Brazil’s Central Bank updates rules to allow international transfers of up to US$10,000

RIO DE JANEIRO, BRAZIL – Transfers can be made between the same client’s accounts in Brazil and abroad, as well as to third parties. For the latter, the requirement is that the funds must be used for “current expenses,” such as maintenance abroad, retirement, pensions, and donations.

Currently, typical eFX service providers, as denominated by the Central Bank, are international payment facilitators and card companies, for instance. The institution expects that there will be an increase in their use after allowing transfers up to US$10,000.

Another change facilitates sending and receiving international funds by credit card. The goal is to facilitate sending low amounts internationally, the so-called personal transfers.

These are typically Brazilians abroad sending money to relatives or parents in Brazil sending funds to their children studying abroad. Remittances from Brazilians abroad hit a record high in the first half of this year because of the crisis and the devalued Brazilian real.

According to the sub-unit chief of the Central Bank’s Prudential and Exchange Regulation Department Lucio Holanda Oliveira, the system will be faster, cheaper and simpler.

“Someone with an international credit card will be able to send funds and someone in Brazil will have their account credited, for instance. We see it as a good alternative for these small-value transfers,” he said.

Within the same regulation, the Central Bank and the CMN also allowed payment institutions to request authorization to operate in the foreign exchange market as of September 2022. The operation will be only conducted electronically, i.e., without physical currency exchange.

Many fintechs offering digital accounts are payment institutions and the goal is to expand competition in the market, Ferreira said. “We expect that these measures will indeed lead to more competitiveness in the market. We will have new players, new options for conducting operations, and this is something we see as very positive,” he said.

The president of the Brazilian Foreign Exchange Association (ABRACAM), Kelly Massaro, sees that the Central Bank measures should encourage competitiveness in the market and reduce the rates charged. “The operation will now have better rates, not only in the spread that makes up the portion of the final value of the operation, but also in the remittance fees.”

Massaro also points out that exchange brokers and payment institutions will be able to perform payments and transfers in foreign currency through an account abroad, which eliminates an intermediary in the operation. Before the change, only banks could do this.

“The brokerage house will be able to perform this operation directly without going through this bank and have a relationship with the correspondent bank abroad. The brokerage house will already have this account abroad, so it will be able to negotiate better rates for remittance fees and also change the spread,” Massaro said.

The official also pointed out that the measures maintain the requirements related to the Prevention of Money Laundering (PML) and the need to provide information to the Central Bank.

FOREIGNERS IN BRAZIL

Foreigners in Brazil will also be allowed to open a prepaid account in the country. This was previously only allowed for savings accounts. According to Ferreira, this will speed up the process for those who need to receive funds in Brazil.

“From now on, anyone who is a non-resident and has an economic interest in the country, has to pay bills or receive amounts, will be able to open these prepaid payment accounts, just like Brazilians living abroad will have the facility to have prepaid payment accounts,” he said.

In addition to people’s daily lives, the Central Bank has also eased the foreign exchange rules for exporters. As of October, they will be able to receive the proceeds of their sales in an account abroad, either in a foreign bank or a Brazilian institution with an account abroad.