Fintechs are companies that intensely use technology to offer financial products with high-tech intelligence or disruptive business models with friendly interfaces or language to the end-user via app (applications) or browser (PC).
Since Resolution 4.656 of the National Monetary Council came into force on April 26th, 2018, the Direct Credit Companies (SCD) and the Peer-to-Peer Loan Companies (SEP), known as credit fintech, entered in the list of authorized institutions to operate by Central Bank of Brazil and, consequently, became BCB regulated and supervised institutions.
SCD’s are financial institutions which perform lending and financing transactions and the acquisition of credit rights exclusively by electronic platform, using their own capital.
SEP’s are financial institutions which promote lending and financing transactions among private individuals, exclusively by electronic platform (peer-to-peer lending).
Other services that may be performed by SCD’s and SEP’s:
- Third Party credit analysis;
- Payment collection to third parties;
- Acting as an insurance representative distributing, through an electronic platform, insurance products related to the credit transactions, in accordance with the National Council of Private Insurance (CNSP) regulation; and
- Issue of electronic currency, in accordance with the rules in force.
The operation of SCD and SEP depends on previous authorization by de BCB. JL Rodrigues provides advisory services to interested companies, which shall meet the necessary requirements to be assessed by the Central Bank of Brazil in order to verify the capacity to become a financial institution, this assessment includes:
- Reputational Analysis of the future controlling group members;
- Absence of restrictions that may, according to the Central Bank of Brazil's discretion, affect the reputation of the project;
- SCD and SEP must be duly incorporated;
- Payment and deposit of the corporate capital at the Central Bank of Brazil, in accordance with Law 4,595 as of December 31, 1964;
- Election or appointment of members of governing corporate bodies, in accordance with the regulation in force;
- Substantiated justification;
- Minimum BRL 1,000,000.00 corporate capital;
- List of the services provided, including interest in issuing electronic currency;
- Market opportunities justifying the project;
- Competitive distinctions;
- Indication of Systems and Technological Resources;
- Manifestation of interest in opening a settlement account from the beginning of its operations;
- Identification of members of the controlling group;
- Information regarding the type of fund, if that is the case;
- Information regarding the conditions of quotas/share trading;
- Information regarding the number of shareholders;
- Provide a list of the six largest shareholders;
- Total market value of assets forming corporate capital;
- Indication of operational fields;
- Presentation of Company past results prior to the authorization request to BCB;
- Presentation of time horizon;
- Presentation of divestment policy;
- Evidence of origin and corresponding financial transactions of the resources to be used in the project by the members of the controlling group and the holders of qualified participation;
- Authorizations and declarations signed by all members of the control group and all holders of qualified participation in questions requested by the Central Bank.
Besides the assistance in the preparation of the application containing all information above mentioned, JL Rodrigues will monitor the whole proceeding, since the filing of the requirement until the decision granting authorization, the services include responses to eventual questions posed by BCB during the analysis. The Central Bank of Brazil may, during the procedure, summon administrators and controllers to provide clarifications and extra technical details.
Cybernetic Security Policy
The National Monetary Council of Brazil has published Resolution nº 4.658, which orders financial institutions to implement Cybernetic Security Policy and establishes requirements for hiring services of data processing and storage and cloud computing. The rule defines the minimum content for the Cybernetic Security Policy and determines the implementation of an action plan, which shall include the controls and procedures adopted by the institution in prevention of and in the response to cybernetic incidents. The Resolution provides that institutions shall implement their Security Policy by May 6th, 2019..