This content is from: Local Insights


On March 4 2005, the National Monetary Council (CMN) enacted Resolution 3,265/2005, unifying, effective as of March 14 2005, the two existing foreign exchange markets: the commercial rate exchange market (the commercial market) and the floating rate exchange market (the floating market).

The difference between the commercial market and the floating market was the type of transaction that could be performed through each market. Foreign exchange transactions relating to exports and imports and remittances of funds relating to foreign investments registered with the Brazilian Central Bank (BACEN) were performed through the commercial market. The floating market was the channel used for certain transfers of funds from and to Brazil that were not regulated by the commercial market, such as payments for services, indemnification, bank guarantees and acquisition of real estate property.

The former foreign exchange regulation also provided for the transfer of funds to Brazil and abroad through international transfers of reais, performed by means of non-residents' accounts in reais maintained by foreign financial institution with a financial institution in Brazil (former so-called CC5 accounts).

As a result of the unification of the foreign exchange markets, BACEN Circular 3,280/2005 created a new regulation to govern remittances of funds to Brazil and abroad.

Among the various innovations introduced by the new regulation, the following are noteworthy:

  • A general authorization was given for Brazilian individuals and legal entities to purchase and sell foreign currency and to perform international transfer of reais without limitation of the amounts involved. The general authorization is subject to certain procedures and specific regulatory provisions, such as the legality and economic justification of the transaction.
  • International transfers of reais on behalf of, or for the benefit of, third parties are no longer allowed. Under the new regulation, transfers of funds through CC5 accounts can only be made for the benefit of the account holder.
  • Individuals are authorized to transfer funds from Brazil to invest in companies abroad. This was not possible under the former regulation.
  • Transfers of funds by individuals or entities for the purpose of investing in companies abroad are no longer subject to limitations based on the amounts involved. Under the former regulation, transfers of funds by Brazilian entities for this purpose were limited to $5 million a year and per economic group.
  • Brazilian individuals and entities are allowed to transfer funds abroad to make loans to non-Brazilian residents. There was no such provision in the former regulation.
  • A specific provision was created to enable the transfer of funds abroad for the payment of guarantees, whether the guarantee is granted by a Brazilian entity or individual.
  • Authorization for investments in the international financial markets.
  • Transfers relating to investments in the international capital markets and derivatives transactions (except for hedge transactions for protection against variation of interest rates, foreign exchange rates and price of commodities, as provided for by CMN Resolution 2012) are expressly excluded from the general authorization and will depend on specific regulation.
  • As opposed to the former rules, the new regulation does not specify the documents required to support the transfer of funds abroad. However, it requires financial institutions undertaking foreign exchanges to put mechanisms in place to prevent foreign exchange transactions that aim to avoid the identification, limitation of value and client registration rules provided for in the new regulation.

On the one hand, the new regulation has brought a certain amount of liberalization for the foreign exchange market in Brazil. On the other hand, it restricts the international transfer of reais, which was an important channel for the transfer of funds by individuals and entities. It has also hindered the investment by Brazilian residents in the international capital markets, as well as the performance of derivatives transactions (other than those provided for in CMN Resolution 2,012) until the enactment of specific regulation.

Instant access to all of our content. Membership Options | One Week Trial