Regulation of financial services in Portugal - read in the blog of the company COREDO

Regulation of financial services in Portugal

04.01.2021

Portugal’s financial institutions are mainly attractive thanks to the Portuguese regulation of the financial sector. Two mains authorities who are responsible for the regulation of financial services in Portugal are the BoP and CMVM. The first one advises the government on matters connected to the economic and financial sectors. The second one provides advice about financial sector development: recommendations on financial markets, institutions, and instruments.

Internal control

Financial companies opening in Portugal have an obligation to set up internal control systems. Those systems also need to fulfill the following conditions:

  • Applicability to all subsidiaries of a financial company;
  • Correlation with the company’s activities, risks associated with a company’s activities, and centralization/delegation of authority in a company.

Internal control systems aim to avoid any negative consequences connected to violations of financial legislation, customer relations, contractual obligations, rules of conduct. Moreover, when someone sets up a financial institution, they need to keep documentation about strategies, procedures, policies, and systems related to that institution.

Auditors

When opening a business in Portugal, it is crucial to learn about the main activities conducted by internal auditors:

  • Audit plan preparation;
  • Preparation and submission of annual audit reports;
  • Provision of recommendations and control of their implementation.

Directors

There are two key responsibilities of directors:

  • Cautiousness about their company’s activities;
  • Acting in their company’s best interests.

It is vital to remember while preparing to obtain a financial services license in Portugal that directors bear responsibility for the failure of complying with their responsibilities. In addition, directors can be held responsible if their actions or violation of legal/contractual duties result in damages. However, directors can be excluded from liability, yet only if it was found out that they acted in good faith and their actions were not influenced by their personal interests.

In case it is proven that directors were aware of a regulatory violation and did not act on precluding the infringement, they can be also held liable.

Mediators

If you are obtaining a financial mediator license in Portugal, do not forget that you would need to request permission to use financial instruments registered in the name of non-professional clients. On the opposite side, when it is professional clients who receive the services, those individuals or entities are considered to be experienced and familiar with financial instruments, financial services as well as the process of conducting financial transactions.

Do you want to register a financial company in Portugal and need professional help? Do not hesitate to contact us in COREDO: we are prepared to assist on every stage of setting up your business there.

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