Circular No. 3707 — Regulates the Local Currency Payment System (SML) between the Central Bank of Brazil (BCB) and the Central Bank of the Argentine Republic (BCRA)

The Collegiate Board of the Central Bank of Brazil, in a session held on June 11, 2014, based on the provisions of Article 13 of Resolution No. 4,331, of May 26, 2014,

R E S O L V E:

Art. 1º The operation, within the country, of the Local Currency Payment System (SML) between Argentina and Brazil, established between the Central Bank of Brazil (BCB) and the Central Bank of the Argentine Republic (BCRA), shall follow the discipline set forth in the Regulation attached to this Circular.

Art. 2º This Circular enters into force on June 26, 2014.

Art. 3º Circular No. 3,406, of September 29, 2008, is hereby revoked.

                             Luiz Edson Feltrim Director of International Affairs and Corporate Risk Management, substitute


REGULATORY FRAMEWORK ATTACHED TO CIRCULAR NO. 3,707, OF JUNE 16, 2014

                                     Regulates the operation, within the country, of the Local Currency Payment System (SML) between the Central Bank of Brazil (BCB) and the Central Bank of the Argentine Republic (BCRA).

Art. 1º For the purposes of this Regulation, the following definitions are adopted:

I - business day: any day of the year in which banking institutions are open for business simultaneously in Brazil and Argentina;

II - recipient: any beneficiary of funds originating from the Local Currency Payment System (SML), such as the exporter and the official pension insured;

III - sender: any party responsible for the payment of an SML banking order, such as the importer and the paying official pension entity;

IV - authorized institution: a national financial institution authorized to operationalize the SML within the scope of the agreement between the Central Bank of Brazil (BCB) and the Central Bank of the Argentine Republic (BCRA);

V - SML rate: the exchange rate for converting Argentine pesos to Brazilian reais, published by the BCB on business days, until 2:30 PM, to be used in relations between national authorized institutions and the BCB.

Sole Paragraph. The authorized institution cannot be classified as a recipient or sender, except when operating in the SML on its own behalf.

Art. 2º Within the scope of the agreement between the BCB and the BCRA, fund transfers may be carried out, with a view to the payment of:

I - international trade operations of goods and services associated with such operations, such as freight and insurance, involving natural and legal persons resident, domiciled, or with headquarters in Brazil or Argentina;

II - pensions and annuities, between Brazil and Argentina, provided that the official pension entity (paying entity) and its beneficiary are resident, domiciled, or have headquarters in these countries, but in distinct poles.

§ 1º The operations indicated in item I must have a maximum term of 360 days for payment.

§ 2º Records related to the advance receipt of export revenues with a term exceeding 360 days will not be admitted.

Art. 3º The denomination of the currency for the transfer of funds within the scope of the agreement between the BCB and the BCRA, which is the same as that of the payment order corresponding to the operation carried out, shall be:

I - that of the country of the commercial transaction party responsible for supplying the merchandise;

II - that of the country of the paying official pension entity.

Art. 4º The registration and cancellation of payment orders and the records of credit returns must be carried out by authorized institutions on business days, during the period from 8:00 AM to 1:00 PM (Brasília time).

§ 1º For the cancellation of a payment order, the authorized institution must request this operation from the BCB on the same day as the corresponding registration.

§ 2º The registration of a credit return by an authorized institution implies authorization to carry out the corresponding debit, on the same day, in its bank reserve or settlement account.

Art. 5º To carry out an operation through the SML, the authorized institution must obtain from the sender, and provide to the BCB, the following data regarding the beneficiary in Argentina:

I - the full name of the natural or legal person (trade name or corporate name);

II - Clave Única de Identificación Tributaria (CUIT) or Código Único de Identificación Laboral (CUIL);

III - Clave Bancaria Uniforme (CBU);

IV - code of the Argentine financial institution (ENT).

Art. 6º The BCB shall promptly return to the authorized institution any payment order that presents irregularities or signs of their occurrence.

Art. 7º For the purpose of calculating the value in reais for payment by the national sender responsible for an operation set forth in item I of Art. 2 of this Circular, the exchange rate of the Argentine peso shall be the rate freely agreed upon with the authorized institution.

§ 1º By 12:00 PM on the business day following the registration of the operation by the authorized institution, the BCB shall debit, in the settlement account of the said institution, the value corresponding in reais to the amount denominated in Argentine pesos of that operation.

§ 2º For the conversion of the value in reais to be debited by the BCB, the SML rate of the day of the operation's registration will be used.

Art. 8º For the purpose of calculating the value paid in reais to the beneficiary of the Argentine official pension, the exchange rate of the Argentine peso used will be the SML rate of the day of the operation's registration.

Art. 9º By 12:00 PM on the business day following the receipt of the payment order from the BCRA, the BCB shall credit, in reais and in the settlement account of the authorized institution, the value related to the operation.

Sole Paragraph. The BCB shall use the SML rate of the day of the operation's registration to convert operations registered in Argentine pesos into reais.

Art. 10. The transfer of funds from the BCB to the authorized institution, in return for payments made in the SML, will be effected on the business day following the receipt of the corresponding values from the BCRA, applying the SML rate of the day of the return's registration.

Art. 11 The values resulting from currency conversion will be rounded to two decimal places by increasing the second digit to the next unit when the third digit is equal to or greater than 5 (five); keeping the second digit when the third digit is less than 5 (five).

Art. 12. Documents related to operations carried out in the SML must be kept in the archive of the authorized institution, in physical or electronic media, for a period of 5 (five) years counted from the end of the fiscal year in which the corresponding payments are settled.

Art. 13. The agreement between the BCB and the BCRA within the scope of the SML is managed and operated by the Division of Financial Operations of International Agreements (Disip), of the Department of International Affairs (Derin), which, among other duties:

I - issues specific operational guidelines on the functioning of the SML;

II - manages the registry of national authorized institutions, which is published on the BCB's website on the internet.