnatory decision.

§ 1 The Central Bank of Brazil may determine the disclosure of the news referred to in the caput, at the expense of the infringer, in a place of easy access and visibility, for a period not less than five days and not more than fifteen days, in:

...............................................................................................................” (NR)

“Art. 50. .......................................................................................................... .........................................................................................................................

III - the degree of reprehensibility of the conduct of the infringer;

IV - the expressiveness of the amounts of the irregular operations;

V - the duration of the infraction or the systematic or repeated practice; and

VI - the antecedents of the infringer.” (NR)

“Art. 56. .......................................................................................................... .........................................................................................................................

BANCO CENTRAL DO BRASIL

III - the regularization of the infraction before its detection by the Central Bank of Brazil; and IV - the reparation of the damages caused, provided that it is proven by the infringer by means of documentary evidence submitted up to the publication of the date of judgment of the administrative sanctioning proceeding. ...............................................................................................................” (NR)

“Art. 59. The sum of the fine penalties applied to each infringer in a single administrative sanctioning proceeding shall be limited: ...............................................................................................................” (NR)

“Art. 60. .......................................................................................................... .........................................................................................................................

§ 3º The decision that imposes a penalty as a result of the infractions provided for in the caput shall not be considered for the purposes of the antecedents referred to in item VI of art. 50 and of the recidivism referred to in § 3º of art. 55 of this Circular.” (NR)

“Art. 61. .......................................................................................................... .........................................................................................................................

§ 3º The Central Bank of Brazil shall not enter into a commitment agreement regarding infractions:

I - serious, in the form established by art. 14 of Circular No. 3.858, of 14 November 2017; and

II - related to the registration and census of foreign capital in the Country and to the declaration of Brazilian capital abroad, governed by Laws Nos. 4.131, of 1962, and 11.371, of 28 November 2006, by Provisional Measure No. 2.224, of 4 September 2001, and by Decree-Law No. 1.060, of 21 October 1969.” (NR)

“Art. 62-A. Upon receipt of the proposal for a commitment agreement, the Central Bank of Brazil, within twenty days, shall decide whether to proceed with its analysis or to reject it outright.

Sole paragraph. The proposal for a commitment agreement shall be rejected if:

I - it concerns facts that represent indications of a serious infraction;

II - it concerns infractions mentioned in item II of § 3º of art. 61; and

III - there is no interest on the part of the Central Bank of Brazil in entering into it.” (NR)

“Art. 64. Once the decision referred to in art. 62-A of this Circular is rendered, the Central Bank of Brazil, within ninety days, shall decide on the execution of the commitment agreement.

§ 1º The period mentioned in the caput may be extended once, for up to an equal period, by means of a reasoned decision.

§ 2º The Central Bank of Brazil shall consider, for the purposes of negotiating the obligations to be assumed in the commitment agreement, among other elements, the nature and repercussion of the infractions, the moment of submission of the proposal and the antecedents of the interested party.

§ 3º The Central Bank of Brazil may propose adjustments to the interested party in the proposal.” (NR)

“Art. 65. The commitment agreement shall contain:

I - a clause stipulating the frequency with which the committing party shall provide the Central Bank of Brazil with information regarding the fulfillment of the obligations assumed by it; and

II - a penalty clause in the event of default by the proponent and of total or partial non-fulfillment of the committed obligations, without prejudice to the establishment of a penalty clause as special security for a given clause.” (NR)

“Art. 67. ..........................................................................................................

Sole paragraph. The total or partial non-fulfillment of the obligations assumed, except for the hypothesis provided for in art. 66 of this Circular, shall entail the revocation of the commitment agreement and the adoption of the measures provided for in art. 15, § 2º, of Law No. 13.506, of 2017.” (NR)

“Art. 71. ..........................................................................................................

Sole paragraph. The Central Bank of Brazil, by means of a reasoned decision, may not publish the precautionary decision if there are risks to the stability or soundness of the institution, of the National Financial System, of the Brazilian Payment System or of the Consortium System.” (NR)

“Art. 73. The appeal against the decision that rules on the objection shall be filed before the authority that issued the decision, shall proceed in separate case files and, within five days counted from its receipt, shall be forwarded to the Board of Appeals of the National Financial System, for judgment.” (NR)

“Art. 75. ..........................................................................................................

I - the warning that its non-compliance within the established period subjects the administered party to the payment of a coercive fine;

II - the indication of the daily amount of the coercive fine applied;

.........................................................................................................................

§ 1º The administered party shall prove compliance with the determination referred to in the caput within two days, counted from its effective occurrence, except when it concerns the imposition of the penalty of disqualification, in which case the period of five days provided for in § 3º of art. 8º of Law No. 13.506, of 2017, shall be observed.

CENTRAL BANK OF BRAZIL

......................................................................................................................... § 3º If there is more than one addressee, the periods for compliance with the determination and its proof to the Central Bank of Brazil shall be counted independently and, in the event of non-compliance by any of them, each addressee shall be subject to the payment of a coercive fine, and there shall be no question of joint liability.

§ 4º In the hypothesis provided for in § 3º of this article, compliance with the determination by only one of its addressees benefits the omissive addressee, but does not exempt it from the payment of the fine that may have accrued up to that date.

§ 5 In the cases of § 4 of art. 8 and of items I and II of art. 17 of Law No. 13,506, of 2017, the administered party shall be subject to the payment of as many coercive fines as there are supervised institutions in which it holds a position subject to authorization by the Central Bank of Brazil.” (NR)

“Art. 76. ..........................................................................................................

I - .....................................................................................................................

.........................................................................................................................

i) microentrepreneur and small business credit society;

j) real estate credit society; or

k) real estate credit securitization companies authorized to exercise the function of fiduciary agent in the issuance of Guaranteed Real Estate Letter in the form of Circular No. 3,891, of 28 March 2018;

II - ....................................................................................................................

.........................................................................................................................

g) legal entity that provides independent audit services, including cooperative audit;

.........................................................................................................................

i) direct credit society; or

j) peer-to-peer lending society;

.........................................................................................................................

§ 1-A If the content of the determination referred to in art. 75 is an obligation not to do, the Central Bank of Brazil may impose a daily fine of up to R$100,000.00 (one hundred thousand reais) or 1/1000 (one thousandth) of the revenue from financial products and services of the recipient institution, whichever is greater, even if it is an entity not classified in Segment 1 (S1).

...............................................................................................................” (NR)
“Art. 79. ..........................................................................................................

Sole paragraph. If a sanctioning administrative proceeding has been initiated, the proposal for an administrative agreement in a supervision proceeding may be presented until the first-instance decision, provided that it identifies those involved in the practice or presents information and documents that prove the infraction, which are unknown to the Central Bank of Brazil.” (NR)

“Art. 80. The proposal for an administrative agreement in a supervision proceeding may only be presented to the Central Bank of Brazil in writing and shall contain:

I - the complete qualification of the proponent and the detailed description of the reported infraction, including its known duration, the identification of its authors and the list of information and documents that will be presented to prove the veracity of the narrated facts;

II - the indication of a single representative, and their means of contact for the purposes provided in § 6 of art. 83-A, including if the proposal is presented by a group of persons; and

III - the information of the presentation of a proposal for an agreement on the same infraction to another authority, if it has occurred and provided that there is no prohibition to do so.

§ 1 Until the electronic protocol of administrative agreement in a supervision proceeding is implemented, the proponent shall submit the proposal in physical form, filed at any location where there is a representation of the Central Bank of Brazil in a sealed envelope and clearly identified with the terms “PROPOSAL FOR ADMINISTRATIVE AGREEMENT IN A SUPERVISION PROCEEDING - CONFIDENTIAL”.

§ 2 After the implementation of the electronic protocol of administrative agreement in a supervision proceeding, the proponent may only submit the proposal through this means, observing the instructions contained on the website of the Central Bank of Brazil.” (NR)

“Art. 81. The presentation of a proposal for an administrative agreement in a supervision proceeding shall not prevent:

I - the progress of the sanctioning administrative proceeding already initiated for the investigation of the conducts narrated in the proposal; and

II - the initiation of a sanctioning administrative proceeding for the investigation of the conducts narrated in the proposal, provided that it results from elements identified in the regular course of the supervision activity of the Central Bank of Brazil. (NR)

“Art. 82-A. The analysis by the Central Bank of Brazil of the proposals for an administrative agreement in a supervision proceeding shall observe the following phases:

I - Qualification Phase; and

II - Negotiation Phase.

§ 1 The proponent may withdraw the proposal for an administrative agreement in a supervision proceeding at any time before the signing of the agreement.

§ 2 The non-compliance with the determinations of the Central Bank of Brazil, in the time and manner established, and with the legal and regulatory requirements shall imply the summary rejection of the proposal for an administrative agreement in a supervision proceeding.

§ 3 The analysis referred to in the caput shall always be carried out separately from the supervision proceeding of the Central Bank of Brazil, in order to always maintain the confidentiality of the information and documents presented by the proponent in the context of an administrative agreement in a supervision proceeding.” (NR)

“Art. 83-A. Upon receipt of the proposal for an administrative agreement in a supervision proceeding, the Central Bank of Brazil, within fifteen days, shall verify the existence of:

I - a proposal for an administrative agreement in a supervision proceeding on the same facts that has been previously qualified;

II - prior knowledge of the reported infraction; and

III - sufficient evidence to ensure the administrative conviction of the natural or legal persons involved.

§ 1 The proposals that deal with the same facts shall be analyzed in the order of receipt.

§ 2 The order of receipt of the proposals shall be established considering the day and time of the protocol.

§ 3 The proposals submitted by legal entities that are in the situation provided for in § 4 of art. 30 of Law No. 13,506, of 2017, and by natural persons who were not the first to qualify may only be qualified if they identify those involved in the practice or present information and documents that prove the infraction, which are unknown to the Central Bank of Brazil and which were not contained in the previously qualified proposals.

§ 4 For the purposes of the provisions of this chapter, the Central Bank of Brazil shall be considered to have prior knowledge of the reported infraction when, on the date of receipt of the proposal, there is a record of occurrences or findings resulting from a supervision procedure related to the reported infraction.

§ 5 The proposal shall be summarily rejected in the event that the Central Bank of Brazil has sufficient evidence to ensure the administrative conviction of the natural persons or legal entities involved.

§ 6 Once in possession of the information listed in the items of the caput, the Central Bank of Brazil, within fifteen days counted from receipt of the proposal, shall decide on its qualification or summary rejection, and shall subsequently communicate its decision to the proponent.” (NR)

“Art. 84-A. Once the proposal is qualified, the negotiation phase shall begin, and the Central Bank of Brazil shall, within up to ninety days counted from communication to the proponent of its qualification, issue a decision on the execution of the administrative agreement in a supervision process.

§ 1 The period mentioned in the caput may be extended once, for up to an equal period, by means of a reasoned decision.

§ 2 During the negotiation phase, the proponent must present the information and documents mentioned in item I of the caput of art. 80 of this Circular, which shall form, together with the other elements provided for in art. 89 of this Circular, the conduct history prepared by the Central Bank of Brazil.” (NR)

“Art. 87. The administrative agreement in a supervision process, in which the conditions necessary to ensure the effectiveness of the proponent's collaboration and the usefulness for the administrative sanctioning process shall be established, must contain:

I - full qualification of the signatories;

II - brief exposition of the facts related to the reported infraction;

III - express confession of the participation of the signatory of the administrative agreement in a supervision process in the illicit act;

IV - declaration by the signatory of the administrative agreement in a supervision process that he has ceased his involvement in the reported or under-investigation infraction;

V - declaration by the signatory of the administrative agreement in a supervision process that the information and documents contained in the conduct history provided by him are true;

VI - obligations of the signatory of the administrative agreement in a supervision process to:

a) present to the Central Bank of Brazil all and any information, documents or other materials of which he has possession, custody or control, capable of proving the reported or under-investigation infraction, including those of which he becomes aware in the course of the investigations;

b) cooperate fully and permanently with the investigations and with the administrative sanctioning process related to the reported infraction;

c) appear, when requested, at his own expense, at all procedural acts until the final decision on the reported infraction; and

d) communicate to the Central Bank of Brazil any and all changes to the data contained in the agreement instrument, including the qualifiers;

VII - warning that the signatory's non-compliance with the obligations provided for in the administrative agreement in a supervision process, including with regard to the veracity of the information and documents contained in the conduct history, will result in loss of the benefits inherent thereto, including with regard to the reduction or extinction of penalties; and

VIII - the benefits granted to the signatory.

§ 1 When the legal entity is the proponent of the administrative agreement in a supervision process, its benefits may be extended to the companies of the same group and to its administrators and former administrators involved in the infraction who sign the respective instrument together with the proponent.

...............................................................................................................” (NR)

“Art. 87-A. The following criteria must be observed for the establishment, in the administrative agreement in a supervision process, of the benefit in favor of the signatory who qualifies first:

I - the extinction of the punitive action of the public administration, in the event that the proposal for the administrative agreement in a supervision process was submitted without the Central Bank of Brazil having prior knowledge of the reported infraction; or

II - the reduction of one third to two thirds of the penalties applicable in the administrative sphere, in the event that the Central Bank of Brazil has prior knowledge of the reported infraction.

§ 1 Natural persons who do not qualify first shall benefit exclusively from the reduction provided for in item II of the caput.

§ 2 In cases in which the Central Bank of Brazil has prior knowledge of the infraction reported in the administrative agreement in a supervision process, and in cases of natural persons who do not qualify first, the following criteria shall be observed for setting the fraction of reduction of the penalties applicable in the administrative sanctioning process initiated to investigate the infraction addressed by the agreement:

I - importance of the information, documents and evidence presented by the signatory;

II - the moment at which the proposal was presented; and

III - the good faith of the signatory.” (NR)

“Art. 89. The conduct history, a document whose purpose is to substantiate all written collaboration, must contain, at a minimum:

BANCO CENTRAL DO BRASIL

...............................................................................................................” (NR)

“Art. 89-A. Once the negotiation phase is completed and the terms are accepted by the proponent and by the Central Bank of Brazil, the administrative agreement in the process of supervision shall be executed.

Sole paragraph. The conduct history referred to in art. 89 of this Circular, prepared during the negotiation phase, shall be signed together with the administrative agreement in the process of supervision.” (NR)

“Art. 89-B. If the proposal is not qualified or the agreement is not reached, all documents submitted by the proponent shall be returned to them, if submitted in physical form, or discarded, if submitted in electronic form.

Sole paragraph. In the case of the caput, the use of the aforementioned documents by the Central Bank of Brazil for other purposes is prohibited, except if it has knowledge of them independently of the submission of the proposal for the administrative agreement in the process of supervision.” (NR)

“Art. 92-A. The communication referred to in § 2 of art. 31 of Law No. 13.506, of 2017, shall be governed by the memorandum of understanding to be entered into with the Public Prosecutor's Office within the scope of the permanent forum referred to in § 4 of art. 31 of the aforementioned legal instrument.” (NR)

“Art. 93. In cases of permanent or continued infraction, the rule in force on the day on which the permanence ceased or the last infraction was committed shall apply.” (NR)

“ANNEX I TO CIRCULAR No. 3.857, OF 14 NOVEMBER 2017

Table I - Weighting factor of the base penalty of fine applicable

Type of institution or activity	Weighting factor (PJ)	Weighting factor (administrators, members of the board of directors, of the fiscal council, of the audit committee and of other bodies provided for in the bylaws or in the articles of association of the institution)
Multiple Bank, Commercial Bank, Investment Bank, Exchange Bank and Caixa Econômica that is part of a prudential conglomerate classified in Segment 1 (S1), under the	100	5

CENTRAL BANK OF BRAZIL

Circular No. 3.910, of 17 August 2018
Page 11 of 12

terms of Resolution No.
4.553, of 2017.
Multiple Bank, Commercial
Bank, Investment
Bank, Exchange
Bank, Development
Bank and Caixa
Econômica, except the institutions that are part of a prudential conglomerate classified in Segment 1 (S1), and Payment Arrangement Initiator.
10
3
Payment institution.
6
1
Leasing Company and Savings and
Loan Association.
4
1
Credit Cooperative
–
Confederation and
Central Credit
Cooperative.
–
3
1
1
Development Agency,
Credit Society,
Financing and
Investment, Society
Securities and
Exchange Brokerage,
Full-Service Credit
Cooperative.
2 0.5
Consortium
Administrator
– real estate.
2 0.5
Securities and Exchange
Distribution
Society and
Consortium
Administrator
– movable property and services.
2 0.
5
Mortgage Company.
2 0.5
Direct Credit Society and Peer-to-Peer
Lending Society
2 0.5

Fiduciary
Agent in issuance of
Real Estate
Credit Bill
2
0, 5
Other institutions or supervised activities 2
0, 5
” (NR)

Art. 2 The following provisions of Circular No. 3,857, of 2017, are revoked:

I - art. 10;

II - the sole paragraph of art. 11;

III - the sole paragraph of art. 37;

IV - § 2 of art. 40;

V - item II of art. 55;

VI - item II of art. 56;

VII - the sole paragraph of art. 62;

VIII - art. 63;

IX - the sole paragraph of art. 64;

X - §§ 1 and 2 of art. 73;

XI - §§ 1 and 2 of art. 79;

XII - the sole paragraph of art. 80;

XIII - arts. 82, 83, 84, 85 and 86;

XIV - art. 88; and

XV - arts. 90 and 91.

Art. 3 This Circular enters into force on the date of its publication.

Sidnei Corrêa Marques
Director of Organization of the Financial System and Resolution

This text does not replace the one published in the DOU of 21/8/2018, Section 1, p. 28-30, and in Sisbacen.