Useful pages on the regulator website
Board of directors:
- Diego Labat, Governor
- Jorge Gamarra, Vice President
- Washington Ribeiro, third director
The BCU is governed and managed by a board of directors responsible for the BCU’s general administration and policies. It is composed of three members appointed by the Executive Power. The directors are selected based on their personal and professional backgrounds and expertise to ensure their independence from criteria, efficiency, objectivity and impartiality in performing their duties.
The board of directors’ composition will soon change with the assumption of a newly elected government.
The BCU is a state autonomous entity that has technical, administrative and financial autonomy. Its main purposes are to maintain a stability that contributes to achieving employment and growth goals, and to regulate and supervise the payment and financial systems, ensuring that they operate in the best interests of consumers and the wider economy.
The Superintendence of Financial Services, a department of the BCU, ensures the stability and proper functioning of the institutions of the financial system, including banks, insurance companies, pension funds and the capital market. To this end, it regulates and supervises financial entities, and is responsible for disclosing relevant financial information to controlled entities. The current Superintendent is Juan Pedro Cantera.
The Organic Charter Ordered Text of the BCU was sanctioned by Act No. 16.696 of 30 March 1995 and modified by Act No. 18.401 of 24 October 2008, Act No. 18.494 of 5 June 2009, Act No. 18.643 of 9 February 2010, Act No. 18.670 of 20 July 2010 and Act No. 18.996 of 7 November 2012. The Charter regulates the BCU’s structure, and its purposes, competences and powers.
Other regulations that consolidated the BCU as the main authority for financial activities are:
- Act. No. 15.322, which regulates banking activities;
- Act No.16.713 of 3 September 1995, which gives the BCU authority over pension funds;
- Act No. 18.627 of 2 December 2009, which regulates the capital markets;
- Act No. 16.774, which gives the BCU the power to control and regulate investment funds; and
- Act No. 17.703, which gives the BCU control over trusts and professional trustees.
The most relevant regulation concerning the prevention of money laundering and terrorist financing is Act No. 19.574 of 20 December 2017, and its Regulatory Decree No. 379/018. The Financial Information and Analysis Unit, a unit under the Superintendence of Financial Services, ensures compliance with such regulations by receiving, requesting and analysing information from all the subjects obliged to submit such information by the current regulations, and is responsible for transmitting it to the competent court of justice, when appropriate, in order to prevent money laundering and terrorist financing offences.
According to Article 7 of the Organic Charter Ordered Text, for the accomplishment of its purposes, the BCU will have the following functions:
- exclusive issuance and withdrawal of currency notes and minted coins in the entire Republic;
- Acting as an economic adviser, banker and financial representative of the government;
- managing the state’s international reserves;
- acting as a banker for financial intermediary institutions;
- representing the government before international financial institutions;
- passing regulations and overseeing compliance with the applicable laws and decrees of the institutions operating in the financial system. For this purpose, it can authorise or prohibit, either entirely or in part, operations in general or in particular, and also establish norms for the purposes of prudence, good management and sound working methods; and
- foster education, and the development of the economic and financial culture.
The BCU issues general rules and specific instructions aimed at promoting stability, solvency, transparency and the correct functioning of supervised institutions and markets; protection for financial services consumers; and the prevention and control of money laundering and terrorist financing.
The regulations approved by the BCU are organised into the following rules approved by the BCU in its circulars:
- the Consolidated Rules for Capital Markets;
- the Consolidated Rules for Pension Funds;
- the Consolidated Rules for the Financial System;
- the Consolidated Rules for Insurance and Reinsurance;
- the Consolidated Rules for Payment Systems; and
- the Consolidated Rules for Operations.
The BCU may also approve communications, which are more specific resolutions that might be general or specifically issued for some entities subject to its control, and that usually contain criteria for the interpretation of and compliance with the Consolidated Rules.
All circulars and communications may be amended from time to time by a resolution of the board of directors or a decision of the Superintendence of Financial Services.
Reporting and disclosure obligations
The list of reporting and disclosure obligations regarding controlled entities is extensive; as such, hereunder we describe only the most significant ones:
- In accordance with Article 55 of the Organic Charter Ordered Text, the BCU may request compulsorily and for statistical purposes, from any individual or legal person, private or public, all the information needed to duly fulfil its duties and roles. This information will be protected by administrative secrecy and will be strictly confidential. The BCU may impose fines on anyone that does not present the required information, or if the information is presented in an inexact or incomplete way. The payment of a fine does not exempt from the obligation of presenting the required information.
- The BCU authorises or grants permission to supervised entities to operate. For that purpose, it requires information and documents from those entities, and for them to disclose records and documents periodically and in the form it deems necessary. As an example, depending on the type of entity, the BCU might require certain information such as a company’s bylaws, the identities of its shareholders, its financial statements, its internal codes of conduct and its organisation charts.
- Supervised entities are also subject to a reporting regime regarding their economic and financial status.
- Some controlled entities, such as stock exchange brokers and professional trustees, have to communicate, among other things, every significant event in their organisation that may affect their financial situation or their regular activities. As an example, they have to communicate changes in the capital of companies and any change to the integration of their boards of directors or management.
- Likewise, most controlled entities are obliged, among other things, to publish their financial statements as well as other financial information, and the results of an annual external audit.
- Additionally, the regulations on transparency and the prevention of money laundering and terrorist financing, Act No. 19.484 and Act No. 18.930, set out the obligation of reporting the ownership of equity participations and final beneficiaries to the BCU. The only entities that are exempt from this obligation are entities that have gone public and are quoted on the stock exchange.
- In line with the above, and in accordance with Act No. 19.574, all natural persons or legal entities subject to the control of the BCU are obliged to report transactions, whether carried out or not, that are unusual, presented without economic or legal justification, or raised with unusual or unjustified complexity. Financial transactions that involve funds whose origins are suspected to be illegal must also be reported in order to prevent money laundering infringements.
Monetary sanctions and recent behaviour
The BCU publishes every month on its official website a report including all the sanctions applied by the Superintendence of Financial Services. As can be appreciated from those reports, the most common sanction when an institution infringes the laws, decrees or general rules that govern its activities or a specific instruction given thereon are fines, which are defined in law and the Consolidated Rules.
The Consolidated Rules establish the basic fine as 5,000 indexed units, which currently corresponds to a value of approximately US$500. The value of fines applied for each day of delay in addressing an infringement might be slightly lower. The maximum fine established by law is equivalent to 10% of the value of the patrimonial liability established for banks, which corresponds to approximately US$14 million.
The usual fines imposed by the BCU, depending on the severity of an infringement, range from US$100 to US$30,000. However, fines are much higher for infringements of the regulations for the prevention of money laundering and terrorist financing.
Aggravating circumstances for the application of a fine include, among other things, recurrence, motive, delays in the fulfilment of obligations, negligence, and whether an infringement affects the market, users or consumers. In addition, the BCU may fix the amount of fines in relation to a benefit obtained in the transgression of the rules. Furthermore, in the case of use of privileged information or disclosure of false information by agents operating in the capital markets, the person responsible may be subject to civil and criminal actions.
Non-monetary sanctioning powers and behaviour
The non-monetary sanctions that the BCU may apply will depend on the severity of the infringement and in general can consist of the following (some of these are only applicable for certain kinds of controlled entities such as banks, pension funds and insurance companies). The general sanctions are, from the least to the most severe:
- removal of individuals from their positions in the infringing entity;
- suspension of activities; and
- revocation of operating licences, when appropriate.
The most severe sanctions, such as intervention, haven’t been regularly applied since the last economic crisis.
Recent and upcoming developments
With the assumption of the newly elected government, there have been some changes in the authorities at the BCU, most importantly the appointment of the new Governor, the economist Diego Labat.
At the moment, in response to the outbreak of the worldwide pandemic, in order to minimise economic damage in the country, the BCU has adopted some measures based on three lines of action. The first line of action’s main goal is to sustain the functioning of the financial system; the second line includes measures that tend to facilitate the continuity of credit lines; and finally, the third line of measures seeks to minimise restrictions in the economy through monetary policy.
One of the most important challenges that the BCU faces is an evaluation of the possibility of separate regulation of the stock market and banking activities.
Additionally, with respect to the capital market, the BCU is in the process of discussing the regulation of over-the-counter operations.
Moreover, with regards to banking activities, the BCU has advocated the implementation of the new Basel Recommendations.
Interacting with the regulator
In interactions with the BCU, communications should be made in writing and in Spanish. In some very exceptional cases, the BCU may accept consultations or clarifications by telephone.
Some proceedings, such as requests for authorisations or filing final beneficiaries’ affidavits, may be done via the BCU website.
The BCU’s website also allows the general public to make consultations regarding the applicable regulations through pre-established forms and about open proceedings, and to report complaints about the activities of supervised entities.
Notes for foreign investors
Foreign investors have to take into account the fact that the BCU will require some additional information regarding their companies. Mostly, when a legal entity has foreign shareholders, the BCU requires information about, inter alia, its financial statements, as well as a declaration from the authority of the country of origin stating that the entity was legally constituted and has no restrictions to being a shareholder in a foreign company.
Furthermore, the BCU has subscribed to inter-institutional cooperation agreements with foreign regulators, for instance with Argentina and Brazil. Through these agreements, the BCU generally requests a confirmation of information about the foreign companies that request access to the Uruguayan financial market.
Other regulators it works closely with
- Dirección General Impositiva (DGI): Tax Administration Department;
- Poder Judicial (PJ): Department of Justice;
- Auditoría Interna de la Nación (AIN): National’s Internal Audit;
- Egmont Group for Financial Intelligence Units; and
- Asociación Grupo de Acción Financiera Latinoamericana (GAFISUD): Financial Action Task Force.