Interested party: LGBANK BRASIL
Origin: GÓES INTERNATIONAL CORP. DO BRASIL LTDA
SUMMARY: INSTALLATION OF FOREIGN COMPANIES IN BRAZIL. AUTHORIZATION OF THE BRAZILIAN GOVERNMENT. NEED.
1_ A foreign business company wishing to establish a branch, branch, agency or establishment in Brazil must request operating authorization from the Federal Government. (Article 1, IN 77/20 RFBME). 2_ The company that depends on authorization from the Executive Power to function will be governed by this title, without prejudice to the provisions of a special law. Single paragraph. The competence for authorization will always be with the Federal Executive Power. (Art. 1.123. CC). 3_ In the absence of a period stipulated in law or in an act of the public authority, the authorization will be considered forfeit if the company does not start operating within the twelve months following the respective publication. (Art. 1.124.CC). CC - Law No. 10,406 of January 10, 2002 SUMMARY: FROM THE PREVENTION PLAN TO MONEY LAUNDERING AND THE FINANCING OF TERRORISM AND THE PROLIFERATION OF WEAPONS OF MASS DESTRCTION. OBLIGATORINESS. 1_ Law 9613/98, updated by Law 12683/12, is the main law to combat “laundering or concealment of assets, rights and values; the prevention of the use of the financial system for the illicit activities provided for in this Law; creates the Financial Activities Control Council – COAF, and takes other measures”;
2_The Normative Instruction No. 36, of March 10, 2021, of the Financial Activities Control Council – COAF – “Disciplines the form of adoption of policies, procedures and internal controls SUMMARY: INSTALLATION OF FOREIGN COMPANIES IN BRAZIL. AUTHORIZATION OF THE BRAZILIAN GOVERNMENT. NEED. 1_ A foreign business company wishing to establish a branch, branch, agency or establishment in Brazil must request operating authorization from the Federal Government. (Article 1, IN 77/20 RFBME). 2_ The company that depends on authorization from the Executive Power to function will be governed by this title, without prejudice to the provisions of a special law. Single paragraph. The competence for authorization will always be with the Federal Executive Power. (Art. 1.123. CC). 3_ In the absence of a period stipulated in law or in an act of the public authority, the authorization will be considered forfeit if the company does not start operating within the twelve months following the respective publication. (Art. 1.124.CC). CC - Law No. 10,406 of January 10, 2002 SUMMARY: FROM THE PREVENTION PLAN TO MONEY LAUNDERING AND THE FINANCING OF TERRORISM AND THE PROLIFERATION OF WEAPONS OF MASS DESTRCTION. OBLIGATORINESS. 1_ Law 9613/98, updated by Law 12683/12, is the main law to combat “laundering or concealment of assets, rights and values; the prevention of the use of the financial system for the illicit activities provided for in this Law; creates the Financial Activities Control Council – COAF, and takes other measures”; 2_The Normative Instruction No. 36, of March 10, 2021, of the Financial Activities Control Council - COAF - "It regulates the form of adoption of Federal policies, procedures and internal controls, constitutes a Democratic State of Law and is based on: I - the sovereignty; IV - the social values of work and free enterprise;
1. This is a legal analysis requested by GÓES INTERNATIONAL CORPORATION, aiming at the installation and operation of its counterpart, LGBANK BRASIL, in Rio de Janeiro/RJ; in order to operate in the national crypto-asset market; LGBANK BRASIL is a personified company that fits into companies that depend on authorization from the federal government. 2. Operate, through its “Fintech”, the custody and temporary assignment of crypto-assets (rental); 3. Act with legal certainty, within the constitutional, legal and normative frameworks, without incurring a legal prohibition. 4. Both companies are duly registered, GÓES INTERNATIONAL CORP. DO BRASIL LTDA, (BVI Company, No. 2066424 - CNPJ 46.138.901/0001-45 RJ/RJ - email REINALDO.RSCONTAS@GMAIL.COM) and LGBANK BRASIL (CNPJ 36.948.490/0001-08 - RJ/RJ, CNAE 6619-3/99 5. It is necessary to report, I will give an opinion.
LEGAL ANALYSIS: The examination of this consultation takes place: i) under the terms of the need for authorization for a foreign company to operate in Brazil (IN 77/20 RFB/ME - Arts. 1123/1124 CC); ii) operationalize, through its “Fintech”, the custody and temporary assignment (rental) of crypto-assets; (IN 1,888 RFB, art. 6, § 2, IV). iii) Act with legal certainty, without incurring a legal prohibition in accordance with: the principle of legality; free enterprise and the free exercise of economic activity; the declaration of economic freedom rights; within the constitutional, legal and regulatory frameworks; the adoption of a plan to prevent money laundering and terrorist financing and the proliferation of weapons of mass destruction. As follows. BACKGROUND: From the need for operating authorization for the installation of foreign companies in Brazil, it is necessary to request operating authorization from the Federal Government, through the “gov.br” portal, as established in Normative Instruction No. 77
The possibility of operationalizing, through its “Fintech”, the custody and temporary assignment (rental) of crypto assets. The Normative Instruction of the Federal Revenue of Brazil 1,888 of May 3, 2019, regulates the obligation to provide information regarding operations carried out with crypto assets to the Special Secretariat of the Federal Revenue of Brazil. (art. 1, IN of RFB 1.888/19), “in verbis” Art. 1 This Normative Instruction establishes and regulates the obligation to provide information regarding operations carried out with crypto assets to the Special Secretariat of the Federal Revenue of Brazil (RFB). The legal permission to operate with temporary assignment (rental) of crypto-assets is given through IN 1888, art. 6, § 2, VI, “in verbis”. “Art. 6 It is obliged to provide the information referred to in art. 6, § 2 The obligation to provide information applies to the individual or legal entity that performs any of the operations with crypto-assets listed below: [ ... ] ; VI - Temporary assignment (rent)”. Act with legal certainty, without incurring a legal prohibition: LGBANK BRASIL must, as a rule, comply with the legal limits of the Brazilian Civil Code, regarding contracts in general (articles - 421 to 480); (as for obligations - articles 233 to 303), (performance, extinction of obligations - articles 304 to 388) and (default of obligations - articles 389 to 420). Freedom to contract is a basic principle to be respected.
Also, in terms of legal certainty, as well as by virtue of national law and international conventions, the company must adopt, in view of the rejection of terrorism and money laundering, preventive measures to protect the misuse of its platforms, as well as to the use or attempts of these illicit purposes. The company must mandatorily adopt the Plan for the Prevention of Money Laundering and the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction (PLD-FTP), under the legal and regulatory terms in force of Law 9.613/98, which was updated in accordance with Law 12,683/12, to make criminal prosecution of money laundering crimes more efficient; The aforementioned Law also created the COAF – Financial Activities Control Council, aiming to intensify and speed up the inspection and use of preventive measures and sanctions to combat money laundering crimes, through internal control. COAF, by its Resolution No. 36/21, regulates the form of policies, procedures and controls to prevent money laundering, "in verbis": "It regulates the form of adoption of policies, procedures and internal controls to prevent money laundering, terrorist financing and funding the proliferation of weapons of mass destruction”. It is convenient to illustrate some points of Resolution No. 36/21 (COAF) to be implemented by the Company, before starting the business relationship: [...], implement and maintain, [...], procedures aimed at getting to know its customers that ensure due diligence in their identification, qualification and risk rating; the PLD/FTP policy; the risk profiles of the client and the transaction associated with it, including reinforced measures for hypotheses that involve greater risk.
It is important to pay attention to the full compliance with all legislation, by the company LGBANK BRASIL, of the normative instructions, ordinances reported in the Plan for the Prevention of Money Laundering and Financing of Terrorism and the Proliferation of Weapons of Mass Destruction. Mandatory to all national companies, LGBANK BRASIL must immediately promote its adequacy to the General Data Protection Law (LGPD), in all terms, for the safety of its customers and employees, regarding the protection of the privacy of personal data. and banking, mandatory identification of their customers, (right holder). It is mandatory to adapt all national companies that have a CNPJ, Law nº 13.709/18, with wording given by Law nº 13.853/19, (LGPD), in its art. 1st. provides: “in verbs”. art. 1 - provides for the processing of personal data, including in digital media, by a natural person or by a legal entity governed by public or private law, with the aim of protecting the fundamental rights of freedom and privacy and the free development of the personality of the natural person. ”. Before commenting on the aforementioned law (LGPD), it is worth highlighting a small glossary of technical terms for a better understanding of what will follow. See, (art. 5, items I to XVIII), “in verbis”. Art. 5th For the purposes of this Law, it is considered: I - personal data: information related to an identified or identifiable natural person; II - sensitive personal data: personal data about racial or ethnic origin, religious conviction, political opinion, affiliation to a union or organization of a religious, philosophical or political nature, data referring to health or sexual life, genetic or biometric data, when linked to a natural person; III - anonymized data: data relating to the data subject that cannot be identified, considering the use of reasonable technical means available at the time of its treatment; IV - database: structured set of personal data, established in one or several places, in electronic or physical support;
V - holder: natural person to whom the personal data that are processed; VI - controller: natural or legal person, governed by public or private law, responsible for decisions regarding the processing of personal data; VII - operator: natural or legal person, governed by public or private law, who processes personal data on behalf of the controller; VIII - person in charge: person appointed by the controller and operator to act as a communication channel between the controller, data subjects and the National Data Protection Authority (ANPD); (Wording provided by Law No. 13,853, of 2019) Term IX - treatment agents: the controller and the operator; X - treatment: any operation carried out with personal data, such as those referring to the collection, production, reception, classification, use, access, reproduction, transmission, distribution, processing, archiving, storage, elimination, evaluation or control of information, modification , communication, transfer, diffusion or extraction; XI - anonymization: use of reasonable technical means available at the time of treatment, through which data loses the possibility of association, directly or indirectly, with an individual; XII - consent: free, informed and unequivocal expression by which the holder agrees with the processing of his/her personal data for a specific purpose; XIII - blocking: temporary suspension of any processing operation, by keeping personal data or database; XIV - elimination: deletion of data or a set of data stored in a database, regardless of the procedure used; XV - international data transfer: transfer of personal data to a foreign country or international organization of which the country is a member; XVI - shared use of data: communication, dissemination, international transfer, interconnection of personal data or shared treatment of personal data banks by public bodies and entities in the fulfillment of their legal competences, or between these and private entities, reciprocally, with specific authorization , for one or more treatment modalities allowed by these public entities, or between private entities; XVII - impact report on the protection of personal data: controller documentation containing the description of the personal data processing processes that may generate risks to civil liberties and fundamental rights, as well as measures, safeguards and risk mitigation mechanisms; XVIII - research body: body or entity of the direct or indirect public administration or non-profit legal entity of private law legally constituted under Brazilian laws, with headquarters and jurisdiction in the country, which includes in its institutional mission or in its social or statutory basic or applied research of a historical, scientific, technological or statistical nature; and (Wording provided by Law No. 13,853, of 2019) Term XIX - national authority: public administration body responsible for overseeing, implementing and monitoring compliance with this Law throughout the national territory. (Wording provided by Law nº 13.853, of 2019) Validity Allied to the (PLD-FTP), the General Data Protection Law (LGPD) gains importance in the corporate world, arousing special interest and care regarding the treatment of data of its holders , articles 9 and 18 of the aforementioned Law, “in verbis”.
Art. 9 The data subject has the right to facilitated access to information on the processing of their data, which must be made available in a clear, adequate and ostensible way about, among other characteristics provided for in regulations to comply with the principle of free access. In the case of art. 9, deserves special attention when it comes to: the purpose, duration and trade secrets, identification and contact of the controller, sharing of data by the controller, (art. 9, I, II, III, V). It is important to observe greater caution regarding consent (art. 9, VII, §§§ 1, 2 and 3), “in verbis”. VII - rights of the holder, with explicit mention of the rights contained in art. 18 of this Law. § 1 In the event that consent is required, it will be considered void if the information provided to the holder has misleading or abusive content or has not been previously presented transparently, in a clear and unequivocal manner. § 2 In the event that consent is required, if there are changes in the purpose for the processing of personal data that are not compatible with the original consent, the controller must previously inform the holder about the changes in purpose, and the holder may revoke the consent, if disagree with the changes. § 3 When the processing of personal data is a condition for the provision of a product or service or for the exercise of a right, the holder will be informed about this fact and about the means by which he can exercise the rights of the holder listed in art. 18 of this Law. It is important to emphasize that the consent can be revoked at any time by the holder of the right, causing serious inconvenience and financial damage to the image and reputation of the company. It is suggested to adopt a contract for each event in the case of data sharing or company campaign that uses data or photos of the right holder, as well as a specific clause in the initial crypto asset rental agreement signed, informing about the processing of data of the holder of the right. In the case of art. 18, the company must exercise extreme caution when dealing with: confirmation of data processing, access, correction, anonymization, blocking or deletion of data, portability, among others. (art. 18, I to IX, §§§ 1, 2 and 8.). “in verbs”. (Wording provided by Law No. 13,853, of 2019) . Art. 18. The holder of personal data has the right to obtain from the controller, in relation to the data of the holder processed by him, at any time and upon request: I - confirmation of the existence of treatment; II - access to data; III - correction of incomplete, inaccurate or outdated data; IV - anonymization, blocking or elimination of unnecessary, excessive or treated data in violation of the provisions of this Law; V - portability of data to another service or product provider, upon express request, in accordance with the regulation of the national authority, observing commercial and industrial secrets; VI - elimination of personal data processed with the consent of the holder, except in the cases provided for in art. 16 of this Law; VII - information on public and private entities with which the controller made shared use of data; VIII - information on the possibility of not providing consent and on the consequences of denial; IX - revocation of consent, pursuant to § 5 of art. 8 of this Law. § 1 The holder of personal data has the right to petition in relation to their data against the controller before the national authority. § 3 The rights provided for in this article shall be exercised upon an express request from the holder or a legally constituted representative, to the processing agent. § 8 The right referred to in § 1 of this article may also be exercised before consumer protection bodies. In addition to the specific legislation reported so far, the LGPD refers to consumer law, consumer relationship, noted by the Consumer Defense Code (CDC). The novel legislation imposes severe Administrative Sanctions for non-compliance with the LGPD, pursuant to art. 52, its items and paragraphs, with emphasis on the warning and the penalty of a simple fine, of up to 2% (two percent) of the revenue of the legal entity governed by private law, group or conglomerate in Brazil in its last fiscal year, excluding taxes , limited, in total, to BRL 50,000,000.00 (fifty million reais) per infraction, “in verbis”.
Art. 52. The data processing agents, due to the infractions committed to the norms foreseen in this Law, are subject to the following administrative sanctions applicable by the national authority; I - warning, indicating a deadline for the adoption of corrective measures; II - simple fine of up to 2% (two percent) of the revenue of the legal entity governed by private law, group or conglomerate in Brazil in its last fiscal year, excluding taxes, limited in total to R$50,000,000.00 (fifty million reais) per infraction; V - blocking of the personal data to which the infraction refers until its regularization; VI - deletion of the personal data to which the infraction refers; The application of any sanction in relation to the Law in question, will only take place through an administrative procedure, safeguarding the full defense and the contradictory, 'in verbis'. § 1 The sanctions will be applied after an administrative procedure that allows the opportunity for a full defense, in a gradual, isolated or cumulative way, according to the peculiarities of the specific case and considering the following parameters and criteria. Ending the LGPD theme, the sidereal value of the fine speaks for its own reasons, as an element of compulsory conviction, arouses special care regarding its adequacy, with emphasis on treatment agents, notably the controller, who is responsible for decisions concerning the processing of personal data. Also, LGBANK BRASIL must provide a TRAINING PROGRAM to its employees and intermediaries, as well as participation in seminars, training and lectures on PLD – FTP and LGPD topics, among other corporate programs adopted. Act with legal certainty, without incurring a legal prohibition: the principle of legality; free enterprise and the free exercise of economic activity; the declaration of economic freedom rights; constitutional, legal and normative beacons; adoption of a plan to prevent money laundering and terrorist financing and the proliferation of weapons of mass destruction. The Constitution of the Federative Republic of Brazil of 1988 asserts in its Art.1, II, “in verbis”, that: “no one will be obliged to do or fail to do anything except by virtue of the law”. Basic constitutional principle, from which it is concluded that only the law can create rights, duties and prohibitions, with individuals being bound by legal commands, disciplining their activities. The principle of legality is the constitutional guarantee against the wills of the State, as well as those committed by individuals. Not being an activity prohibited by law, citizens have ample freedom to do as they please. As the indoctrinator Pedro Lenza1 points out: “in the context of private relationships, you can do everything that the law does not prohibit, the principle of autonomy of will being in force” The individual then has the autonomy to make his decisions in the way that suits him best, being restricted only to the prohibitions expressly indicated by law. Therefore, if there are no legal obstacles, given the lack of regulation for the cryptocurrency market, it is concluded that individuals can act freely, in accordance with the principle of legality, guaranteed by the Magna Carta, (CF/88). Faced with the lack of standardization of cryptocurrencies, on April 26th, the Federal Senate approved a bill regulating the subject, highlighting: the control of customer resources; transparency in operations and risk-based approach; information security and protection of personal data; protection and defense of consumers and users; solidity and efficiency of operations. 1 LENZA, Peter. Outlined Constitutional Law. 25th edition São Paulo: Method, 2021.
Makes it mandatory to adopt the prevention of money laundering, concealment of assets, rights and values; combating the activities of criminal organizations, the financing of terrorism and the proliferation of weapons of mass destruction, in line with international standards. The bill passed in the Senate returns to the Chamber of Deputies for modification, or not, then proceeds to presidential sanction with or without vetoes, being the prerogative of the President of the Republic to appoint one or more government entities to carry out its regulation and inspection. Good prudence suggests waiting for the President's sanction, but one positive point deserves to be highlighted: the regulation of cryptocurrency mining, also granting tax benefits for the acquisition of equipment used by companies that make use of electricity from renewable sources. (Source: Agência Senado). Of free enterprise and the free exercise of economic activity, without the need for authorization or approval by the State, except for what is contained at the end of the sole paragraph, “except in the cases provided for by law”. (art. 170, sole paragraph CF88), “in verbis”. Art. 170. The economic order, founded on the valorization of human work and on free initiative, aims to assure everyone a dignified existence, according to the dictates of social justice, observing the following principles: Sole paragraph. The free exercise of any economic activity is guaranteed to all, regardless of authorization from public bodies, except in the cases provided for by law. (See Law No. 13,874, of 2019). [no emphasis in original] Law No. 13,874, of 2019, establishes the Declaration of Rights to Economic Freedom and establishes rules for the protection of free enterprise and the free exercise of economic activity and provisions on the role of the State as a normative and regulatory agent, “in verbs”.
Art. 1 The Declaration of Rights to Economic Freedom is hereby established, which establishes norms for the protection of free enterprise and the free exercise of economic activity and provisions on the role of the State as a normative and regulatory agent, pursuant to item IV of the caput of art. 1, of the sole paragraph of art. 170 and the caput of art. 174 of the Federal Constitution. The provisions of this Law 13.874/19 will be observed in the application and interpretation of in favor of Economic Freedom, the principles of good faith and respect for contracts, investments and property, all the rules of public ordinance on private economic activities. (art. 1, §§ 1 and 2), “in verbis”. Art. 1st. [...]; § 1. The provisions of this Law shall be observed in the application and interpretation of civil, business, economic, urban and labor law in legal relations that are within its scope of application and in public ordering, including on the exercise of professions, commerce, commercial boards, public records, transit, transportation and environmental protection. § 2. In favor of economic freedom, good faith and respect for contracts, investments and property, all the rules of public ordinance on private economic activities are interpreted. Free enterprise is the foundation of the Federative Republic of Brazil, equating the sovereignty of the State and the social values of work and free enterprise (art. 1, I and IV CF/88), “in verbis”. Art. 1st The Federative Republic of Brazil, formed by the indissoluble union of States and Municipalities and the Federal District, constitutes a Democratic State of Law and is based on: I - sovereignty; IV - the social values of work and free enterprise; The constitutional text of 88 guaranteed extreme protection to national or foreign companies, only allowing state intervention in a very exceptional character that aim to give better shape to distorted or market failures, or to protect constitutional law, always applying the principle of subsidiarity.
According to renowned scholar Silvia Faber Torrer2 , State interference must be an exception: “ipsis liters” The role of the State in economic life, in this vein, is subsidiary in relation to individuals and social groups, manifesting itself in the form of help to eliminate the dysfunctions that dehumanize the spontaneous order" Finally, it is worth mentioning the brilliant doctrinal understanding of the eminent Eros Grau3 , former STF Minister. “The statement that it - the 1988 Constitution - is more liberal than the previous one, given that it enshrines the predominance of free enterprise; and this is because the principles that restrict it (free enterprise) 'must be interpreted restrictively!” In the case under review, that is, the temporary assignment (rent) of crypto assets, when expanding its activities to Brazil, LGBANK BRASIL will enjoy legal certainty of the legal and constitutional guarantees of national or foreign companies, free enterprise, free competition , economic freedom, good faith and respect for contracts. Finally, following the constitutionally imposed observations in the Laws, Regulations and Normative Instructions relevant to the matter, there is no legal obstacle to the installation of representation in Brazil of a legally constituted foreign company abroad, as in the case sub examine. 2 Constitutional Law and Theory of the Constitution. Op. cit. p. 342. 91 TORRES, Silvia Faber. The principle of subsidiarity in Contemporary Public Law. 3 GRAU, Eros Roberto. The Economic Order in Constitution of 1988 (interpretation and criticism), 9th ed. (rev. and current.), São Paulo: Malheiros Editores, 2004, p. 172/173.
CONCLUSION: The Federal Constitution of 1988 guarantees, in its principles, free market competition and the free exercise of any economic activity, regardless of authorization from public bodies, respecting legal reservations. LGBANK BRASIL must have as a basic principle, respect for the contractual limits imposed in the Brazilian Civil Code. The freedom to contract. The repudiation of Money Laundering or Financing of Terrorism and the Proliferation of Weapons of Mass Destruction. And Adequacy to the General Data Protection Law. In view of the foregoing, I understand that the installation and operation of LG BANK BRASIL as a correspondent of GÓES INTERNATIONAL CORP is possible. DO BRASIL LTDA, with the aim of exploring the national market of crypto-assets in the form of custody and temporary assignment of crypto-assets (rental). This is the opinion, now submitted to the learned appreciation of the Senior Management of GÓES INTERNATIONAL CORP. DO BRASIL LTDA and LGBANK BRASIL.
Fortaleza, May 06, 2022.
ANTÔNIO AZEVEDO VIERA FILHO
ORDER OF BRAZILIAN LAWYERS SECTION CEARÁ No. 17,466