Financial Services Regulation 2025 Comparisons

The key pieces of financial services law in Brazil are:

• Law No 4,728 of 14 July 1965;
• Law No 4,595 of 31 December 1964;
• Law No 6,385 of 7 December 1976;
• Law No 12,865 of 9 October 2013;
• Law No 14,286 of 29 December 2021; and
• Law No 14,478 of 21 December 2022.

Together, these statutes establish the main legal framework for the Brazilian Financial System (Sistema Financeiro Nacional), the Brazilian Payment System (Sistema de Pagamentos Brasileiro), and the Brazilian capital markets.

Law No 4,728

Law No 4,728 of 14 July 1965 establishes the foundational legal framework for Brazil’s capital markets, setting out rules to promote the development, integrity and efficiency of securities issuance, intermediation and trading. It defines key market activities and participants, governs the public offering and distribution of securities, and regulates the conduct and responsibilities of intermediaries such as brokerage and dealer firms, alongside provisions aimed at deepening market liquidity and investor confidence.

Over time, portions of the statute have been complemented and, in part, superseded by later legislation – most notably, Law No 6,385 (which created the securities regulator) and Law No 14,286 (which amended Law No 4,728 to clarify the authority of the Central Bank of Brazil (Banco Central do Brasil or BCB) over certain intermediaries). In aggregate, Law No 4,728 remains a cornerstone statute that underpins Brazil’s capital-market architecture and its regulatory evolution.

Law No 4,595

Law No 4,595 lays out the structure of the Brazilian Financial System, comprising the National Monetary Council (Conselho Monetário Nacional or CMN), the BCB, the Banco do Brasil SA, the National Bank for Economic and Social Development (Banco Nacional do Desenvolvimento Econômico), and public and private financial institutions in general.

Pursuant to Law 4,595, financial institutions must seek approval from the BCB before operating their business. This authorisation requirement extends beyond initial licensing, covering subsequent corporate actions such as capital increases, changes in controlling shareholders, appointments of managers (including directors, officers and members of certain statutory boards), and corporate reorganisations including mergers and spin-offs.

The law also adopts a broad definition of financial institutions, encompassing public and private legal entities that have principal or ancillary activities involving the fundraising, intermediation or investment of proprietary or third-party funds (whether in local or foreign currency), as well as the custody of assets belonging to third parties.

Foreign banks that intend to have a local subsidiary in Brazil, or non-resident investors that intend to invest in local financial institutions, are subject to the same requirements as local banks and Brazilian residents.

Law No 6,385

Law No 6,385 establishes the legal framework for the regulation and supervision of the Brazilian capital markets and constitutes the Brazilian Securities Commission (Comissão de Valores Mobiliários or CVM). It defines the types of securities subject to securities regulation, including shares, debentures, investment fund quotas, derivatives, and other collective investment contracts offered publicly, among others. More recently, carbon credits have been classified by law as securities if traded in the financial and capital markets.

Prior authorisation is required for activities including the issuance, distribution, intermediation, and trading of securities and derivatives, as well as portfolio management, investment funds’ fiduciary administration and custody services, and auditing of listed companies.

The law also defines regulated securities and outlines criminal offences such as insider trading, market manipulation and the unauthorised practice of regulated activities.

Fintechs operating in the capital markets are subject to the same regulatory standards and enforcement mechanisms as banks, broker dealers and other traditional capital market participants.

Law No 12,865

Law No 12,865 introduced the first comprehensive framework for retail payment services in Brazil. It defines key concepts such as “payment institutions”, “payment schemes”, and “payment scheme settlors”, and grants the BCB authority to regulate their constitution, operation and supervision.

Payment institutions are prohibited from performing activities exclusively attributed to financial institutions under Law No 4,595, except for managing payment accounts, issuing payment instruments (either pre-paid or post-paid), providing acquiring services and facilitating transfers of funds. The law also mandates segregation of funds held in payment accounts, which must be invested in specified instruments, ensuring consumer protection and financial stability.

This law enabled non-bank entities, including payment institutions and other fintechs, to offer payment services under regulatory oversight, but subject to lighter regulatory burden, and marked a pivotal shift towards financial inclusion and digital innovation, establishing the legal foundation for initiatives such as Pix, the Brazilian instant payment system, and Open Finance, which fosters data sharing, competition and interoperability across payment and financial services.

Law No 14,286

Law No 14,286 of 29 December 2021 has established the new legal framework for Brazil’s foreign exchange (“FX”) market, Brazilian capital invested abroad, foreign capital invested in Brazil, and the reporting of information to the BCB. It has created additional flexibility for FX operations, subject to the CMN directives and the BCB regulation. Transactions are not subject to value limits and exchange rates can be freely negotiated, provided that only BCB duly-authorised institutions are permitted to operate in the FX market. These institutions are required to adopt KYC and AML procedures and to ensure that FX transactions follow the law and applicable regulations.

The statute modernises cross-border financial intermediation by permitting authorised institutions to invest resources raised in Brazil for credit and financing abroad, which was prohibited by previous laws.

It also simplifies the rules for non-resident investors to hold local accounts and allows foreign regulated entities to use accounts held in their own name for transactions to the benefit of their clients, providing additional possibilities for cross-border structures.

Law No 14,478

Law No 14,478, of 21 December 2022 (the “Virtual Assets Law”), established the legal framework for virtual asset service providers (VASPs), including cryptocurrency exchanges, custodians, and platforms offering virtual asset-related services. The law defines virtual assets as digital representations of value used for payments or investments, excluding digital representations of fiat currencies, securities, and other financial assets regulated by specific laws.

Decree No 11,563, of 13 June 2023, formally designated the BCB as the competent authority to regulate and supervise VASPs whose activities do not involve securities, but which remain under the jurisdiction of the CVM.

On 10 November 2025, the BCB issued comprehensive regulations implementing the Virtual Assets Law, establishing a detailed framework for the incorporation and operation of VASPs and introducing rules for virtual asset transactions within the FX market. The rules set governance, capital and risk-management standards, define the licensing process for VASPs already in operation, and impose obligations regarding segregation of client assets, cybersecurity, and anti-money laundering compliance, as well as conditions for cross-border transfers and other virtual asset-related activities in the FX market.

Regulated Financial Products and Services in Brazil

The Brazilian Financial System is governed by a robust and evolving regulatory framework, primarily under the supervision of the BCB. The regulatory perimeter encompasses a wide range of products and services offered by institutions authorised by the BCB to operate in the domestic market, subject to licensing, prudential and conduct requirements, and ongoing supervision. Within this framework, the BCB supervises a broad range of financial products and services, including:

Banking and credit transactions

Pursuant to Law No 4,595 and CMN Resolution No 4,970 of 25 November 2021, the BCB regulates core banking activities, including deposit-taking, lending, financing, leasing, guarantees, and foreign exchange transactions.

These services are provided by banks, credit, financing and investment institutions, credit fintechs, and credit co-operatives, among others. Financial institutions must obtain prior authorisation from the BCB to operate and comply with regulatory standards on governance, capital adequacy, and risk management.

Payment services

Under Law No 12,865 and BCB Resolution No 80, of 25 March 2021, payment institutions are subject to a dedicated regulatory regime and may provide four modalities of payment services:

• electronic currency issuances –  managing pre-paid payment accounts for cardholders or end-users;
• post-paid payment instruments issuance – offering credit-based payment instruments linked to post-paid accounts;
• acquiring services – enabling merchants to accept payment instruments issued by participants in a payment scheme, without managing payment accounts; and
• payment initiation – facilitating the initiation of payment transactions without holding client funds.

All payment institutions must be authorised by the BCB and meet minimum capital requirements, governance and operational standards. Financial institutions may also provide payment services, subject to compliance with applicable rules set forth by the BCB.

Foreign exchange and cross-border transactions

Brazil’s FX framework was significantly modernised by Law No 14,286, regulated by BCB Resolution No 277 and No 278, of 31 December 2022. This reform introduced a flexible principles-based regime aligned with international standards, aimed at enhancing legal certainty, transparency, and operational efficiency in the domestic FX market.

Under this framework, FX transactions may be freely negotiated between the parties, provided they are conducted through institutions duly authorised to operate in the FX market by the BCB. These institutions may facilitate cross-border payments and transfers and manage accounts in domestic currency and, for certain specific cases, also in foreign currency.

BCB Resolution No 277 also governs the use of accounts in Brazilian reais held by non-resident individuals or entities, which may be used for domestic transactions, including Pix transfers and investments. These accounts are subject to the same regulatory treatment as an account held by a person that is resident in Brazil, except they cannot be used for transfers for the benefit of third parties (except where they are held by a foreign entity that is regulated and supervised by a financial authority). Procedures related to anti-money laundering and know-your-customer, and operational limits based on account type, also apply to non-resident accounts.

Virtual asset services

From 2 February 2026, VASPs will be subject to a comprehensive regulatory regime established by the BCB through Resolutions No 519, 520 and 521, published on 10 November 2025, pursuant to the Virtual Assets Law. While the law has been in force since December 2022, these regulations set out detailed operational, prudential and authorisation requirements applicable to VASPs, including governance, capital adequacy, risk management and cybersecurity standards.

The rules classify VASPs into operational categories such as intermediaries, custodians and brokers, each subject to specific prudential and operational requirements. VASPs that were already active in the market before the issuance of the regulation may continue operating during a transitional period, but must apply for authorisation within defined deadlines and demonstrate compliance with phased supervisory requirements.

In addition, BCB Resolution No 521 integrates virtual asset transactions into Brazil’s FX framework, establishing conditions for cross-border transfers and other virtual asset-related activities.

Regulatory Exemptions Under the Brazilian Regulatory Framework

In Brazil, regulatory exemptions are structured around a proportionality principle, whereby the regulated institutions are segmented according to their size, complexity, and systemic relevance. This segmentation, established by CMN Resolution No 4,553 of 30 January 2017, ranges from Segment 1 (S1), comprising systemically relevant banks, to Segment 5 (S5), which includes smaller and certain non-banking institutions.

Institutions classified under S4 and S5 benefit from a series of exemptions aimed at reducing regulatory burden while maintaining essential prudential safeguards. These include simplified governance requirements and reduced reporting obligations. For instance, institutions in S5 may opt for a simplified methodology to calculate their minimum capital requirements (PR S5), pursuant to CMN Resolution No 4,606 of 19 October 2017, provided they meet specific eligibility criteria regarding risk profile and operational scope.

Further exemptions are provided under CMN Resolution No 4,557, of 23 February 2017, which outlines differentiated requirements for institutions in Segments S2, S3 and S4. These may include relief from stress testing obligations, reduced expectations for risk data aggregation, and exemptions from maintaining comprehensive risk scenario documentation.

In addition to segmentation by size and systemic relevance, Brazilian regulation also classifies institutions by type for prudential purposes.

• Type 1 includes financial institutions and conglomerates led by a financial institution, subject to CMN-issued regulations and the full prudential framework.
• Type 2 refers to payment institutions and prudential conglomerates led by a payment institution, provided they are composed exclusively of entities engaged in payment-related activities or ancillary functions.
• Type 3 encompasses securities brokers, distributors, foreign exchange brokers, and prudential conglomerates led by these entities or by payment institutions not eligible for Type 2 classification.

This division reflects the legal framework governing prudential regulation and ensures proportional application of requirements according to the nature, complexity, and risk profile of each institution.

Finally, institutions operating under the simplified capital regime are exempt from several prudential requirements applicable to larger institutions, including the need to calculate leverage ratios or maintain complex risk management structures, provided they comply with the thresholds and conditions set by the BCB.

Virtual Assets Law

The Virtual Assets Law lays down the regulatory framework governing the virtual assets market in Brazil. The statute defines virtual assets as digital representations of value that can be traded or transferred electronically and used for payment or investment purposes, excluding digital representations of fiat currencies, securities and other financial assets regulated by specific laws.

According to the Virtual Assets Law, the provision of virtual assets-related services to third parties must be carried out by entities authorised by the BCB to operate in Brazil. The law ascribes to VASPs the ability to engage in the following services:

• exchange between virtual assets and local or foreign lawful currencies;
• trading of one or more virtual assets;
• transfer of virtual assets;
• custody or administration of virtual assets or of applications enabling control over virtual assets; and
• participation in financial services and other services related to the offering or sale of virtual assets.

The BCB was formally designated as the competent authority for regulating and supervising VASPs by Decree No 11,563.

On 10 November 2025, the BCB published Resolutions No 519, 520 and 521, which implement the Virtual Assets Law and introduce a comprehensive regulatory regime for VASPs. BCB Resolution No 519 sets out the authorisation process, including documentation, suitability requirements for controllers and managers, and minimum capital thresholds. BCB Resolution No 520 establishes prudential and operational standards, covering governance, risk management, cybersecurity and segregation of client assets, as well as anti-money laundering and counter-terrorism financing obligations. Finally, BCB Resolution No 521 integrates virtual asset transactions into Brazil’s FX framework, defining conditions for cross-border transfers and other virtual asset-related activities.

These regulations will come into force on 2 February 2026, and VASPs already operating in Brazil must apply for the formal authorisation provided by the BCB by 30 October 2026.

The Brazilian Financial System is composed of the following regulatory and supervisory bodies.

National Monetary Council (CMN)

The CMN is the highest authority for monetary and financial policy. It establishes guidelines for credit, monetary, budgetary and public debt matters. The CMN regulates the structure and operations of financial institutions, oversees the Brazilian capital markets, co-ordinates foreign exchange and interest rate policies and provides the guidelines for payments’ regulation.

It also oversees the activities of the BCB, the CVM and the Private Insurance Superintendence (Superintendência de Seguros Privados or “SUSEP”). Through its resolutions, the CMN sets prudential requirements, capital adequacy standards and the systemic risk mitigation frameworks applicable to financial institutions.

The Central Bank of Brazil (BCB)

The BCB is the primary regulatory and supervisory authority for financial and payment institutions in Brazil. It implements CMN policies related to monetary, credit and foreign exchange matters, and oversees the licensing, operation and prudential supervision of banks, payment institutions, and other entities authorised to operate in the financial system.

The BCB monitors foreign investments, enforces anti-money laundering regulations, and manages systemic liquidity. It also has broad powers to intervene in financial institutions, impose sanctions, and conduct resolution regimes such as extrajudicial liquidation and temporary special administration. The BCB plays a central role in implementing Basel III standards and regulating digital finance, including Open Finance and the instant payment system known as Pix.

Brazilian Securities Commission (CVM)

The CVM regulates and supervises the Brazilian capital markets. It enforces securities laws, oversees publicly held companies, authorises public offerings and supervises investment funds, stock exchanges and market intermediaries.

The authority ensures transparency, investor protection and market integrity by requiring disclosure of material information and imposing penalties for misconduct. It also regulates financial instruments, derivatives and the activities of asset managers and brokers, working in co-ordination with the CMN and BCB to maintain a stable and transparent capital market environment.

Private Insurance Superintendence (SUSEP)

SUSEP regulates the insurance, reinsurance, capitalisation, and open supplementary pension markets in Brazil. Operating under the guidance of the National Council of Private Insurance, SUSEP supervises the incorporation, operation and liquidation of insurers and reinsurers, and enforces compliance with technical, accounting and solvency standards.

Regulatory Instruments and Guidance Framework

The CMN and the BCB issue resolutions, circulars, and normative instructions that are publicly available via the BCB’s official website. These instruments govern a wide range of regulatory topics, including prudential regulation, licensing procedures, capital adequacy, foreign exchange transactions, payment systems, and conduct-of-business rules applicable to financial and payment institutions.

The CVM also publishes its regulations, interpretative guidance and circular letters on its official portal. These include instructions and resolutions governing securities markets, public offerings, investment funds, and disclosure obligations.

SUSEP provides its regulatory framework through circulars and resolutions available on its website, addressing insurance, reinsurance, capitalisation, and open supplementary pension products.

In addition to binding regulations, the Brazilian financial regulatory environment includes several soft law instruments that guide market conduct and supervisory expectations, such as:

• circular letters and market communications, which provide interpretative guidance and clarify regulatory expectations;
• manuals and guidelines, which detail operational and compliance procedures for regulated institutions;
• regulatory sandboxes, which establish principles for innovation and allow controlled testing environments for new financial products and services; and
• public consultations, which serve as non-binding instruments during the regulatory development process – enabling regulated entities and other interested parties to provide feedback on draft regulations – and which reflect the regulators’ evolving approach to emerging topics.

Basel III Implementation in Brazil

Brazil has been steadily implementing Basel III reforms since 2013 through a series of resolutions issued by the CMN and BCB. These regulations introduced enhanced definitions of regulatory capital, minimum capital requirements, capital buffers, leverage ratios, and liquidity standards.

CMN Resolutions No 5,221 to 5,223

In 2025, Brazil advanced further by introducing solo basis calculations for prudential metrics. CMN Resolution No 5,221 of 30 May 2025 allows financial institutions to calculate the leverage ratio on a solo basis within a defined prudential sub-conglomerate. This was followed by CMN Resolution No 5,222 of 30 May 2025 which requires institutions to implement liquidity transfer mechanisms and calculate the liquidity coverage ratio (LCR) individually, enhancing intragroup risk management and transparency.

CMN Resolution No 5,223, also of 30 May 2025, updated the leverage ratio framework, introducing individualised requirements alongside consolidated ones. The regulation sets a phased compliance schedule, with full effectiveness by 2028, and establishes differentiated minimum ratios based on the institution’s systemic relevance and prudential classification.

CMN and BCB joint resolutions

On 3 November 2025, the CMN and BCB jointly issued Resolution No 14 and BCB Resolution No 517, which modernise the methodology for calculating minimum paid-in capital and net equity. The new framework replaces the previous institution-type-based model with a modular approach based on the actual activities performed, investment profile, and funding sources. It also introduces additional capital requirements for institutions offering technology-intensive services and those using the term “bank” in their corporate name.

CMN Resolution No 4,966

Additionally, CMN Resolution No 4,966, of 25 November 2021, aligned Brazil’s accounting standards with international best practices. This regulation establishes new criteria for the classification, measurement and recognition of financial instruments, as well as the adoption of an expected credit loss model for impairment. It strengthened transparency and risk sensitivity in financial reporting by imposing stricter disclosure requirements and mandating the incorporation of macroeconomic factors into credit risk assessments. The new framework became fully effective on 1 January 2025, requiring institutions to adjust systems, governance structure, and provisioning models to comply with the updated prudential and accounting standards.

Timeline for application

These changes aim to align Brazil’s prudential standards with international Basel III recommendations while reinforcing individual-level oversight within financial conglomerates. The institutions must comply with the new rules until 30 June 2026, and gradually adjust to the new methodology through 2027, applying 25%, 50% and 75% of the difference between the old and new capital thresholds.

T+1 Settlement

Brazil has not yet implemented a T+1 settlement cycle. Under the current regulatory framework, BCB Resolution No 304 of 20 March 2023 establishes the settlement timelines for transactions processed through systemically important deferred net settlement systems.

The rule requires same-day settlement for fund transfer operations; up to one business day for spot transactions involving financial assets and securities, except for equities and investment fund shares traded on stock exchanges; and up to two business days for spot transactions with equities, investment fund shares traded on stock exchanges, and foreign exchange operations.

On 1 October 2025, the BCB launched Public Consultation No 125 to evaluate the feasibility of shortening settlement cycles within the Brazilian Payment System, particularly for systems operating under deferred net settlement.

The BCB highlights that shorter settlement cycles could reduce price volatility and mitigate credit and liquidity risks, thereby lowering collateral and margin requirements and enhancing the resilience of the SPB. However, it also acknowledges that such a transition would require significant operational and technological adjustments, particularly in post-trade processes involving non-resident investors, securities lending, and foreign exchange.

Regulatory Treatment of ESG Investments and Prevention of Greenwashing

Sustainability-related financial reports

Brazil has established a robust regulatory framework to promote ESG-oriented investments and sustainable finance. The CVM issued Resolution No 193 of 20 October 2023, which mandates the preparation and disclosure of sustainability-related financial reports by publicly held companies, investment funds, and securitisation entities. These reports must follow the international standards IFRS S1 and S2, developed by the International Sustainability Standards Board (ISSB), with mandatory adoption starting in 2026 and voluntary adoption permitted from 2025. This initiative aligns Brazil with global best practices and aims to enhance transparency, comparability, and investor confidence in ESG disclosures.

Resolutions preventing greenwashing

To address greenwashing, Brazil has implemented specific rules under various CVM resolutions. Notably, CVM Resolution No 175 of 23 December 2022 prohibits the use of ESG-related labels (such as “green”, “sustainable” or “social”) in investment fund names unless the fund’s investment policy genuinely pursues environmental, social or governance benefits. Similarly, CVM Resolution No 160 of 13 July 2022 requires issuers of labelled securities to disclose the methodologies and independent validation supporting their sustainability claims. These measures aim to prevent misleading marketing and ensure that ESG claims are substantiated by credible data and standards.

The Social, Environmental and Climate Responsibility Policy

In addition, CMN Resolution No 4,945 of 15 September 2021 introduced the Social, Environmental, and Climate Responsibility Policy (Política de Responsabilidade Social, Ambiental e Climática or PRSAC), which applies to all institutions regulated by the BCB. The rule requires institutions to establish and implement the PRSAC aligned with their business model, operational complexity, and exposure to social, environmental and climate risks.

The policy must include principles and guidelines that govern the institution’s activities and relationships with stakeholders, ensuring proportionality and adequacy to the institution’s risk profile. By mandating structured governance and effective actions under the PRSAC, the regulation aims to integrate sustainability considerations into financial decision-making and strengthen resilience against social and environmental risks.

The Center of Excellence in Data Science and Artificial Intelligence

Brazilian financial regulators have not yet issued specific rules on artificial intelligence in financial services. However, the BCB has taken proactive steps to prepare for AI integration, including the creation of the Center of Excellence in Data Science and Artificial Intelligence, which aims to establish governance guidelines for the ethical and secure use of AI within the institution. AI is also included in the BCB’s 2025–2026 regulatory agenda, which reflects the current focus on monitoring international developments and domestic legislative initiatives related to AI.

Artificial Intelligence Bill No 2,338

The most significant development in this subject is the proposed Artificial Intelligence Bill No 2,338 (Projeto de Lei, or “PL 2338”), approved by the federal senate and currently under review in the chamber of deputies. This draft legislation establishes a national framework for the responsible development and use of AI systems, introducing a risk-based classification (including “high-risk” and “excessive-risk” systems), mandatory algorithmic impact assessments, and civil liability provisions. Once enacted, PL 2338 is expected to serve as the foundation for future regulatory actions by financial authorities, including the BCB, aligning Brazil with international standards.

Regarding the financial system, Bill No 2338 explicitly classifies AI systems used for assessing individuals’ creditworthiness or determining their credit rating as high-risk applications. These systems will be subject to strict governance requirements, including mandatory preliminary risk assessments, algorithmic impact evaluations, and robust transparency measures.

Institutions employing such AI must ensure human oversight in decisions that produce significant legal or financial effects, provide clear explanations of automated decisions, and allow affected individuals to contest outcomes. Additionally, the Bill imposes objective civil liability on providers and operators of high-risk AI systems, reinforcing accountability and consumer protection in financial services.

New Rules to Strengthen Financial and Payment System Security

The promotion of innovation has been one of the main pillars guiding the BCB’s activities for more than a decade. However, the Brazilian regulatory attitude towards fintech is increasingly focused on balancing innovation with financial system integrity. The BCB has taken deliberate steps to reduce regulatory asymmetries between traditional financial institutions and fintechs. While fintechs initially benefited from more flexible rules that encouraged market entry and experimentation, the BCB has moved to align their regulatory obligations with those of traditional financial institutions.

In 2025, the BCB introduced a series of new rules to enhance the security and governance of the financial system. A key development was the issuance of Resolution No 494 of 5 September 2025, which mandates that all payment institutions, including those previously exempt due to low transaction volumes, must obtain prior authorisation to operate.

In addition, Joint Resolution No 14 and BCB Resolution No 517, as mentioned in 4.1 Capital Adequacy, introduced a new modular framework for calculating minimum paid-in capital and net equity requirements, replacing the previous institution-type-based approach with a model that considers the activities performed, investment profile, and funding sources of each institution. Previously, payment institutions operated under significantly lower minimum capital requirements, while traditional financial institutions were subject to much higher thresholds. The new framework aims to reduce these asymmetries by applying proportional requirements based on risk and operational complexity.

Furthermore, BCB Resolution No 495 of 5 September 2025, requires payment institutions to maintain a physical headquarters for their operations. The address must be used exclusively by the institution, and the use of co-working spaces, virtual offices or other shared environments as the official headquarters is expressly prohibited, except when entities belong to the same financial conglomerate. This measure aims to strengthen operational security and ensure proper governance standards.

The extension of these obligations reflects the BCB’s intent to harmonise regulatory expectations across financial and payment sectors, ensuring transparency and improving supervisory capabilities.

Pix – Instant Payment System

Brazil’s instant payment system, also known as Pix, regulated by BCB Resolution No 1 of 12 August 2020, was launched in 2020 and has transformed the country’s payment landscape by enabling real-time transactions 24/7 at no cost to individuals. It is a cornerstone of financial inclusion, processing billions of transactions monthly and offering advanced functionalities such as Pix Saque and Pix Troco, which allow cash withdrawals at commercial establishments.

A recent enhancement, Pix Automático, enables automated recurring payments for services such as utilities and subscriptions, providing greater convenience and reducing collection costs. Unlike traditional direct debit, Pix Automático offers interoperability across different payment service providers and integrates with Open Finance, ensuring broader accessibility and innovation.

Pix is expected to evolve further with upcoming features such as Pix Parcelado, which will allow users to finance transactions through instalment payments, and Pix em Garantia, enabling the use of Pix receivables as collateral for credit operations. Additionally, Pix por Aproximação, introduced in May 2025, supports contactless payments and is expected to expand to offline environments.

Robust security measures have been implemented since the beginning of Pix, such as transaction limits and anti-fraud mechanisms, ensuring reliability, while its integration with Open Finance expands its use for payment initiation services. Pix exemplifies the BCB’s commitment to innovation that combines convenience, security and accessibility, while maintaining strong regulatory oversight to ensure resilience and trust in the payment ecosystem.

Open Finance

Open Finance in Brazil, established by Joint Resolution No 1 of 4 May 2020, is a regulatory framework that mandates the standardised sharing of data and services through the opening and integration of systems among institutions authorised by the BCB. The model operates via secure APIs (application programming interfaces) and requires explicit, informed and unequivocal customer consent, ensuring compliance with data protection, cybersecurity, and governance standards. Its primary goal is to foster innovation, competition and transparency by allowing consumers to control and share their financial information across multiple providers.

Since its inception, Open Finance has evolved significantly. Joint Resolution No 4 of 24 March 2022 expanded its scope beyond banking data to include foreign exchange, investments, insurance, and open pension plans. Later, Joint Resolution No 5 of 20 May 2022 reinforced interoperability principles, setting operational and infrastructure standards to integrate the financial, capital markets, insurance and pension sectors. These developments have enabled new functionalities such as credit portability, payment initiation services, and the Open Investment phase, which allows customers to share data on investment products for better portfolio management and tailored offerings.

Open Finance has delivered tangible benefits to the Brazilian financial ecosystem. By reducing information asymmetry and enabling personalised services, it promotes financial inclusion and efficiency while encouraging new business models. Today, the initiative is considered a cornerstone of the BCB’s innovation strategy, driving a more competitive and integrated market and empowering consumers with greater autonomy over their financial data.

Vulnerable Customer Initiatives

Debt renegotiation

Brazilian financial regulators have adopted several initiatives to protect vulnerable customers in the financial system. A key measure was the enactment of Law No 14,690 of 3 October 2023, which created the Desenrola Brasil programme. This federal initiative facilitates debt renegotiation for individuals with overdue obligations, especially those earning up to two minimum wages or registered in the federal social programmes database.

Positive consumer registry

Law No 12,414, of 9 June 2011, created a legal framework for databases that record individuals’ and companies’ payment credit histories. Unlike traditional systems that focused only on negative information, it created a Positive Registry for consumers, which includes timely payments and other indicators of financial reliability, allowing lenders to assess credit risk more accurately. This initiative promotes financial inclusion, facilitates access to credit under better conditions for good payers, and encourages fairer interest rates. The law also sets strict rules for data accuracy, transparency, and consumer rights, ensuring compliance with privacy and consent requirements.

Improved consumer rights

Still under the federal scope, Law No 15,252 of 4 November 2025 introduced a new legal framework to strengthen consumer rights in financial services. It guarantees automatic salary portability, enabling individuals to transfer wages and benefits to an account of their choice without repeated requests, and allows automatic debits between accounts held at different institutions. The law also reinforces transparency by requiring clear disclosure of total credit costs and prohibiting unilateral increases in credit limits without prior consent. Additionally, it creates a special credit modality with reduced interest rates to mitigate over-indebtedness. These measures aim to enhance consumer autonomy, foster competition, and improve fairness in financial relationships.

Tailored financial literacy programmes

In addition, the BCB and CMN have issued regulations requiring regulated institutions to adopt consumer relationship policies that ensure fair treatment and product suitability. Notably, Joint Resolution No 8 of 21 December 2023 mandates financial literacy programmes tailored to the characteristics of each customer, such as age, income level, and digital maturity. These rules aim to prevent over-indebtedness and improve transparency in credit offerings.

FEBRABAN’s self-regulatory regime

Complementing these efforts, the banking sector maintains a voluntary self-regulatory regime co-ordinated by the Brazilian Federation of Banks (Federação Brasileira dos Bancos or “FEBRABAN”), which includes the Guide to Best Practices in Consumer Relations with Vulnerable Groups. This framework encourages banks to identify vulnerable profiles and adopt differentiated service protocols, plain-language communication, and proactive credit mitigation strategies.

The BCB and CVM have adopted a proactive and structured approach to the oversight of entities operating within the shadow banking perimeter. According to the BCB’s assessments, the majority of entities typically classified as shadow banking, such as investment funds, securitisation vehicles, financial companies, and market intermediaries, are already subject to regulatory supervision.

Brazilian authorities have implemented a range of measures to mitigate systemic risk while preserving the sector’s role in credit intermediation and market liquidity. These include:

• activity-based supervision, which ensures that entities are regulated according to the nature of their financial activities, regardless of their institutional form;
• enhanced data collection and transparency, particularly through trade repositories (TRs) and credit registries such as the BCB Credit Information System (Sistema de Informações de Crédito or SCR); and
• prudential consolidation, whereby certain non-bank entities are integrated into banking conglomerates for supervisory purposes.

At the international level, Brazilian regulators actively participate in forums such as the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO), contributing to the development and implementation of global standards for non-bank financial intermediation.

Regulatory Authorisation Request Process Before the BCB

In general terms, each institution must attest the:

(i) economic and financial capacity and unblemished reputation of its controllers;

(ii) lawful origin of resources used for capital pay-up;

(iii) economic and financial viability of its business model;

(iv) suitability of its technology and corporate governance structures to the risks and complexity of the business model;

(v) unblemished reputation and technical capacity of its managers; and

(vi) compliance with minimum capital and prudential requirements.

The BCB may request the drafting of a business plan to demonstrate compliance with items (iii) and (iv). In the case of financial institutions, such compliance may also be verified by the BCB by means of a prior inspection of the institution’s premises and operational structures.

Institutions must pay the minimum capital requirement according to the financial or payment activity provided.

The BCB may require interviews with the managers and controllers and request any additional information it deems necessary.

The BCB has 360 days to analyse authorisation requests, counted from the date of submission of all necessary documents and information. The BCB may require additional information as it deems necessary, in which case the deadline is suspended and only resumed once the institution submits the required information.

The BCB does not charge any fees to review the application and/or grant the authorisation.

BCB Punitive Administrative Proceedings

Managers, executive officers and board members of regulated institutions are directly subject to punitive administrative proceedings conducted by the BCB. Law No 13,506 of 13 November 2017 and BCB Resolution No 131 of 8 August 2021 establish a comprehensive framework for investigating and penalising misconduct, including violations of prudential, governance and conduct-of-business rules. These individuals may be held personally accountable for infractions such as unauthorised activities, failure to comply with supervisory directives, or breaches of regulatory duties.

Penalties may include public admonition, monetary fines, and in severe cases, disqualification from holding management positions in institutions regulated by the BCB. The BCB may also impose precautionary measures, such as temporary suspension from office, when there is imminent risk to financial stability or institutional integrity. These proceedings are conducted with procedural safeguards, including the right to defence, access to evidence and appeal to the National Financial System Appeals Council (Conselho de Recursos do Sistema Financeiro Nacional).

Resolution Regimes

Senior individuals may also be subject to liability under special resolution regimes, such as intervention (intervenção), extrajudicial liquidation (liquidação extrajudicial), or temporary special administration (Regime de Administração Especial Temporária).

These regimes are triggered when a financial or payment institution faces severe distress, engages in fraudulent or reckless management, or poses systemic risk. Under such circumstances, executive officers may be presumed at fault and held jointly liable for damages, including those arising from mismanagement or regulatory breaches. Their personal assets may be frozen automatically upon the imposition of the regime.

The resolution framework aims to preserve financial stability and protect creditors. It empowers the BCB to take decisive action, including dismissing management, appointing a special new manager or council, restructuring the institution, or initiating the liquidation. The BCB may also authorise the transfer of control, corporate reorganisations, or even the expropriation of shares in cases involving public interest.

Individuals and entities with controlling influence over the institution may be held jointly and severally liable for the institution’s uncovered liabilities, regardless of fault, when a resolution regime is triggered. Furthermore, the BCB is mandated to conduct administrative inquiries to determine the causes of the intervention or liquidation and to assess the civil and criminal liability of former executive officers and board members.

While administrative liability remains subject to proof of fault or intent, civil liability under resolution regimes may be objective and unlimited. The legal architecture reflects a strong emphasis on individual accountability and reinforces the importance of governance, transparency and compliance within regulated entities.

Regulatory Outlook for 2026

The Brazilian financial sector is expected to undergo substantial regulatory developments in 2026, reflecting the strategic priorities under the BCB’s regulatory agenda. These initiatives aim to enhance transparency, operational resilience and legal certainty, while fostering innovation and aligning domestic standards with international best practices.

Key areas of focus include:

Virtual asset regulation

With the entry into force of the regulation governing the incorporation and operation of VASPs in Brazil in 2026 and considering the deadline for currently active VASPs to apply for authorisation from the BCB to continue operating, significant regulatory alignment efforts are anticipated. In this context, market participants will need to adapt their structures, processes and systems to comply with regulatory standards, including capital requirements, asset segregation, governance frameworks, internal controls and technological compatibility to avoid operational restrictions.

New authorisation requirements

With the enactment of BCB Resolution No 494, all payment institutions must be authorised by the BCB prior to operating, regardless of the volume of transactions they carry out.

The resolution establishes that electronic money issuers that began operating before 1 March 2021, and postpaid payment instrument issuers and acquirers who have yet to receive authorisation and whose operations began before 5 September 2025, must apply for a licence between 1 May and 31 May 2026.

Asymmetry between financial institutions and fintechs

Another key trend is the BCB’s effort to reduce regulatory asymmetries between traditional financial institutions and fintechs. Historically, fintechs operated under more lenient rules, which facilitated market entry and innovation but also introduced supervisory gaps.

The BCB has moved to align fintechs with traditional financial institutions in terms of transparency and governance. Fintechs are now required to report customer financial data through the Brazilian Federal Revenue’s system, comply with AML protocols, and adhere to internal control standards. This shift reflects the BCB’s broader strategy to ensure that fintechs are subject to regulatory obligations aligned with those imposed on financial institutions, promoting consistency and reinforcing the integrity of the financial system.

Banking-as-a-service regulation

On 28 November 2025, the BCB and CMN issued Joint Resolution No 16, establishing the regulatory framework for banking-as-a-service (“BaaS”) in Brazil. Under this regulation, BaaS is defined as a contractual arrangement whereby an institution regulated by the BCB provides financial and/or payment services through integration with a service-taking entity’s platform, enabling these services to be offered to end users.

The resolution sets out strict governance, risk management and compliance requirements for BaaS providers, including due diligence on service-taking entities, robust internal controls, and adherence to anti-money laundering and cybersecurity standards. Institutions with BaaS agreements executed prior to the resolution’s effective date must achieve full compliance by 31 December 2026.

This regulation represents a milestone in the BCB’s financial innovation agenda, reinforcing systemic security while enabling new business models. In 2026, compliance efforts will dominate the priorities of financial institutions and fintechs engaged in BaaS, as the framework imposes operational, prudential and transparency obligations that reshape partnerships and client interaction models.

Pix trends

At the Pix Forum held on 2 October 2025, the BCB discussed improvements and determined that new Pix functions, such as the use as collateral (Pix em garantia), offline tap payment functions and integration with trade bills, will be further regulated in 2026.

eFX regulations

On 19 September 2025, the BCB published Public Consultation No 124 aimed at improving the regulation of international payment and transfer services (eFX).

The main provisions include restricting eFX services to regulated institutions only, establishing transitional rules for unauthorised entities, strengthening operational transparency and reporting requirements, expanding the scope and permitted operational procedures, as well as maintaining records and compliance.

After receiving comments from market participants, the BCB expects to further elaborate on this matter in the coming year.