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The BCU and cooperatives, in dispute over a new regulation for credit institutions

The BCU and cooperatives, in dispute over a new regulation for credit institutions

The Central Bank rejected the appeals presented by the cooperatives, asking that they not be affected by the new regulation for credit granting entities.

Photo: BCU

A group of cooperatives filed an appeal against a new regulation of the Central Bank of Uruguay (BCU) regarding credit granting entities, but the bank rejected the arguments, including these organizations within the regulation.

The new BCU regulations establish a set of requirements that credit granting entities must comply with in matters related to administration, security, information, publicity, and the prevention of money laundering and terrorist financing, among others. Besides, limits credit modalities that these institutions can grant, and eliminates the possibility of granting credit through the use of cards, purchase orders or other modalities.

Faced with the new regulation, a group of diverse cooperatives —The Savings and Credit Society of the José Artigas Cooperative (Saccja), the Naval Petty Officers Savings and Credit Cooperative (Cacson), the Police Savings and Credit Cooperative (Copac), the Teachers Savings and Credit Cooperative (Comac), the ACAC Savings Cooperative and Credit (ACAC), the Maldonado Municipal Government Officials Savings and Credit Cooperative (Cacfimm), the Maldonado Education Officials Cooperative (Cofuema) and the National Savings and Credit Cooperative (Cofac)— filed an appeal revocation and hierarchical before the BCU so that regulations are not applied.

The arguments of the cooperatives

Among the reasons argued, the organizations pointed out that “the spirit of the Cooperatives Law No. 18,407 was not to duplicate controls for cooperatives, which hinders management, development and increases bureaucratization to the detriment even of the State”. In this sense, the application of the new BCU regulations would duplicate “controls carried out by the Internal Audit of the Nation, the National Secretariat Against Money Laundering and the Financing of Terrorism and the Consumer Defense Area (MEF), which would violate the principle of equality, discriminating against other for-profit entities , which would not have such duality of controls”.

They also pointed out that “the approval of the regulatory project would increase the costs of credit unions of capitalization, it could jeopardize the viability of many and without a doubt it would make the credit of people with fewer resources more expensive.

Beyond these reasons, the BCU finally rejected the resources. The explanation was based on the fact that the bank has the power to regulate and supervise credit-granting entities “regardless of the legal form” in which they are registered, as well as the fact that they are “for-profit and non-profit insofar as grant credits in a habitual and professional manner”.

The cooperatives will now be able to go before the Administrative Litigation Court (TCA) to seek the repeal of this regulation.

Source: Ambito

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