CVM Instruction No. 463 of January 8, 2008

CVM INSTRUCTION NO. 463, OF JANUARY 8, 2008.

Amends CVM Instruction No. 301, of April 16, 1999, and provides for the procedures to be observed for the monitoring of operations carried out by politically exposed persons.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Board, in a meeting held on November 27, 2007, in view of the provisions of Arts. 8, 15 and 18 of Law No. 6,385, of December 7, 1976, and in view of the provisions of Law No. 9,613, of March 3, 1998, Decrees No. 5640, of December 26, 2005, and No. 5,687, of January 31, 2006, Coremec Deliberation No. 2, of December 1, 2006, and COAF Resolution No. 016, of March 28, 2007, resolved to issue the following Instruction:

Art. 1 Arts. 2, 3, 4, 5, 6, 7, 9 and 10 of CVM Instruction No. 301, of April 16, 1999, shall enter into force with the following wording:

“Art. 2 The obligations provided for in this Instruction apply to legal entities that have, on a permanent or occasional basis, as their main or ancillary activity, custody, issuance, distribution, settlement, negotiation, intermediation or administration of securities or financial assets, as well as entities administering organized stock and over-the-counter markets, as well as the other persons referred to in Art. 9 of Law No. 9,613/98, which are under the discipline and supervision exercised by the CVM, and the administrators of the legal entities.” (NR)

“Art. 3......

§ 1 Without prejudice to the provisions of CVM Instruction No. 387, of April 28, 2003, the client registry shall contain, at a minimum, the following information:

......

§ 3 The persons mentioned in Art. 2 of this Instruction shall update the registration files of active clients in periods not exceeding 24 months.” (NR)

“Art. 4 The persons mentioned in Art. 2 of this Instruction shall maintain a record of every transaction involving securities or financial assets, regardless of their value, in a manner that allows:

I – timely communication as referred to in Art. 7;

II – verification of the financial movement of each client, based on a criterion defined in the institution's control procedures, in light of the patrimonial and financial situation recorded in their registry, considering:

a) the amounts paid for settlement of operations;

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b) the amounts or assets deposited as collateral, in operations in the future settlement markets; and

c) the transfer of securities to the client's custody account.”(NR)

“Art. 5 The registries and records referred to, respectively, in Arts. 3 and 4, as well as the documentation proving the adoption of the procedures provided for in Art. 3-A of this Instruction, shall be kept, available to the CVM, for a minimum period of 5 (five) years, from the closing of the account or the completion of the last transaction carried out in the name of the respective client, this period may be extended indefinitely in the event of an investigation formally communicated by the CVM to the person or institution.”

(NR)

“Art. 6 ......

......

II - operations carried out between the same parties or for the benefit of the same parties, in which there are successive gains or losses with respect to any of the parties involved;

......

VII – operations carried out with the purpose of generating loss or gain for which there is objectively no economic basis;

VIII – operations with the participation of natural persons residing or entities constituted in countries and territories not cooperating, in accordance with circular letters issued by the Financial Activities Control Council – COAF;

IX – operations settled in cash, if and when permitted;

X – private transfers, without apparent motivation, of funds and securities;

XI – operations whose degree of complexity and risk appear incompatible with the technical qualification of the client or their representative;

XII – deposits or transfers carried out by third parties, for the settlement of client operations, or for the provision of collateral in operations in the future settlement markets; and

XIII – payments to third parties, in any form, on account of the settlement of operations or redemption of amounts deposited as collateral, registered in the name of the client.

§ 1 The persons mentioned in the caput of this article shall pay special attention to operations in which the following categories of clients participate:

I – non-resident investors, especially when constituted in the form of trusts and companies with bearer shares;

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II - investors with large fortunes managed by areas of financial institutions aimed at clients with this profile (“private banking”); and

III – politically exposed persons (Art. 3-B).

§ 2 For the purposes of the provisions of this article, the persons mentioned in the caput shall analyze the operations together with other related operations that may be part of the same group of operations or bear any type of relationship with each other.” (NR)

“Art. 7 For the purposes of the provisions of Art. 11, item II, of Law No. 9,613/98, and Decree No. 5,640/05, the persons mentioned in Art. 2 of this Instruction shall communicate to the CVM, within twenty-four hours from the occurrence that objectively allows it, all transactions, or proposals for transactions, covered by the records provided for in Art. 4 of this Instruction that may constitute serious indications of crimes of “money laundering” or concealment of assets, rights and values derived from the crimes listed in Art. 1 of Law No. 9,613, of 1998, including terrorism or its financing, or related to them, in which:

I - exceptional characteristics are verified with respect to the parties involved, manner of realization or instruments used; or,

II - there is objectively no economic or legal basis.

......

§ 3 Operations related to terrorism or its financing are considered those carried out by persons who commit or plan to commit terrorist acts, who participate in them or facilitate their practice, as well as by entities belonging to or controlled, directly or indirectly, by such persons and the persons or entities that act under their command.

§4 The communication provided for in the caput of this article shall also inform whether it concerns a client considered as a politically exposed person.” (NR)

"Art. 9 The persons mentioned in Art. 2 of this Instruction shall:

I - develop and implement a control procedures manual that enables faithful compliance with the provisions of this Instruction; and

II - maintain a continuous training program for employees, aimed at disseminating control procedures and money laundering prevention."

(NR)

"Art. 10. The persons mentioned in Art. 2 of this Instruction shall have a director responsible for compliance with the obligations hereby established, to whom access to client registration data, as well as any information regarding operations carried out, must be granted.” (NR)

Art. 2 Arts. 3-A and 3-B are added to CVM Instruction No. 301, of 1999:

“Art. 3-A The persons mentioned in Art. 2 shall:

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I – adopt control measures, according to procedures previously and expressly established, which seek to confirm the registration information of their clients, in order to prevent the use of the account by third parties and identify the ultimate beneficiaries of the operations;

II - identify persons considered politically exposed;

III – supervise more rigorously the business relationship maintained with a politically exposed person; and

IV – pay special attention to proposals for the start of a relationship and to operations carried out with politically exposed persons originating from countries with which Brazil has a high number of financial and commercial transactions, common borders or ethnic, linguistic or political proximity.

Sole Paragraph In the case of a business relationship between the persons mentioned in Art. 2 and a foreign client who is also a client of a foreign institution supervised by a government authority similar to the CVM, it is admitted that the measures provided for in this Instruction are adopted by the foreign institution, provided that the CVM is assured access to the data and procedures adopted.

Art. 3-B For the purposes of the provisions of this Instruction, it is considered:

I – a politically exposed person is one who holds or has held, in the last 5 (five) years, relevant public offices, jobs or functions, in Brazil or in other countries, territories and foreign dependencies, as well as their representatives, family members and other persons in their close relationship;

II – relevant public office, job or function exercised by heads of state and government, high-level politicians, high-ranking public servants, magistrates or high-level military officers, executives of public companies or executives of political parties; and

III – family members of the politically exposed person, their relatives, in the direct line, up to the first degree, as well as the spouse, partner and stepchild.

§1 The 5 (five) year period referred to in item I shall be counted retroactively from the date of the start of the business relationship or the date on which the client came to be classified as a politically exposed person.

§2 Without prejudice to the definition of item I of the caput of this article, the following are considered, in Brazil, politically exposed persons:

I - holders of elective mandates of the Executive and Legislative Branches of the Union;

II - occupants of office, in the Executive Branch of the Union:

a) of State Minister or equivalent;

b) of a special nature or equivalent;

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c) of President, Vice-President and director, or equivalents, of autarchies, public foundations, public companies or mixed-economy companies; or

d) of the senior direction and advisory group - DAS, level 6, and equivalents;

III - members of the National Council of Justice, the Federal Supreme Court and the superior courts;

IV - members of the National Council of the Public Ministry, the Attorney General of the Republic, the Deputy Attorney General of the Republic, the Attorney General of Labor, the Attorney General of the Military Justice, the Deputy Attorneys General of the Republic and the Attorneys General of Justice of the States and the Federal District;

V - members of the Court of Accounts of the Union and the Attorney General of the Public Ministry before the Court of Accounts of the Union;

VI - Governors of States and the Federal District, Presidents of Courts of Justice, Legislative Assemblies and District Chamber and Presidents of Courts and Councils of Accounts of States, Municipalities and the Federal District; and

VII - Mayors and Presidents of Municipal Chambers of State capitals.” (NR)

Art. 3 The institutions mentioned in Art. 2 of CVM Instruction No. 301, of 1999, shall adapt their procedures to the provisions of this Instruction within a maximum period of 90 (ninety) days from its publication.

Art. 4 This Instruction enters into force on the date of its publication in the Official Gazette of the Union.

Signed original by

MARIA HELENA DOS SANTOS FERNANDES DE SANTANA

President