Brazil central bank, monetary council regulate banking-as-a-service

SAO PAULO/BRASILIA, Nov 28 (Reuters) - Brazil's central bank and monetary council decided to regulate banking-as-a-service (BaaS) in the country, they said in a statement on Friday.

• The move paves the way for companies of several segments to offer financial services to their clients through integration with institutions authorized to operate by the central bank.

• The main goal is to mitigate potential risks to clients and firms by establishing which parties are involved in the business model, as well as their respective responsibilities, they said.

• The new rules take effect immediately but give firms until the end of 2026 to adapt existing contracts that fit the regulated models.

RULES FOR NOMENCLATURE

• Separately, the central bank and the monetary council also announced regulation for the nomenclature of companies authorized to operate in the country.

• Firms will be prohibited from using terms that suggest an activity or type of institution, in Portuguese or in a foreign language, for which they do not have authorization, they said.

• Digital lender Nubank NU.N, which is authorized to operate in the country only as a payment institution, said in a statement that the rule only affects the names of firms and not their services, adding it has all the licenses to offer the products available on its platform.