What are some of the main trends impacting the industry sector you work in in Uruguay? 

Two main trends are impacting the financial industry in Uruguay at the moment, and they are bringing regulatory improvements.  

On one hand, the Central Bank of Uruguay (CBU) has announced its future plans for electronic payments industry. This sector gained steam with the approval of the Financial Inclusion Law in 2014, which led to a significant decrease in cash transactions and introduced innovative instruments, such as ‘e-money’ issuers. Led by D-local unicorn and several fintechs such as Mercado Libre, e-payments have come through a large expansion in the past years and now the regulator is seeking to introduce some innovations in favor of the consumers.  

First of all, the regulator is on the way to implementing a centralised automatic compensations system which will ensure more efficiency in e-payments and the possibility to complete instant payments anywhere at any time. Moreover, these innovations will come with new security, integrity and coordination standards based on the main international regulatory frameworks. We can expect a lot more in this industry, specially by looking at our neighbour Argentina in which e-wallets start to become a real headache to traditional banks with examples such as Mercado Libre´s model of a wallet that generates periodic interest payments to users. This tool has already been foreseen by the regulation in the current regulatory regime and will for sure be a reality soon in our country (which will bring a new interesting scenario with the mixture of e-payments and investments). 

On the other hand, the securities industry has been hit in the past years by two severe fraud schemes involving local broker dealers. These cases have confirmed that the regulatory framework was not enough to protect unsophisticated investors from fraudsters or negligent advisors in this sector.  

The first step to overcome this situation was taken in 2019, when the directive 2320 of the CBU came into force introducing two new requirements to financial intermediaries, investment advisors and portfolio managers: the investment profile and investment strategy. If compared with the main financial epicenters of the world, it is clear that this regulation came in late, but it delivered a clear message: not every security or financial instrument is adequate for every unsophisticated investor. It seems obvious, but until then you could only rely on some general principles present in the securities industry regulation. A lot has happened in the past three years and all the players in this sector of the industry have implemented through their compliance departments investment profile and investment strategy provisions and monitoring systems to ensure their sales force is offering the financial instruments that suit the best to their customers.  

During the past year, the CBU issued the guide for the protection of consumers of financial services, which is just the tip of the iceberg for several regulatory changes still to come. This guide confirms the regulator´s intention to secure better information access to consumers, more transparent billing practices and clearer communications to the public.  

I believe there is a lot to be done in the next years, but I’m convinced that as a priority the regulator must seek to achieve better practices when it comes to the access of the consumers account information (ensure firms implement better information integrity practices and require to deliver account statements not just once a year) and get some inspiration from Finra´s ‘Best Interest’ regulation. 

Can you foresee any key developments to the way general counsel work over the next five years?

General counsel still seems to have a traditional model in our country; however, some trends are approaching slowly and may bring a sensitive impact in legal counseling in our country.  

One of these trends is the increase in the incorporation of arbitration clauses in M&A and company law. Companies are not willing to face almost eternal trials in the traditional judicial system and are getting more used to arbitration procedures. This is bringing a great challenge to legal counsel, since most of the law professionals in the current market are used to procedures in the traditional justice system and have almost no experience in arbitration. Therefore, universities and the main law firms are starting to get more involved in the arbitration system and are recurring to the international exchange for the adequate formation of professionals in this area.  

Great developments can also be seen in the desire for knowledge outside the law that counsel are seeking to learn. The involvement of new technologies and the huge impact that these are having in daily business has led to professionals that have understood that knowledge of the law is not enough and seek to reach a reasonable understanding of the technicalities of new technologies to deliver a better service to customers. Personally, I have invested a lot of time to expand my knowledge in data management, fintech and new technologies, and I am convinced this is having a positive impact in my daily tasks as compliance manager. I believe that in the years to come professionals in general counsel will increase their knowledge of new technologies to offer broader solutions to their customers and better communicate with those in the technology sector. 

Artificial Intelligence will possibly introduce new developments too, but not in the way it has in the United States by shortening the timeframe that law professionals needed to study precedent. I believe that AI will bring law professionals in Uruguay better tools for contract drafting and shorten the time in due diligence procedures (today, notaries may need more than 30 days to complete all the necessary controls in a real estate acquisition). Counselors will need to get involved in a more dynamic way of service and a new generation of customers that is not used to the traditional bureaucracy of our local legal system.  

Finally, Anti Money Laundering and Terrorist Financing policies, despite of a decrease in Suspicious Activity Reports last year, are gaining priority in the non-financial sector and are getting involved in some areas of the economy that do not have formation in this type of requirements (such as foundations or football clubs). Counselors have made great developments in the last years when it comes to advisory in AML compliance frameworks, but it’s still a great road ahead. Non-financial subjects will face new challenges and requirements and counselors will need to be prepared to help assemble the proper compliance framework for each type of business.