BRAZILIAN SECURITIES AND EXCHANGE COMISSION (“COMISSÃO DE VALORES MOBILIÁRIOS” –“CVM”) DISCLOSES CIRCULAR LETTER WITH GUIDELINES ON ADOPTION OF THE “KNOW YOUR CLIENT” POLICY BY BRAZILIAN INTERMEDIARIES
On November 29th , 2011, the Superintendencies of Market Relations and Intermediary (“Superintendência de Relações com o Mercado e Intermediários” – “SMI”) and Institutional Investor Relations (“Superintendência Relações com Investidores Institucionais” – “SIN”) of the Brazilian Securities and Exchange Commission (“CVM”) published Circular Letter 3/2018 – CVM / SMI / SIN (“Circular Letter”), which provides guidelines for the adoption, by Brazilian intermediaries, of the “Know Your Client” Policy of the Financial Activities Control Council (“Conselho de Controle de Atividades Financeiras” – “COAF”), considered one of the pillars of money laundering and terrorist financing .
The purpose of the Circular Letter is to guide Brazilian intermediaries who adopt the simplified register for non-resident investors, as provided in art. 9º of “CVM” Instruction No. 505/2011, on the measures to be adopted in cases in which the foreign intermediary has not provided the necessary information to the full knowledge of the non-resident investor.
In this sense, art. 9º of “CVM” Instruction No. 505/2011 establishes that the agreement between the Brazilian intermediary and the foreign intermediary must include the obligation of the foreign intermediary to submit to the Brazilian intermediary the duly updated registration information, capable of meeting the requirements of the “CVM” regulations which regulates the client registry in the scope of the securities market.
It should be noted that the aforementioned Circular Letter also states that the non-knowledge of the final beneficiary of the foreign client is not, in itself, sufficient element to send suspicious transaction reporting to the “CVM” Segment in (“Conselho de Controle de Atividades Financeiras” – “COAF”).