Brazil’s Central Bank issued a rule on compliance policies for financial institutions and credit unions. Resolution Nº 4,595 of August 28, 2017 requires these institutions to adopt compliance programs.
Under the new rule, boards of directors of financial institutions are required to send documentation to the Central Bank and an annual report with the results of activities related to the compliance function. The report must include main conclusions, recommendations and actions taken by the institution’s management, as well as steps to “test and evaluate the institution’s adherence to the legal framework, infra-legal regulations, recommendations of supervisory bodies and, where applicable, codes of ethics and conduct.”
The new rule requires banks to define at least: (1) the objective and scope of the compliance function, (2) the clear division of the responsibilities for the persons involved in it, (3) the allocation of adequate personnel and resources, (4) the position of the specific unit in the organizational structure of the institution, and the measures necessary to ensure its independence and adequate authority, as well as its free access to the information necessary for the exercise of its functions, (5) communication channels, and (6) the procedures for coordination with risk management and internal auditing areas.
Banks are required to have policies, procedures and internal controls compatible with their size and volume of operations, that allow them to comply with the AML provisions.
In June of this year, the Central Bank issued another regulation requiring all institutions operating under its guidelines to make available an independent channel for reporting fraud or unlawful evidence. Under Resolution Nº 4,567 of April 27, 2017, companies must provide whistleblower channels to all of their employees, collaborators, clients, partners and suppliers.
Lucas Zanoni is an undergraduate student of history and law at the University of São Paulo, researcher in the fields of Fiscal History and Anti-corruption, and intern at ID Global, an institute of research and experimental development in social and human sciences.