On February 3, the new rule establishing a regulatory framework for activities related to payment initiation technologies comes into force.
On February 3, Law No. 21,521, which establishes a general framework to encourage the provision of financial services through technological means, also known as the “Fintec Law“, comes into effect.
At the same time, the General Rules (NCG) of the Financial Market Commission (CMF) will be published, which regulate the registration of companies subject to this law, as well as the procedure and requirements for requesting authorization to provide investment advisory services, respectively.
From a compliance perspective, the Fintec Law mainly addresses two points.
The first refers to the incorporation of providers of: (i) crowdfunding platforms; (ii) alternative transaction systems; (iii) credit and investment advisory services; (iv) custody of financial instruments; (v) order routing; (vi) intermediation of financial instruments and (vii) providers of payment initiation services, as regulated entities under Law No. 19,913 before the Financial Analysis Unit (UAF).
In this sense, the providers of these services must have a Manual for the Prevention of Money Laundering and Financing of Terrorism, designate a Compliance Officer and comply with the obligations required by law and the circulars issued by the UAF for this purpose regarding suspicious transactions, cash transactions, due diligence and records.
Secondly, the Fintec Law incorporates compliance rules by establishing that these entities must have the authorization of the CMF, prior to the initiation of their services, accrediting compliance with certain requirements, which will be determined by NCG and dictated by the CMF.
For example, the NCG that regulates the procedure and requirements to request authorization to perform investment advisory services, establishes minimum requirements that must be accredited, among them:
- A regulatory compliance program that contemplates policies, procedures or controls referred to investment advisory, identification and communication of conflicts of interest and the design and implementation of algorithms.
- A Code of Conduct that contemplates the principles and standards that guide the actions of the advisor, its personnel and the obligations that must be complied with in terms of publication and disclosure of information.
- Programs of continuous training and accreditation of knowledge for advisors and executives.
- Compliance with other obligations and records as appropriate.
The other service providers regulated by this law must wait for the publication of the General Rules issued by the CMF, which will establish the procedure and requirements for requesting authorization to begin providing services.
It is advisable that the providers dedicated to the services regulated by the Fintec Law establish, from the very beginning and with a Compliance perspective, the different tools they must have for a good corporate governance, complying with the requirements dictated by the CMF, to manage in a preventive and adequate way their daily activities in line with the operational and legal risks of each company.
For more information on these topics, please contact our Compliance Group: