Under Resolution Nº 4,595 of August 28, 2017, the Central Bank of Brazil will be requiring financial institutions and credit unions to adopt compliance programs. The new rule also requires the boards of directors of financial institutions to send the Central Bank documentation as well as an annual report with the results of activities related to compliance including main conclusions, recommendations and actions by the institution’s management with regards to the testing and evaluation of their “institution’s adherence to the legal framework, infra-legal regulations, recommendations of supervisory bodies and, where applicable, codes of ethics and conduct.”
The banks are required to define in their reports at least five provisions such as objective and scope of compliance function, a clear division of the responsibilities for the persons involved, the allocation of adequate personnel and resources, the position of the specific unit in the organizational structure of the institution, communication channels, and the procedures for coordination with risk management and internal auditing areas.
Prior to this new regulation, the Central Bank released another regulation in June that requires all organizations functioning under its guidelines to provide an independent channel for reporting fraud or unlawful evidence in order to comply with anti-money laundering (AML) provisions.
In addition, it is required that all banks have policies, procedures, and internal controls in place that are compatible with their size and volume of operations because without an adequate compliance program the risk for money laundering and other illicit activities increases tremendously.
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