Financial Crime World

Brazilian Regulators Crack Down on Financial Institutions’ AML Compliance

Strengthening Financial Integrity and Combating Money Laundering

In a bid to strengthen financial integrity and combat money laundering, Brazilian regulators have been cracking down on financial institutions that fail to comply with anti-money laundering (AML) rules.

Registration and Reporting Requirements

Over 1,000 financial institutions in Brazil have registered with the country’s financial intelligence unit, COAF, as required by law. The registry data shows that many of these institutions have exceeded the limits set by regulators for reporting suspicious transactions and currency transactions. Financial institutions are required to report any transactions exceeding a certain threshold (ranging from 30,000 reais to 100,000 reais) to COAF within a specific timeframe.

Penalties for Non-Compliance

Failure to comply with AML requirements can result in severe penalties, including:

  • Fines ranging from 100,000 reais to 1 million reais (approximately $25,000 to $250,000)
  • Administrative sanctions
  • Criminal charges

Confidentiality Requirements

The Brazilian AML Law also establishes confidentiality requirements for reporting suspicious activity, which apply to companies, individuals, and government officials who may be sanctioned if they violate these requirements.

COAF’s Role in Financial Intelligence

COAF receives and reviews suspicious and currency transaction reports (STRs and CTRs) from financial institutions and includes relevant information in financial intelligence reports (RIFs), which are then sent to competent authorities such as the Federal and State Prosecution, police, and foreign financial intelligence units.

In recent years, Brazilian regulators have been increasingly vigilant in enforcing AML compliance requirements, resulting in a significant increase in the number of financial institutions being fined for non-compliance. As the country continues to strengthen its financial regulations, it is likely that this trend will continue.

Key Takeaways

  • Over 1,000 financial institutions in Brazil have registered with COAF as required by law.
  • Many financial institutions in Brazil have exceeded limits set by regulators for reporting suspicious transactions and currency transactions.
  • Failure to comply with AML requirements can result in severe penalties, including fines and criminal charges.
  • Confidentiality requirements apply to companies, individuals, and government officials who may be sanctioned if they violate these requirements.
  • COAF receives and reviews STRs and CTRs from financial institutions and includes relevant information in RIFs for transmission to competent authorities.