Circular No. 3907 — Regulates the Local Currency Payments System (SML) between the Central Bank of Brazil and the Central Bank of Paraguay

The Collegiate Board of the Central Bank of Brazil, in a session held on August 2, 2018, based on the provisions of Article 13 of Resolution No. 4,331, of May 26, 2014,

R E S O L V E S:

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

Art. 2º This Circular enters into force on August 6, 2018.

                             Tiago Couto Berriel Director of International Affairs and Corporate Risk Management

REGULATION ATTACHED TO CIRCULAR NO. 3,907, OF AUGUST 3, 2018

                          Regulates the operation, within the country, of the Local Currency Payments System (SML) between the Central Bank of Brazil (BCB) and the Central Bank of Paraguay (BCP).

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

I - business day: any day of the year when banking institutions are open for business simultaneously in Brazil, Paraguay, and New York;

II - recipient: the party, in the payment transaction, who is the beneficiary of the transferred funds;

III - sender: the party, in the payment transaction, who issues the payment order to the recipient;

IV - authorized institution: national financial institution authorized by the BCB to operate in the SML, within the scope of the agreement between the BCB and the BCP; and

V - SML rate: exchange rate for converting guaranis to reais, published by the BCB on business days, until 17:30, to be used in relations between authorized institutions and the BCB.

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

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

I - international trade operations of goods and services associated with these operations, such as freight and insurance;

II - international trade operations of various services:

a) related to accommodation, tourism, transport, recreation, culture, and sports;

b) of food and beverage supply;

c) of publishing, printing, and reproduction;

d) provided by individuals (personal services);

e) related to the real estate market;

f) support for business activities;

g) rentals, freight services, and financial leasing, except for imports with a term exceeding 360 (three hundred and sixty) days;

h) postal and courier services;

i) information technology, except for imports related to intellectual property and technology;

j) education, research, and development;

k) health and social assistance;

l) telecommunications, broadcasting, and information supply;

m) maintenance, repair, and installation, except when associated with local expenses linked to imports with a payment term exceeding 360 (three hundred and sixty) days;

n) legal, accounting, and other professional services;

o) related to waste treatment and pollution reduction; and

p) construction support for agricultural, forestry, fishing, aquaculture, and mineral extraction activities; and

III - the following operations described in Annex V of Circular No. 3,690, of December 16, 2013:

a) receipt of social security benefits;

b) receipt of pension fund benefits;

c) maintenance of residents;

d) maintenance of students;

e) taxes;

f) social security contributions;

g) pension fund contributions;

h) international cooperation;

i) donations; and

j) international postal vouchers and refunds.

§ 1º Import operations and local expenses associated with them must have a maximum payment term of 360 (three hundred and sixty) days.

§ 2º Records related to the advance receipt of export revenues prior to more than 360 (three hundred and sixty) days relative to the date of shipment of the goods or provision of the service will not be admitted.

§ 3º Regarding the operations set forth in item II of the caput, transfers of funds for the payment of the following are prohibited:

I - financial services; and

II - imports of the following services:

a) royalties;

b) subject to the annotation of contracts related to industrial and technological property; and

c) technical complements and other expenses linked to or arising from items “a” or “b” of this item, even if not subject to the annotation of the contract.

Art. 3º The transfer of funds within the scope of the agreement between the BCB and the BCP may be carried out in reais or guaranis.

Sole Paragraph. The transfer of funds for the payment of operations denominated in currencies other than the real and the guarani is permitted.

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 8h to 13h (Brasília time).

§ 1º The cancellation of a payment order must be requested to the BCB by the authorized institution 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 Paraguay:

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

II - unique taxpayer registration (RUC) or identity card (CED);

III - unique identification code of the financial institution and agency (BIC); and

IV - account code at the financial institution (ACC).

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

Art. 7º For the purpose of calculating the value in reais for payment by the national sender, when the denomination currency is the guarani, the exchange rate will be the freely negotiated rate with the authorized institution.

§ 1º By 12h on the business day following the registration of the operation by the authorized institution, the BCB will debit, in the bank reserve or settlement account of the aforementioned institution, the value in reais of this operation, or its equivalent in national currency, if it was registered in guaranis.

§ 2º To convert 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 By 12h on the business day following the receipt of a payment order from the BCP, the BCB will credit, in reais and in the bank reserve or settlement account of the authorized institution, the value related to the operation.

Sole Paragraph. The BCB must use the SML rate of the day of the operation's registration to convert operations registered in guaranis to reais.

Art. 9º The transfer of funds from the BCB to the authorized institution, regarding the return of payments made in the SML, will be carried out on the business day following the receipt of the corresponding values from the BCP, applying the SML rate of the day of the registration of the return.

Art. 10. The values resulting from currency conversion will be rounded to two decimal places by increasing the second digit to the subsequent 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. 11. The maximum term for the return of payments, in cases of impossibility of crediting the beneficiary, is 15 (fifteen) calendar days, counted from the date of registration of the payment order, which constitutes the initial term.

§ 1º If the final term is a non-business day, the term referred to in the caput is extended to the first following business day.

§ 2º Returns will transit as new operations and will be settled at the respective exchange rate of the day on which they occur, with the Central Banks not being responsible for any differences between the originally registered payment values and the returned values.

Art. 12. The documents related to operations carried out in the SML must be kept in the file of the authorized institution, in physical or electronic media, for a term 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 BCP within the scope of the SML will be managed and operated by the Division of International Payment Systems (Disip), of the Department of International Affairs (Derin), which, among other duties:

I - will issue specific operational guidelines on the functioning of the SML; and

II - will manage the registry of authorized national institutions, which is published on the BCB's Internet site.