Resolution CMN No. 1065 — Lowers the Regulation on the Application of Penalties to Financial Institutions and Their Administrators for Violations of Laws No. 4.595/1964, 4.728/1965, and 4.829/1965 — BCB — BR

RESOLUTION No. 001065

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4.595 of December 31, 1964, makes public that the MONETARY COUNCIL NATIONAL, in a session held on December 4, 1985, considering the provisions of Article 4, item VIII, of the aforementioned Law,

RESOLVES:

I - To issue the attached Regulation on the Application of Penalties to financial institutions, their administrators, members of advisory boards, auditors and similar, managers and other persons who violate the provisions of Laws No. 4.595 of December 31, 1964, 4.728 of July 14, 1965, and 4.829 of November 5, 1965, as well as other applicable legal or regulatory norms.

II - Consequently, the Manual of Norms and Instructions (MNI) shall enter into force with the alterations contained in the attached pages, revoking Resolution No. 494 of October 19, 1978.

III - This Resolution shall enter into force as of March 3, 1986.

Brasília-DF, December 5, 1985

Fernão Carlos Botelho Bracher
President

MANUAL OF NORMS AND INSTRUCTIONS
General Index

1-PRELIMINARY PROVISIONS

1-National Financial System (to be published)
2-Distribution System for Securities and Financial Instruments (to be published) 3-National Rural Credit System (to be published) 4-Financial and Capital Markets 5-Securities and Financial Instruments (to be published)

2-MONETARY COUNCIL NATIONAL

1-Nature and Objectives
2-Organization and Operation
3-Advisory Commissions

3-CENTRAL BANK OF BRAZIL

1-Nature and Objectives
2-Functions
3-Organization

4-REGULATIONS AND SPECIAL PROVISIONS

1-Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes (*) 2-Monetary Standard 3-Check Clearing Service and Other Papers 4-Tax on Credit, Exchange and Insurance Operations, and on Operations Related to Securities and Financial Instruments 5-Special System for Settlement and Custody of LTN 6-Bank Reserves 7-Autonomous Investment Agents 8-Fixed Price Operations 9-Evaluation and Accounting of Investments in Affiliated or Controlled Companies 10-Voluntary Deposits of Banking Financial Institutions 11-Microfilming of Documents 12-Special Funds 13-Trading of Fixed Income Securities 14-Credit Contingency 15-System for Registration and Financial Settlement of Securities

5-INTERNAL PUBLIC DEBT

1-Federal Direct Administration
2-Federal Indirect Administration
3-State and Municipal Direct Administration, including Autonomous Entities 4-State and Municipal Indirect Administration, except Autonomous Entities

6-FOREIGN CAPITAL

1-Preliminary Provisions
2-Financed Import
3-Loan in Currency
4-Foreign Investments
5-Leasing (External)
6-Technology Import
7-Brazilian Financing Plan
8-Inheritance (to be published)
9-Estate (to be published)
10-Brazilian Investment Abroad (to be published) 11-Maintenance of Office Abroad (to be published)

7 to 10 - (To be used)

11-SAVINGS BANK

1 and 2-(To be used)
3-Capital
4-Administration
5-Premises
6-(To be used)
7-Operational Norms
8-(To be used)
9-Active and Passive Operations
10-Ancillary Operations
11-Service Provision
12 to 15 (To be used)
16-General Norms of Accounting and Auditing
17-Process Preparation

12-(To be used)

13-DEVELOPMENT BANKS

1-Characteristics and Constitution
2-Objective
3-Capital
4-Administration
5-Premises
6-Operational Norms
7-Active and Passive Operations
8-Operational Instruments
9-General Norms of Accounting and Auditing (to be published) 10-Process Preparation 11-Ancillary Operations 12-(To be used) 13-Final Provisions 14 to 19 (To be used) 20-National Bank for Economic and Social Development (BNDES)

14 and 15 (To be used)

16-COMMERCIAL BANKS

1-Characteristics and Constitution
2-Objective
3-Capital
4-Administration
5-Premises
6-Exchange Portfolio
7-Operational Norms
8-Operational Instruments
9-Active and Passive Operations
10-Ancillary Operations
11-Service Provision
12-Loans
13-Export Financing Programs
14-Compulsory Deposits
15-Special Deposits
16-General Norms of Accounting and Auditing
17-Process Preparation
18 and 19 (To be used)
20-Final Provisions

17-CREDIT COOPERATIVES

1-Characteristics
2-Constitution
3-Objective
4-Capital
5-Members
6-Administration
7-Premises
8-Operational Norms
9-Operations and Services
10-Accounting Norms

MANUAL OF NORMS AND INSTRUCTIONS
Regulations and Special Provisions - 4
Index of Chapters and Sections

1-SUPERVISORY ACTION: INFRACTIONS, PENALTIES, MEASURES, PROCEDURES AND ADMINISTRATIVE PROCESSES (*) 1-Basic Concepts 2-Preliminary Provisions 3-Penalty - Warning 4-Penalty - Monetary Fine 5-Penalty - Suspension of Exercise of Offices 6-Penalty - Temporary or Permanent Disqualification 7-Penalty - Revocation of Operating Authorization 8-Infractions - Exchange Operations 9-Administrative Process - Acts and Procedural Terms 10-Administrative Process - Deadlines 11-Administrative Process - Evidence 12-Administrative Process - Initiation - Development 13-Administrative Process - Summons 14-Administrative Process - Offense Report 15-Administrative Process - Defense 16-Administrative Process - Decision 17-Administrative Process - Appeals 18-Administrative Process - Nullity 19-Administrative Process - Efficacy and Execution of Decisions 20-Administrative Process - Precautionary and Instructional Measures 21-General Provisions

2-MONETARY STANDARD

Document
1-Banknote of Cr$1,000.00

3-CHECK CLEARING SERVICE AND OTHER PAPERS
1-General Provisions
2-Advisory Group for Clearing Matters
3-Documents in Clearing
4-Documents in Return
5-Clearing Sessions - Operation
6-Clearing Sessions - Exchange
7-Clearing Sessions - Return
8-Clearing Closure
9-Penalties

Documents
1-Adjustment Difference Documents (DAD)
2-Deadlines for Check Return

4-TAX ON CREDIT, EXCHANGE AND INSURANCE OPERATIONS, AND ON OPERATIONS RELATED TO SECURITIES AND FINANCIAL INSTRUMENTS 1-Preliminary Provisions 2-Incidence and Taxable Event 3-Taxpayers and Responsible Parties 4-Calculation Base 5-Rate 6-Payment 7-Registration and Collection 8-Non-Taxable Operations 9-Refund 10-Infractions and Penalties 11-Fiscal Administrative Process 12-Consultation Process 13-Orienting Criteria () 14-Final and Transitional Provisions ()

Documents
1-Payment Guide
2-Offense Report
3-Notification of Assessment
4-Term of Start of Supervision
5-Term of Extension of Supervision
6-Declaration - IOF - Applicability
7-IOF Collection Statement by Federative Unit

5-SPECIAL SYSTEM FOR SETTLEMENT AND CUSTODY OF LTN 1-Preliminary Provisions 2-Accounts 3-Teleprocessing Terminals 4-Normal Custody Subsidiary System 5-Bonded Custody Subsidiary System 6-Financial Settlement Subsidiary System 7-Statements Provided by the System 8-General Provisions

Documents
1-Model of Account Opening Letter for Custody
2-Signature Card (green)
3-Signature Card (white)
4-Model of Account Opening Letter for Sub-custody 5-Model of Account Opening Letter for "client 2" account 6-Model of Account Closing Letter for Custody 7-Model of Account Closing Letter for Sub-custody 8-Unique Form of the Special System for Settlement and Custody of LTN 9-Update Table

6-BANK RESERVES
1 - Preliminary Provisions
2 - Movement

Documents
1 - Accreditation of Representatives - Signature Card 2 - Substitution of Powers 3 - Revocation of Powers 4 - Revocation of Powers by Special Means

7-AUTONOMOUS INVESTMENT AGENTS
1-Characteristics
2-Operational Norms
3-Accreditations
4-Agency Contract
5-General Registry of Autonomous Investment Agents

Documents
1-Agency Contract

8-FIXED PRICE OPERATIONS
1-Preliminary Provisions
2-Minimum Requirements
3-Operational Limits
4-Information Disclosure
5-Accounting and Auditing Norms
6-Final Provisions

TITLE : REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures,
Procedures and Administrative Processes - 1
SECTION : Basic Concepts - 1

1 - The provisions of this chapter govern the supervisory action of the Central Bank, exercised within the scope of its legal and regulatory competence, determine its scope, objective and performance, prescribe penalties and measures applicable to offending natural and legal persons, as well as discipline procedures and administrative processes.

2 - The supervisory and controlling action of the Central Bank has as its main objectives the stability and solidity of the System under its aegis, the improvement of financial instruments and institutions, and the safeguarding of the interests of investors and creditors.

3 - To achieve these objectives, the performance of the Central Bank comprises the following main groups of activities:
a) monitoring the economic-financial situation of institutions and financial groups; b) permanent surveillance of the financial, exchange and capital markets, as well as of natural and legal persons who, directly or indirectly, interfere therein, except for the competence of the Securities and Exchange Commission; and c) verification of the procedures adopted by institutions, in order to enforce the norms and regulations issued by the Monetary Council National and by the Central Bank itself and the current legislation.

4 - The performance of the Central Bank is governed by the following basic principles:
a) by virtue of its preventive and orienting action, it may alert the supervised natural or legal person to the observed lack, signing a reasonable deadline for its correction, if applicable; b) the correction of the irregularity during the course of the process is not a cause for extinction of punishability; c) the penalty shall be imposed on the offending society or natural person, and may also be applied, individually or jointly, to the responsible administrator, board member and manager, depending on the nature, scope and gravity of the infraction; d) the allegation of ignorance or wrong understanding of the law or regulation does not exempt the offender from punishment; e) in the examination of the procedure, aggravating or mitigating circumstances shall be considered, for the purpose of applying the applicable penalty; f) recidivism occurs when the agent commits a new infraction after having been previously punished by virtue of a definitive administrative decision, unless at least 3 (three) years have elapsed since the fulfillment of the respective punishment; g) recidivism is considered generic when the infractions are of a different nature, and specific, when of the same nature; and h) infractions of the same nature are considered those provided for in the same legal or regulatory provisions, as well as those that, although provided for in different provisions, present fundamental common characteristics due to the facts that constitute them or their determining motives.

5 - The Central Bank, upon learning of an illegality occurring in an area subject to the supervision of another body of the public administration, or that, in any way, causes damage to the property, assets or rights of a different entity, shall make the appropriate communications, for the measures that may become necessary.

6 - Upon verifying the existence of an indication of the practice of a criminal offense defined in law as a public action, the Central Bank, independently of the administrative action applicable, shall notify the Public Ministry for legal purposes, attaching proof of the criminal action.

TITLE : REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures,
Procedures and Administrative Processes - 1
SECTION : Preliminary Provisions - 2

1 - The violation of the legal or regulatory norm governing an activity supervised by the Central Bank subjects, in the administrative sphere, the natural or legal person involved, without prejudice to other sanctions established in current legislation, to the following penalties:
a) warning; b) monetary fine; c) suspension of the exercise of offices; d) disqualification, temporary or permanent, for the exercise of management offices in the administration or management of financial institutions or entities integrated into the capital market distribution system; and e) revocation of the operating authorization, globally or partially.

2 - The Central Bank may establish corrective, restrictive and prohibitive administrative measures aimed at compliance with legal or regulatory provisions.

TITLE : REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures,
Procedures and Administrative Processes - 1
SECTION : Penalty - Warning - 3

1 - The penalty of warning shall be applied, without prejudice to other applicable sanctions:
a) for non-observance of a provision contained in the legislation or regulation in force, except in the case of a more severe sanction; b) for the provision of inaccurate information, in the area of competence of the Central Bank; and c) when the accounting records are kept late or are being processed in disagreement with the norms issued by the Central Bank.

TITLE : REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures,
Procedures and Administrative Processes - 1
SECTION : Penalty - Monetary Fine - 4

1 - Fines, up to 200 (two hundred) times the highest reference value in force in the Country, follow the following gradation (art. 44, Paragraph 2, of Law No. 4.595/64):
a) from 1 (one) to 50 (fifty) times, when the institution:
I - having been warned of an irregularity that was committed, fails to correct it within the deadline assigned to it; II - fails to communicate to the Central Bank, an act related to the election of an administrator or member of any statutory body, within 15 (fifteen) days following the occurrence; III - fails to make, within the prescribed deadline, publication required by law or by determination of competent authority; IV - fails to provide, within the established deadline, document or information required by the Central Bank; V - violates a legal or regulatory provision related to capital, reserves, cash, services and operations; VI - takes office, without prior acceptance by the Central Bank, as an administrator or member of any statutory body, except in the cases provided for in Paragraph 2 of art. 22 of Law No. 4.595/64; VII - violates conditions of competition among institutions regulated by the Central Bank; VIII - maintains investment in real estate in disagreement with the limits established by monetary authorities; IX - acquires real estate intended for own use, without observing the regulatory norms in force; and X - fails to alienate, within a maximum deadline of one year, unless extended by the Central Bank, real estate received in liquidation of a loan of difficult or doubtful solution; b) from 51 (fifty-one) to 100 (one hundred) times, when the institution:
I - recidivates in a fault punished in the manner of item "a" of this section, provided that specific recidivism is not characterized; II - acquires real estate not intended for own use, except that received in liquidation of a loan of difficult or doubtful solution; and III - participates, except for investment and development institutions, in the capital of any company, without prior authorization of the Central Bank, except for underwriting cases; c) from 101 (one hundred and one) to 150 (one hundred and fifty) times, when the institution:
I - recidivates in a fault punished in the manner of item "b" of this section, provided that specific recidivism is not characterized; II - guarantees or grants loan, credit or financing, in disagreement with the provisions of arts. 37 and 39 of Law No. 4.131/62; III - fails to comply with a legal or regulatory norm pertinent to resources raised abroad; and IV - fails to correctly, or does so outside the deadline, the compulsory deposit due; d) from 151 (one hundred and fifty-one) to 200 (two hundred) times, when the institution:
I - recidivates in a fault punished in the manner of item "c" of this section, provided that specific recidivism is not characterized; II - grants loan or advance prohibited by items II to V of art. 34 of Law No. 4.595/64, or by regulatory norm issued by the Central Bank; III - opposes obstacles to the supervision of the Central Bank; IV - does not maintain secrecy in its active and passive operations and services provided; and V - issues debentures and beneficiary shares without being previously authorized by the Central Bank, in each case.

2 - Also subject to a fine of up to 200 (two hundred) times the highest reference value in force in the Country, without prejudice to applicable criminal sanctions, is any natural or legal person who acts in the financial, exchange or capital markets, without being duly authorized by the Central Bank, except for the competence of the Securities and Exchange Commission (arts. 11, 12 and 13 of Law No. 4.728/65).

3 - Also subject to the following fines, up to a maximum of 200 (two hundred) times the highest reference value in force in the Country:
a) of a value equal to double the loan or advance granted in disagreement with arts. 34 and 40 of Law No. 4.595/64, the responsible person who, for the institution, authorized the prohibited operation; and b) of 50% (fifty percent) on the value of the title irregularly launched in the market, the responsible persons listed in art. 17, Paragraph 4, of Law No. 4.728/65.

4 - The fine not paid until the deadline fixed for payment, in addition to the incidence of late interest of 1% (one percent) per month, shall be monetarily updated, based on the variation index of the Redeemable Treasury Bonds (ORTN), in the form of current legislation.

TITLE : REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures,
Procedures and Administrative Processes - 1
SECTION : Penalty - Suspension of Exercise of Offices - 5

1 - The penalty of suspension of the exercise of the office, which shall last up to 3 (three) years, shall be imposed on the holder of a management office in the administration or management in institutions in the area of supervision of the Central Bank, when a serious infraction in the conduct of the society's interests is verified or when specific recidivism in a transgression previously punished with a fine is characterized.

1 - The penalty of disqualification, temporary or permanent, for the exercise of management offices in the administration or management in institutions in the area of supervision of the Central Bank, shall be applied when a serious infraction in the conduct of the society's interests is verified or when specific recidivism in a transgression previously punished with a fine is characterized.

2 - The penalty of temporary disqualification, which shall last up to 10 (ten) years, shall be imposed on the office holder, responsible for the infraction, when the gravity or frequency of the irregularities practiced reveals his unpreparedness for the exercise of management offices in the administration or management in any institution subject to the supervision of the Central Bank.

3 - The penalty of permanent disqualification shall be imposed on the holder responsible for the infraction, when the severity or frequency of the irregularities committed reveals their total incapacity to hold positions of direction in the administration or management in any institution subject to the supervision of the Central Bank.

4 - The penalty of temporary or permanent disqualification shall also be incurred, even if first-time offenders, by the administrator of a financial institution or of a company or enterprise part of the securities distribution system and by the autonomous agent, with the exception of the competence of the Securities and Exchange Commission (Comissão de Valores Mobiliários), provided they are responsible for the non-compliance with legal or regulatory norms, which contribute to generating indiscipline or affecting the normality of the financial or capital markets (art. 1 of Decree-Law No. 448/69).

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: Penalty - Cancellation of Operating Authorization - 7

1 - The penalty of cancellation of authorization to operate shall be imposed by the National Monetary Council, upon proposal by the Central Bank, in the case of specific recidivism in an infraction previously punished with the penalties provided for in items "c" and "d" of item 4-1-2-1.

2 - Recidivism in a serious offense, punished in the manner provided for in item 4-1-6-4, subjects the natural person or the infringing institution to a summary process for the cancellation of the registration or charter, and consequent liquidation, in the case of a financial institution, regardless of the observance of what is provided in Paragraph 9 of art. 44 of Law No. 4.595/64 and Paragraph 1 of art. 4 of Law No. 4.728/65, without prejudice to other sanctions provided for in the legislation in force (art. 2 of Decree-Law No. 448/69).

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: Infractions - Foreign Exchange Operations - 8

1 - Foreign exchange operations shall be carried out through establishments authorized to operate in foreign exchange, with the intervention of a brokerage firm or company, when provided for by law or regulation, both being responsible, when applicable, for the identity of the client, as well as for the correct classification of the information provided by the client, according to norms established by the Central Bank (art. 23 of Law No. 4.131/62).

2 - It constitutes an infraction attributable to a banking establishment, a brokerage firm or company, if it has intervened, and to the client, punishable by a fine equivalent to triple the value of the operation for each of the infringers, the declaration of false identity on the form which, according to the model and number of copies determined by the Central Bank, will be required in each operation, signed by the client, by the banking establishment and by the brokerage firm or company intervening therein (art. 23, Paragraph 2, of Law No. 4.131/62).

3 - It constitutes an infraction, the exclusive responsibility of the client, punishable by a fine equivalent to 100% (one hundred percent) of the value of the operation, the declaration of false information on the form referred to in the previous item (art. 23, Paragraph 3, of Law No. 4.131/62).

4 - It constitutes an infraction, attributable to a banking establishment and to a brokerage firm or company intervening in the operation, punishable by a fine equivalent to 5% (five percent) to 100% (one hundred percent) of the respective total, for each of the infringers, the incorrect classification, within the norms established by the National Monetary Council, of the information provided by the client on the form referred to in item 2 (art. 23, Paragraph 4, of Law No. 4.131/62).

5 - In case of recidivism, the National Monetary Council may cancel the authorization to operate in foreign exchange of the banking establishment that neglects compliance with the provisions of item 2 and propose to the competent authority, if applicable, the same measure in relation to the brokerage firm or company (art. 23, Paragraph 5, of Law No. 4.131/62).

6 - The banking establishment authorized to operate in foreign exchange that fails to inform the Central Bank, daily, of the total purchase and sale of foreign exchange, with the specification of its purposes, according to the established classification, shall be subject to a fine of up to 30 (thirty) times the highest reference value in force in the Country, tripled in the case of recidivism (arts. 24 and 25, of Law No. 4.131/62).

7 - The banking establishment, the firm and other legal entities authorized to practice manual foreign exchange operations that recidivate in infraction of the law and regulations in force may have their respective authorization cancelled by the National Monetary Council (art. 37 of Decree No. 42.820/57).

8 - The act of cancellation of the authorization to operate in foreign exchange may be carried out summarily by the Central Bank, when the infraction is considered a serious offense, in the manner provided for in Decree-Law No. 448/69.

9 - Private compensation of credits or values of any nature, that is, without prior compliance with the current foreign exchange norms, is prohibited (art. 10 of Decree-Law No. 9.025/46).

10 - Illegitimate foreign exchange operations are considered those carried out (arts. 1 and 2 of Decree No. 23.258/33):
a) between banks, natural or legal persons, domiciled or established in the Country, with any entities abroad, when such operations do not pass through banks authorized to operate in foreign exchange; and b) in Brazilian currency, by entities domiciled in the Country, on behalf and order of Brazilian or foreign entities domiciled or resident abroad.

11 - Failure to provide coverage for export values, as well as the increase in the price of imported merchandise to obtain undue coverage, is subject to penalty (art. 3 of Decree No. 23.258/33).

12 - Infractions of the provisions of items 9, 10 and 11 shall be punished with a fine of up to double the value of the operation (art. 6 of Decree No. 23.258/33).

13 - The Central Bank may conduct an examination of the books and documents of any persons suspected of practicing the acts mentioned in items 9, 10 and 11 (art. 4 of Decree No. 23.258/33).

14 - Resistance to the examination indicated in the previous item constitutes obstruction of supervision, classified under item III of item "d" of item 4-1-4-1, for punishment purposes (art. 6, sole paragraph, of Decree No. 23.258/33).

15 - In the case of repeated infractions, the Central Bank may cancel the authorization to operate in foreign exchange of the banking establishment responsible for them, submitting its decision to the National Monetary Council (art. 26, Law No. 4.131/62).

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: Administrative Process - Procedural Acts and Terms - 9

1 - Procedural acts and terms do not depend on a special form, unless the law expressly requires it, and shall contain only what is indispensable to their purpose.

2 - The administrative process must be organized with pages initialed and numbered consecutively, with all documents in chronological order of their attachment.

1 - Deadlines are continuous, excluding from their count the day of initiation and including the day of expiration.

2 - Deadlines only begin or expire on normal business days at the Central Bank.

3 - The deadline for the practice of the procedural act by the interested party is 10 (ten) days, unless legal or regulatory provision, or established by the Central Bank.

4 - Upon expiration of the deadline, the right to practice the act is extinguished, however, the accused is saved from proving that they did not perform it for just cause.

5 - Just cause is understood as an unforeseen event, outside the will of the accused, which prevents them from practicing the act, by themselves, by their representative or by attorney.

6 - The Central Bank, upon verifying just cause, will allow the accused to practice the act within the deadline it establishes, which shall not exceed double the deadline fixed in item 3.

7 - The renewal and extension of deadlines are restricted to cases expressly provided for in this chapter.

8 - The extended deadline begins on the day following the expiration of the original deadline, regardless of the date of communication of the grant.

1 - The accused may, in the exercise of their defense, produce any evidence.

2 - Evidence to be produced by the accused may only be produced within the defense deadline and shall be presented together with it, except as provided in the following item.

3 - If the accused intends to produce evidence that normally requires time beyond that allowed for the defense, they must justify its necessity and request, for this purpose, an additional deadline, which cannot exceed that granted for the defense.

4 - After the defense phase has passed, if new evidence is collected by the Central Bank, the accused is guaranteed a 10 (ten) day period to speak, if they wish.

1 - The administrative process is initiated due to non-compliance with legal or regulatory provisions:
a) against financial institutions, their directors, council members and managers, as well as natural or legal persons equated to them, in accordance with art. 17 of Law No. 4.595/64; b) against all who, in accordance with Paragraph 1 of art. 18 of the same law, are subject to its provisions and disciplines; and c) against any other persons who, directly or indirectly, irregularly interfere in the financial, foreign exchange and capital markets.

2 - For the purposes of the previous item, the following are equated to a financial institution: a public or private legal entity that has, as its main or ancillary activity, and a natural person who practices, permanently or occasionally, in a manner characterizing speculative interference in the market, the following operations or services, jointly or individually:
a) capture or intermediation of financial resources from third parties; b) application of own or third-party financial resources; c) custody of value belonging to third parties; d) irregular operation of purchase and sale of foreign currency; and e) unauthorized practice of any other financial operation.

3 - The process begins with a notice of infraction or summons.

4 - The procedure shall develop at the headquarters of the Central Bank, in Brasília (DF), respecting the rights of the accused.

5 - In the interest of the Central Bank's administration or when there is manifest convenience for the accused, stated in a written request, certain acts may be carried out at the Regional Departments.

6 - The administrative process comprises:
a) drafting of the notice of infraction or summons; b) attachment of supporting documents, when possible; c) information on the background of the accused; d) review of the records by the accused, if requested; e) receipt of the defense and its attachment, or information on its non-presentation; f) examinations or diligences, if necessary; g) examination of the regularity of the process and forwarding to the Central Unit, if applicable; h) forwarding of the records to the competent authority to issue a decision; i) reasoned decision; j) communication, to the interested party, of the full text of the decision issued; l) receipt of the appeal and its attachment; m) forwarding of the records to the competent body; and n) communication, to the interested party, of the decision issued.

7 - When the practice of several infractions is verified, the Central Bank may investigate responsibilities through one or several distinct processes, depending on the nature of the occurrences.

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: Administrative Process - Summons - 13

1 - The summons shall contain:
a) identification of the accused; b) detailed report of the infractions or irregularities investigated; c) legal or regulatory provision infringed and the penalty provided; d) order to cease the irregular activity, if applicable; e) setting of the deadline for defense; f) designation of the location for review of the process; g) location and date; and h) name and signature of the competent authority.

2 - Omission or inaccuracy in the legal or regulatory classification referred to in item "c" of the previous item does not invalidate the summons, provided that the report of the fact typifies punishable behavior.

3 - When, in subsequent examinations after the drafting of the summons, another offense related to the initial one is verified, a new summons shall not be drafted, but only a complementary term, which shall record, in detail, the fact, with the defining elements of the infraction, opening a new defense deadline.

4 - Summons is made to the person of the accused, legal representative or attorney with express powers, by means of a receipt on the second copy of the instrument.

5 - Summons is carried out by:
a) Central Bank employee; b) postal registration, with acknowledgment of receipt ("A.R."), with express indication that it aims to summon the recipient; and c) public notice, when the place where the accused is located is unknown, uncertain or inaccessible, a circumstance duly certified in the records.

6 - Summons by public notice shall be published once in the Official Gazette of the Union, as well as in a newspaper of large circulation in the state where the offender has domicile, and must contain the indispensable requirements listed in item 1, except for that which deals with item "b".

7 - If any domicile of the offender is unknown, the publication in the newspaper referred to in the previous item shall be made based on the location where the infraction occurred.

8 - A copy of each publication shall be attached to the records.

9 - Summons is considered made:
a) on the date of knowledge by the summoned person, proven by a receipt signed by them, their legal representative or attorney with express powers, on the second copy of the instrument or the acknowledgment of receipt; b) on the date of the declaration of the employee responsible for carrying it out, in case of refusal to receive; and c) at the end of the deadline fixed in the public notice.

1 - The notice of infraction shall be drafted when there is a flagrant practice of the infraction.

2 - The drafting of the notice of infraction must be carried out where the offense was verified, unless there is a special justified reason, even if the offender is not established or domiciled in the location.

3 - The notice of infraction contains:
a) identification of the accused; b) detailed report of the infraction or irregularity investigated; c) legal or regulatory provision infringed and the penalty provided; d) order to cease the irregular activity; e) setting of the deadline for defense; f) designation of the location for review of the process; g) location and date; h) signature of the charged person; and i) name and signature of the charging officer.

4 - Omission or inaccuracy in the legal or regulatory classification referred to in item "c" of the previous item does not invalidate the notice of infraction, provided that the report of the fact typifies punishable behavior.

5 - When, in subsequent examinations after the drafting of the notice of infraction, another offense related to the initial one is verified, a new notice of infraction shall not be drafted, but only a complementary term, which shall record, in detail, the fact with the defining elements of the infraction, opening a new defense deadline.

6 - The employee who drafts the notice of infraction must, when possible, request the supporting documents of the infraction, drafting the respective retention term.

7 - The offender may not, under penalty of characterizing obstruction of supervision, withhold requested documents.

8 - The Central Bank may develop, based on the notice of infraction, the verifications it deems necessary, respecting the right of the offender to manifest themselves on new documents attached to the records.

9 - The notice of infraction shall be submitted for signature by the charged person, their legal representative or agent, mentioning, if applicable, the refusal to receive it.

10 - In the case of a legal entity, in the absence of directors, they shall be charged in the person of the representative or agent of the infringing party.

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: Administrative Process - Defense - 15

1 - Once the summons has been made or the notice of infraction drafted, the deadline for defense begins to run, to be submitted in writing, supported by the documents on which it is based and signed by the accused, legal representative or attorney with express powers.

2 - A deadline of no less than 30 (thirty) days shall be granted for the presentation of the defense.

3 - The defense may, to avoid forfeiture, be signed by a person without a power of attorney instrument, who undertakes to attach it within the non-extendable deadline of 10 (ten) days, with powers of ratification.

4 - Upon expiration of the deadline without the power of attorney instrument being exhibited, the defense shall be considered non-existent and removed from the records through a competent term.

5 - During the running of the deadline for offering a defense, the accused, legal representative or attorney with express powers duly constituted is allowed to review the process, without the need for a request, during normal business hours at the Central Bank, at the location designated in the summons or notice of infraction.

6 - The removal of the process records is allowed, upon request by a duly constituted lawyer, for a period of 5 (five) days.

7 - The provisions of the previous item do not apply when the following hypotheses occur, jointly or separately:
a) existence of two or more accused with different attorneys and common defense deadlines; b) existence of an original document of difficult restoration; and c) occurrence of a relevant circumstance that justifies the retention of the records at the Central Bank, recognized by the authority in a reasoned dispatch, issued ex officio or at the request of the interested party.

1 - Once the procedural instruction is completed, the records shall be concluded to the Director, to issue a decision.

2 - The judge may determine diligences they deem necessary.

3 - The decision is restricted to the recognition, or not, of the merit of the accusation, materializing in a reasoned dispatch.

4 - If it is concluded that the penalty of cancellation of the operating authorization should be applied, the records shall be forwarded to the National Monetary Council, unless legal provision gives express competence to the Central Bank to impose this penalty.

5 - Material inaccuracy, due to an obvious lapse in the decision, may be corrected ex officio or at the request of the interested party, without prejudice to the running of the normal deadline for any appeal that may be available.

6 - A reasoned appeal to the Council of Resources of the National Financial System shall be filed against the decision that fails to apply a penalty.

7 - Upon expiration of the deadline for presenting the defense, the process must be concluded, within the Central Bank, within a period of 12 (twelve) months, extendable by identical periods, by means of a reasoned dispatch by the head of the Unit where the records are located.

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: Administrative Process - Appeals - 17

1 - From a condemning decision by the Central Bank, a total or partial appeal may be filed to the Council of Resources of the National Financial System, received with its legal effects.

2 - The deadline for filing an appeal, unless otherwise provided by law, is 15 (fifteen) days, counted from the date the offender is notified of the application of the penalty.

3 - During the running of the deadline for filing an appeal, it is permitted for the accused or duly constituted attorney to view the case file, regardless of request, during normal business hours at the Central Bank, at the designated location.

4 - The mere protest for the presentation of an appeal does not interrupt the running of the deadline for its filing.

5 - The appeal shall be delivered to the Central Bank and shall contain the grounds of fact and law supporting it.

6 - The appeal, attached to the respective case file, shall be forwarded to the Council of Resources of the National Financial System within 20 (twenty) days.

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: Administrative Process - Nullity - 18

1 - The nullity of any procedural act only prejudices subsequent acts that directly depend on it or are a consequence thereof.

2 - In the declaration of nullity, the competent authority for judgment shall state the acts affected and determine the necessary measures for the continuation or resolution of the process.

3 - Irregularities, errors, or omissions do not constitute nullity and shall be remedied when they result in prejudice to the offender, unless the offender caused them, or when they do not influence the resolution of the process.

1 - A decision rendered by the following is final:
a) The Central Bank, after the deadline for appeal has expired without an appeal being filed; and b) The Council of Resources of the National Financial System.

2 - The Central Bank's decision shall also be final regarding the part that was not subject to an appeal.

3 - The case file from which a final decision resulting in a fine arises shall remain, in the processing unit, for a period of 15 (fifteen) days for friendly collection.

4 - After the friendly collection deadline has expired without the fine amount being paid, the appropriate registration in the Active Debt shall be made, for the purpose of promoting judicial execution.

5 - The Active Debt registration term, authenticated by the competent authority, shall indicate, obligatorily:
a) the name and, whenever possible, the C.P.F. or C.G.C. of the debtor, their domicile or residence; b) the amount due and the method for calculating late interest and monetary correction; c) the origin and nature of the credit, specifically mentioning the infringed legal or regulatory provision and the basis for the penalty; d) the date of registration; and e) the number of the administrative process from which the credit originated.

6 - The certificate of registration must contain, in addition to the requirements mentioned in the previous item, the indication of the book and page of the registration.

7 - When a final decision results from the administrative process, the Central Bank shall publish the applied penalty, by publication, at least once, in the Official Gazette of the Union.

1 - At any stage of the administrative procedure, including when the infraction report is drawn up or when notification is effected, the Central Bank may order the cessation of any activity that violates legal or regulatory provisions, requesting, if necessary, the intervention of the police authority.

2 - In the exercise of its supervisory competence, the Central Bank may require any natural or legal person, who directly or indirectly interferes with the supervised activities, to provide information or display, to its expressly accredited employee, any document, paper, or accounting book, considering the refusal to comply as hindering supervision.

3 - The Central Bank, in the face of strong indications or proof of the practice of an illegal act of difficult repair, or whose immediate term is required by public interest, may take precautionary or preventive administrative measures that prevent the perfection of a situation or the continuation of the practice of acts under investigation.

TITLE: REGULATIONS AND SPECIAL PROVISIONS - 4
CHAPTER: Supervisory Action: Infractions, Penalties, Measures, Procedures and Administrative Processes - 1
SECTION: General Provisions - 21

1 - The right to consult the case files and to request certificates, the cost of which the Central Bank may require reimbursement, is restricted to the directly involved parties and their duly constituted attorneys.

2 - Consultation of the case files outside the hypotheses provided in items 4-1-15-5 and 4-1-17-3, as well as requests for certificates, must be the subject of a written request to the processing unit.

3 - Delegation of competence, total or partial, is admitted for the acts provided for in this chapter, unless otherwise provided by law.

4 - Procedural incidents raised and not expressly regulated in this chapter shall be decided by the processing authority, and do not suspend the running of deadlines nor prevent the practice of acts or procedures in progress or subsequent.

5 - The procedural norms contained in this chapter apply to all administrative procedures, provided they do not conflict with their own norms.

6 - The procedural rules and procedure norms provided for in this chapter shall be applied to ongoing processes, without prejudice to the administrative acts practiced.

Resolution CMN No. 1065 — Lowers the Regulation on the Application of Penalties to Financial Institutions and Their Administrators for Violations of Laws No. 4.595/1964, 4.728/1965, and 4.829/1965

RESOLUTION No. 001065

Lineage: Amended

Timeline

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