Opening Electronic Bank Accounts

The Brazilian Monetary Council, the government body responsible for regulating the country's financial markets, has taken a significant step towards the expansion of electronic banking. Through Resolution 2,817 (February 22 2001) the council established the guidelines and procedures to be followed by virtual banks so that accounts can be opened and operated exclusively by electronic means.

Under the Resolution 2,747/00, the prospective account holder had to present various forms of identification (copies of which were checked against originals) and complete and sign a registration form in order to open and operate a current account. No mention was given to the possibility of electronic signatures. In several cases the usual practice was to stipulate that the signed forms and copies of documentation be hand delivered via courier. These measures were in place despite the fact that significant parts of current accounts were already being operated via the Internet (which were made through completion of paperwork) and all the necessary data, deposit and remittance orders were being transmitted electronically to financial institutions.

Such restrictive measures highlight the financial market authorities' concern with fraud (especially the opening of false accounts) through the use of forged or non-existent documents. The use of electronic media for banking purposes was thought to carry inherent risks as to the authenticity of an account's origin and holder.

In passing the new resolution, the Monetary Council took into consideration the speed of technological development, the increasing use of electronic means for banking services and the need to reduce the bureaucracy surrounding such services. After all, withdrawals using a password, and automatic debiting of checking accounts for paying bills and credit cards have become routine. All major domestic banks have their own web sites through which financial transactions can be undertaken.

In fact, there is an abundance of electronic banking services, including:

• the checking of statements and balances;

• the redemption of investments and investment funds;

• the payment of private and public utility bills; and

• the transfer of funds to other accounts.

Following the new resolution, there is no need to present original documents or a handwritten signature when opening an internet bank account. However, the resolution does not allow virtual banks to open checking accounts indiscriminately without any confirmation procedure. The holder must already have one bank account and be able to operate deposit accounts in a financial institution that is authorized by the Central Bank.

The institution responsible for a checking account, opened by means of presentation of documents and signature of the holder, shall perform the certification of the virtual current account.

Bank accounts that are opened electronically may only receive deposits by means of debit in other current accounts of the same holder (through cheque or wire transfer) or by credits related to the liquidation of investments on behalf of, and by order of, the beneficiary of the accounts by the financial institution responsible for their maintenance.

The electronic means for opening checking accounts shall bear the relevant corporate name, customer service telephone numbers (which must be available on working days from 8am to 6pm), e-mail and postal addresses. These are the minimum requirements.

The executive officers of financial institutions are responsible for the maintenance of internal control systems, assuring the confidentiality and security of internet banking.

Although the certification issue is not completely solved for the purpose of opening current accounts through electronic means, the Monetary Council has taken a significant step towards the acceptance of electronic means for the opening and operation of current accounts. The resolutions (as well as the Central Bank's recent authorization of the operation of wholly virtual institutions) indicates that the way forward for the authorities is the replacement of physical monetary means with their virtual counterparts, which should significantly reduce financial institution costs.

For further information on this topic please contact Ricardo Barretto or Carlos Pompermaier at Barretto Ferreira, Kujawski, Brancher e Gonçalves – Sociedade de Advogados by telephone (+55 11 3066 5999) or by fax (+55 11 3167 4735) or by e-mail ([email protected] or [email protected]).