16 November 2023

Banco de Portugal NOTICE - Unauthorized Credit Reporting

With the publication of the Regime for the Prevention and Combating of Unauthorized Financial Activity and Consumer Protection, Law No. 78/2021 of November 24, the legislator once again aimed to regulate and combat economic crime. This law, far from perfect, was particularly relevant for the Real Estate Market.

The Banco de Portugal Notice brings an effort in the implementation of the 2021 Law, specifically articles 4(1) and 4(5). Starting from March 1, 2022, professionals were already obligated to electronically communicate to the Banco de Portugal information regarding public deeds, authenticated private documents, or documents with signatures recognized by the individuals themselves, when they are involved in acts that, by their nature, are related to:
  • Loan agreements or statements of assumption or acknowledgment of debt;
  • Financial leasing agreements;
  • Restitutive financial leasing agreements;
  • Purchase and sale agreements of real estate associated with a lease contract to the seller or with the transmission of ownership to the original seller;
  • Purchase and sale agreements of real estate that do not involve the granting of a loan by entities authorized to engage in credit activities, provided that the buyer has already been the seller of the same property, or the lease or usufruct of the real estate is envisaged, or the option of repurchase of the property by the seller is provided.

Increasingly placing the role of 'policing' and overseeing the actions in which Notaries, Solicitors, Lawyers, and Trainee Lawyers are involved, which can significantly conflict with the independence and level of trust/secrecy that clients place in us, Lawyers. Shouldn't this be a legal obligation of the Market Supervisor and Regulator?

In terms of real estate investment, it can indeed be a hindrance.

The international trend is increasingly towards simplifying all these procedures, so it is not understood what the objective of the Portuguese legislator is in not wanting to follow this evolution.

The banco de Portugal Notice 6/2023, now published, makes that Law operational whenever a Lawyer, Trainee Lawyer, Notary, or Solicitor intervenes in an act whose financier is not an Unauthorized Credit Entity, being obliged to send to the Banco de Portugal within 30 days, according to Article 3 of the BP Notice:

  • a. Identification of the reporter;
  • b. Identification of the grantors;
  • c. Capacity in which they intervene;
  • d. Legal nature of the act performed;
  • e. Date and place of the act;
  • f. Monetary value of the act.

Reporting is done through the Banco de Portugal platform, in a digital form. The doubt lies in how and with what tools we can identify unauthorized entities, especially when dealing with fraud. As for whether Lawyers and involved agents should report acts involving Entities Authorized by the banco de Portugal, the BP clarifies that, in principle, they should not.

However, it safeguards cases where legal acts performed fall outside the scope of the entity's qualification or registration, and there may be an obligation to report. Leaving an example, where a lawyer called to intervene in a debt confession by an individual before a currency exchange agency should report this legal act under Article 4(1)(a) of Law No. 78/2021, of November 24.