Financial Crime World

Portugal’s Financial Regulatory Compliance: A Closer Look at the Bank of Portugal, ASF, and CMVM

This article provides an in-depth analysis of the financial regulatory landscape in Portugal, focusing on the roles and responsibilities of the Bank of Portugal, Autoridade de Supervisão Financiera (ASF), and Comissão do Mercado de Valores Mobiliários (CMVM).

Regulatory Framework

Portugal’s financial sector operates under a specialized or institutional model. This framework separates regulatory institutions to oversee banking, insurance, and securities markets:

  1. The Bank of Portugal
  2. Autoridade de Supervisão Financiera (ASF)
  3. Comissão do Mercado de Valores Mobiliários (CMVM)

Regulatory Authorities and Their Roles

The Bank of Portugal

  • Supervises: credit institutions including banks, financial companies, payment institutions, and electronic money institutions.
  • Focuses on: retail financial products and services.

Autoridade de Supervisão Financiera (ASF)

  • Regulates: insurance and reinsurance activity, brokering of insurance funds, and other related activities.

Comissão do Mercado de Valores Mobiliários (CMVM)

  • Oversees: supervision of securities markets, organized trading of financial instruments, public offers of securities, and entities under its supervision.
  • Involved in: securities markets and related areas.

Registration & Authorisation

In Portugal, financial services firms and their associated persons must obtain authorization to operate. The Bank of Portugal, CMVM, and ASF have the power to grant authorization and register entities within their respective spheres.

Legislative Framework

The legislative basis for each regulatory authority includes their by-laws and primary legal statutes. For example:

  • The Bank of Portugal: Law No. 5/98

Product & Activities Regulation

Each authority regulates specific activities and products within the financial sector:

  • The Bank of Portugal: Retail financial products
  • ASF: Insurance and reinsurance
  • CMVM: Securities markets

Governing Laws & Regulations

Portuguese financial services are significantly influenced by EU legal instruments, with secondary legislation like regulations and circular letters also playing a role in regulation and interpretation.

Main Areas of Regulation

The main areas of regulation include:

  • Authorisation and registration
  • Business conduct rules
  • Capital and liquidity rules
  • Information duties
  • Corrective actions
  • Anti-money laundering rules

Additional Requirements

Limited self-regulation exists for market participants, although specific entities may regulate activities they manage under the supervision of the CMVM.

Investigatory Powers

The national financial services authorities possess extensive investigatory powers to request information, documents, and conduct on-site examinations with the assistance of other entities.

Disciplinary Powers

The national financial services authorities cannot enforce criminal or civil punishments. Instead, they hold the power to impose fines and ancillary sanctions.

Tribunals & Penalties

Civil financial services infractions are adjudicated by Portuguese civil courts. Regulatory infractions are heard by the Court of Competition, Regulation and Supervision. Penalties include fines, removal of economic benefit, and disqualification from corporate roles.

Settlements & Compliance Programs

Although no regulations exist for settlements under Portuguese law, financial entities are required to adopt internal structures and policies that ensure compliance. The extent and content of these efforts is ultimately the responsibility of the directors of these financial institutions.