Law that authorizes Brazilian Central Bank and Brazilian Securities Exchange Commission to enter into Leniency Agreements comes into force

On November 14, 2017, Law No. 13.506 came into force, imposing changes to the administrative sanctions procedures applicable to financial institutions and to individuals or legal entities that violate the rules and regulations imposed by the Brazilian Central Bank”BACEN“) and by the Brazilian Securities Exchange Commission”CVM“).
Pursuant to Law No. 13.506, the penalties to be applied for wrongdoings include fines, prohibition to participate in public bids, disqualification to act as managers and loss of permit to conduct business.
According to these new rules, the amount of the fine imposed by the BACEN may reach R$2 billion and by the CVM may reach R$ 50 million.
Law No. 13,506 innovated by allowing BACEN to stop or suspend the administrative proceeding if the entity/person allegedly making the infractionexcept in case of serious infractions) signs a term of commitment undertaking to cease the illegal practice, to correct irregularities and/or to indemnify for the losses. The term of commitment does not require the entity/person under investigation to confess or recognize the performance of the wrongdoing.
The highlight of Law 13,506 is, however, the possibility of BACEN and CVM to enter into leniency agreements with legal entities under its supervision and agreements with individuals who confess the practice of illegal activities. The legal entity or person under investigation that cooperates to ascertain the facts under investigation can have as benefit the extinction of the punitive action or the reduction of 1/3one third) to 2/3two thirds) of the penalty applied.
The criteria to enter into leniency agreements with BACEN and CVM, include, among others, that the legal entity be the first to qualify for the leniency agreement among those involved in the investigation and cease to perform the wrongdoing.
Candido Martins Advogados is available for any clarification.