CMN Resolution No. 5,039 — Adjusts Rules for Monitoring and Inspection of Proagro Operations and Sicor Registration Procedures

The current text of the MCR can be found at the following electronic address: www3.bcb.gov.br/mcr.

CMN RESOLUTION NO. 5,039, OF SEPTEMBER 29, 2022

Adjusts, within the scope of the Agricultural Activity Guarantee Program (Proagro), rules applicable to the monitoring and inspection of qualified operations and to the registration of procedures in the Rural Credit and Proagro Operations System (Sicor) after the deadlines provided in the regulation.

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the National Monetary Council, in a session held on September 29, 2022, considering the provisions of Article 4, item VI, of the aforementioned Law, Articles 4, 5, and 14 of Law No. 4,829, of November 5, 1965, Articles 59, 65-A, and 66-A of Law No. 8,171, of January 17, 1991, and Article 4 of Decree No. 175, of July 10, 1991,

R E S O L V E S:

Article 1. Section 11 (Monitoring and Inspection) of Chapter 12 (Agricultural Activity Guarantee Program - Proagro) of the Rural Credit Manual (MCR) is hereby established, as per the annex.

Article 2. Section 5 (Coverage) of Chapter 12 (Agricultural Activity Guarantee Program - Proagro) of the MCR shall henceforth be in effect with the following alterations:

“19 - The agent must exhaust all necessary diligence for the analysis and judgment of the coverage request, deciding it within a maximum period of 90 (ninety) days, counting from the receipt of the conclusive loss verification report, and preparing a judgment summary, according to the model published by the Central Bank of Brazil.” (NR)

“19-A - The deadline referred to in item 19:

a) applies to operations with analysis or judgment of the coverage request pending as of 2/1/2023, with the counting starting from the date of receipt of the conclusive loss verification report;

b) does not apply to operations whose analysis or judgment of coverage is overdue as of 2/1/2023.” (NR)

“19-B - In exceptional cases where the deadline for concluding the analysis and judgment of the coverage request provided in item 19 is exceeded, the agent must observe the following conditions:

a) the procedures to be carried out in Sicor are the responsibility of the director responsible for the rural credit area of the agent, who must register in the said system, for each impacted enterprise, the reason for the non-compliance with the deadline; and

b) the supporting documentation justifying the non-compliance with the deadline must be kept available to the Central Bank of Brazil for the period provided in the applicable legal and regulatory norms regarding the production and management of documents related to operations and transactions carried out by financial institutions.” (NR)

“19-C - The Proagro agent is liable, except in cases where the reasons are not attributable to them, for the non-compliance with the deadline for analysis and judgment of the coverage request provided in item 19, subject to the sanctions provided for in the legal and infra-legal regulation.” (NR)

Article 3. Item III of letter “k” of item 1 of Section 1 (General Provisions) of Chapter 12 (Agricultural Activity Guarantee Program - Proagro) of the MCR is hereby revoked.

Article 4. This Resolution enters into force on January 2, 2023.

Roberto de Oliveira Campos Neto
President of the Central Bank of Brazil

ANNEX

------------------------------------------------------------------------------------------------------------------------------------------------------ TITLE: RURAL CREDIT
CHAPTER: Agricultural Activity Guarantee Program (Proagro) - 12
SECTION: Monitoring and Inspection - 11

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1 - The agent of the Agricultural Activity Guarantee Program (Proagro) is responsible for the monitoring and inspection of operations qualified under Proagro, with the duty to define the applicable procedures, observing:

a) the requirements established in this Chapter;

b) the effectiveness of the adopted procedure considering the characteristics of the qualified enterprise; and

c) the application of consistent, verifiable criteria and methods subject to evaluation by the Central Bank of Brazil.

2 - The monitoring and inspection of the operation qualified under Proagro aim to:

a) evaluate, in view of the applicable regulation, the adequacy of the enterprise's qualification in the program;

b) evaluate the extent of the losses indicated in the Loss Verification Report (LVR);

c) identify qualified operations with signs of irregularities and prevent the improper payment of indemnities by Proagro, in disagreement with the applicable regulation, through practices such as:

I - remote sensing;

II - cross-referencing information and use of indicators; and

III - generation of risk alerts for irregularities, from qualification through the payment of indemnities;

d) recommend changes in the internal processes of the Proagro agent, including controls in the qualification of operations in the program and in inspection actions.

• To comply with the provisions of item 2, the use of all analysis methods used in the monitoring and inspection of rural credit operations is permitted, individually or combined.

4 - The structure responsible for the activities indicated in item 2 must have:

a) policies and strategies for monitoring and inspection of operations qualified under Proagro, clearly documented;

b) methodology for monitoring and inspection actions;

c) management of inspections, with adequate reporting of actions performed and continuous evaluation of the effectiveness of strategies used to mitigate irregularities; and

d) systematic control of the qualification of operations in Proagro, through the implementation of routines, procedures, and risk indicators capable of identifying signs of irregularities in qualification, loss assessment, and indemnity payment.

• In its monitoring and inspection work, the Proagro agent may use, complementarily, other external sources of information available.

• Without prejudice to the full responsibility for complying with the provisions of this Chapter, the Proagro agent may hire specialized individuals to assist in the execution of its monitoring and inspection work.

7 - The exercise of the activities treated in item 6 within the scope of Proagro is prohibited:

a) by a natural or legal person hired directly by the borrower of the rural credit operation qualified under Proagro to provide technical assistance to the enterprise;

b) by a company in which the program beneficiary participates directly or indirectly;

c) by a technician or team that prepared the plan or project of the enterprise;

d) by a technician or company that sells agricultural inputs and products, regardless of the location of its area of operation;

e) by a technician from the city hall and the agriculture department;

f) by a technician or team from a rural workers' representation entity;

g) by a person who, at the municipal, state, or federal level, in the legislative power, the judicial power, or the direct administration of the executive power, is holding or running for an elected office or companies in which these persons participate directly or indirectly; and

h) by a technician or team from the Proagro agent itself that analyzed and/or approved the operation qualified in the program.

8 - The Proagro beneficiary may be held liable for the reimbursement of expenses, in cases of inspection actions:

a) frustrated due to their fault; and

b) extraordinary, carried out due to irregularities in their conduct.

• In the event of confirmation of signs of criminal offenses or tax fraud, the Proagro agent must communicate such signs to the Public Ministry or tax authorities, forwarding, whenever possible, the documents related to the signs of irregularities verified, without prejudice to the communication to the Proagro administration and compliance with Complementary Law No. 105, of January 10, 2001, when applicable.

• In the event of confirmation of signs of irregularities in the performance of Proagro experts, the Proagro agent must communicate such signs to the Ministry of Agriculture, Livestock, and Supply, forwarding, whenever possible, the documents related to the signs of irregularities verified.

• In the cases described in items 9 and 10, the Proagro agent must keep archived and available to the Central Bank of Brazil the communications made, for the period corresponding to the statute of limitations of the punitive claim.

• Proagro agents must keep the documentation generated in the inspection and monitoring process available to the Central Bank of Brazil, observing the applicable legal and regulatory norms regarding the production and management of documents related to operations and transactions carried out by financial institutions.

13 - The Central Bank of Brazil may, at its discretion:

a) directly inspect rural credit operations qualified in the program by Proagro agents, including with beneficiaries, and the adherence instrument to the program must contain an explicit clause to this effect;

b) determine, in a reasoned manner, that Proagro agents carry out inspections in any operations qualified under Proagro, without cost to the Central Bank of Brazil;

c) request, in a reasoned manner, the designation of an inspector from the Proagro agent to conduct inspections on the rural property, jointly with representatives of the Central Bank of Brazil and without cost to the latter; and

d) determine, in a reasoned manner, the substitution of the inspection sample with another considered adequate, when the inconsistency of the method used for sampling is verified.