The Office of the Superintendent of Banking Sector Institutions (SUDEBAN) issued Resolution No. 001.21 of 4 January 2021 to regulate the financial technology (fintech) services ("Resolution")1. The Resolution entered into force on 17 June 2021.
The purpose of the Resolution is to regulate financial services provided through new technologies offered by Financial Technology Institutions (ITF) to institutions in the banking sector, as well as their organization and operation. In general terms, the Resolution establishes a regulatory framework so ITF can operate in Venezuela as Financial Technology Institutions of the Banking Sector (ITFB), with prior authorization issued by SUDEBAN. The Resolution establishes the requirements that the ITF must meet to obtain such authorization (e.g., number of shareholders, corporate form, minimum share capital, among others).
The companies that, upon the entry into force of the Resolution (i.e., 17 June 2021), carry out the activities provided therein, must comply with the provisions of the Resolution within a period of 90 banking business days.
The Resolution’s most relevant aspects:
- To organize and operate as ITFB, ITFs must submit an application to SUDEBAN and obtain an authorization issued by said authority, prior binding opinion of the Higher Body of the National Financial System (OSFIN).
- The Resolution establishes a series of definitions and requirements so that the ITF can operate in Venezuela as ITFB. The Resolution defines ITFB as any legal entity, public or private, national or foreign, previously authorized by SUDEBAN to provide certain financial services in Venezuela, through new fintech with the restrictions established by SUDEBAN.
- An ITF seeking authorization to operate as an ITFB must file an application with SUDEBAN. It will include documents regarding the ITF and its shareholders, as well accounting and financial information and other corporate documents, among others. If the ITF is a foreign individual or legal entity, it must file the equivalent documents from the jurisdiction of its constitution, duly apostilled and translated by a public interpreter if they are prepared in a language other than Spanish.
- Some of the requirements that ITFs must meet to obtain authorization and operate as ITFBs are:
- To be constituted in the form of a corporation (sociedad anónima or compañía anónima), with registered shares of the same class, which may not be converted to bearer and will include the initials "ITFB" in their corporate name.
- Have a minimum of five (5) shareholders.
- The corporate purpose must be related to the performance of financial services using fintech.
- Establish their domicile in Venezuela.
- Have a minimum capital, which will be established by SUDEBAN.
- The Resolution establishes the following financial services that the ITFB can offer: (i) payment products and money storage (e.g., mobile payments, payments with virtual cards); (ii) products within banking institutions (e.g., fintech connection platforms, automated interaction of financial users, voice recognition (also called speaker recognition or voice authentication); and (iii) advice on new business models (e.g., integration of social networks-payments-finance-retail).
- ITFBs that offer financial services and products using advanced technology such as artificial intelligence, advanced data analysis, or cloud computing, must have risk management control processes in place.
- IFTBs must have a performance bond that may not be less than the equivalent of EUR 20,000 according to the exchange rate determined by the Central Bank of Venezuela.
- The Resolution establishes that the wording of the contracts between the IFTBs and their customers must be previously evaluated and approved by SUDEBAN.
- In the event of the cessation of activities of an IFTB, it must request an authorization from SUDEBAN at least 90 continuous days prior to the date it will cease its activities. Said request must contain (i) estimated closing date, and (ii) justification for closing, attaching a copy of the Minutes of the Shareholders' Meeting that resolves said resolution and (iii) additional documents.
- The Resolution also sets forth the circumstances under which SUDEBAN may revoke the authorization to operate as an IFTB (e.g., if the ITF provided false information or fails to comply with statutory requirements). SUDEBAN may also revoke the authorization if it obtains a prior binding opinion of OSFIN in cases of non-compliance with instructions issued by SUDEBAN or if the IFTB carried out practices that affected the national payment system or put it at risk.