Circular No. 3735 — Establishes Preventive Measures for Payment Arrangement Initiators in the Brazilian Payment System

The Collegiate Board of the Central Bank of Brazil, in a session held on November 26, 2014, based on Articles 6, 9, items I and IX, and 15 of Law No. 12,865, of October 9, 2013, and considering the provisions of Resolution No. 4,282, of November 4, 2013,

RESOLVES:

Art. 1 This Circular provides for preventive measures, applicable to initiators of payment arrangements integrated into the Brazilian Payment System (SPB), with the objective of ensuring the solidity, efficiency, and regular functioning of the payment arrangements.

Sole Paragraph. The preventive measures referred to in this Circular shall be adopted by a reasoned decision of the Central Bank of Brazil, without prejudice to the application of penalties that may be applicable in the specific case.

Art. 2 The Central Bank of Brazil, in a discretionary evaluation of the circumstances of each case, may determine the adoption of the preventive measures indicated in Art. 3, upon verifying the occurrence of one of the following situations, which compromise or may compromise the solidity, efficiency, and regular functioning of the payment arrangements:

I - insufficiency in the establishment or monitoring of rules and procedures related to:

a) risk management;

b) minimum operational aspects;

c) fraud monitoring;

d) participation in the arrangement; or

e) interoperability between the participants of the arrangement or with other payment arrangements.

II - deficiency in internal controls;

III - non-compliance with determinations of the Central Bank of Brazil, including regarding the deadline and documentation of requests for authorization and amendment of regulations, which hinders the adequate assessment of the arrangement's situation;

IV - lack or inadequacy of communication to the participating institutions of the arrangement regarding:

a) changes promoted in the regulations;

b) the need for participating institutions of the arrangement to request authorization for operation from the Central Bank of Brazil; or

c) decisions of the Central Bank of Brazil regarding the operation of the arrangement;

V - provision to the Central Bank of Brazil of documents, data, or information that are incorrect or out of compliance with the deadlines or conditions established in legal or regulatory norms, which hinders the adequate assessment of the arrangement's situation; and

VI - closure of the set of activities carried out within the scope of the arrangement, without prior authorization from the Central Bank of Brazil.

Sole Paragraph. In the evaluation of the situations referred to in the main text, for the purpose of adopting preventive measures, the Central Bank of Brazil shall consider, jointly or individually, their effects:

I - on interoperability between the participants of the arrangement or with other payment arrangements;

II - on the promotion of competition;

III - on meeting the needs of end users;

IV - on the reliability, quality, and security of payment services;

V - on the orderly closure of the arrangement's activities; and

VI - on other relevant indicators for the assessment of the solidity, efficiency, and regular functioning of the payment arrangements and their participants.

Art. 3 When one or more of the situations indicated in Art. 2 are present, the Central Bank of Brazil may determine that the initiators of payment arrangements that integrate the SPB adopt one or more of the following preventive measures, concurrently or successively:

I - establishment of additional rules, procedures, and operational limits within the scope of the arrangement, including:

a) risk management procedures;

b) provision of additional guarantees;

c) conditions to ensure interoperability between the participants of the arrangement or with other payment arrangements;

d) conditions for participation in the arrangement; and

e) types of participation.

II - establishment of additional measures for monitoring and controlling compliance with rules and procedures within the scope of the arrangement;

III - limitation or suspension of fees and internal transfers to the arrangement;

IV - limitation or suspension of the sale of products, the provision of payment services, and the use of operational modalities; and

V - maintenance of the validity of rules and procedures within the scope of the arrangement, including the use of the brand.

Sole Paragraph. In addition to the measures referred to in the main text, the Central Bank of Brazil may, upon verifying the omission mentioned in item IV of Art. 2, communicate to the participating institutions of the arrangement the changes to the regulations promoted by the initiator, as well as other information necessary for the regular functioning of the arrangement.

Art. 4 Once the preventive measure is applied, the Central Bank of Brazil shall convene the legal representatives of the initiator and the director responsible for addressing demands related to issues concerning the arrangement to provide clarifications on the causes of the situation that led to the adoption of preventive measures.

Art. 5 The following procedure applies to the preventive measures referred to in this Circular:

I - the appearance of the legal representatives of the initiator and the responsible director must occur within a maximum period of five days counted from the date of the summons referred to in Art. 4, which must be formalized in a specific term drawn up by the Central Bank of Brazil;

II - in the appearance term, the Central Bank of Brazil may request the preparation of a plan to resolve the situation that led to the adoption of preventive measures, indicating quantitative and qualitative goals to be achieved, the consent of all parties involved in the execution of the plan, and the establishment of a schedule for its execution;

III - the plan, approved by the institution's board of directors and, if applicable, by the board of trustees, must be presented to the Central Bank of Brazil within the period established by it, which shall not exceed sixty days, counted from the date of appearance;

IV - the plan must be executed within the period approved by the Central Bank of Brazil, which may not exceed six months, extendable for relevant reasons, at the discretion of the Central Bank of Brazil, by a maximum equal period;

V - the legal representatives of the institution and other interested parties may file an appeal against the decision that determined the adoption of a preventive measure, without prejudice to the presentation of the plan to resolve the situation; and

VI - the deadline for filing an appeal, which must be directed to the authority that applied the preventive measure, shall be ten days counted from the appearance at the Central Bank provided for in this article, and must be included in the term mentioned in item I.

§ 1 The Central Bank of Brazil may determine that an independent auditor prepare follow-up reports on the execution of the plan referred to in item II.

§ 2 The Central Bank of Brazil shall define the minimum frequency of the reports referred to in § 1, which must be made available to it.

§ 3 In the absence of a board of directors and a board of trustees, the plan referred to in item III must be approved by the legal representatives of the initiator.

§ 4 The competent authority may reconsider the decision to apply the preventive measure and, if it does not agree, shall send it to a higher body, which will receive the appeal only for its devolutive effect.

Art. 6 The provisions of Law No. 9,784, of January 29, 1999, apply subsidiarily to the procedure provided for in Art. 5.

Art. 7 This Circular enters into force on the date of its publication.

Aldo Luiz Mendes
Director of Monetary Policy