Brazil’s AML/CFT Regulatory Bodies: A Comprehensive Overview

In recent years, Brazil has taken significant steps to combat money laundering (ML) and terrorist financing (TF), establishing a robust anti-money laundering (AML) and combating the financing of terrorism (CFT) regulatory framework. This framework is comprised of various regulatory bodies that work together to prevent and detect financial crimes.

Central Authority: Financial Activities Control Council (COAF)

At the heart of Brazil’s AML/CFT efforts is COAF, which serves as the central authority responsible for receiving, analyzing, and disseminating information related to suspicious financial transactions and activities. COAF plays a crucial role in:

Detecting and preventing ML and TF
Providing guidance to reporting entities
Issuing AML regulations

Regulatory Bodies

Several regulatory bodies play important roles in Brazil’s AML/CFT landscape, including:

Central Bank of Brazil (Banco Central do Brasil): As the primary regulator of financial institutions, it sets AML compliance standards and conducts inspections to ensure adherence.
Brazilian Securities and Exchange Commission (CVM): Issues guidelines for AML compliance in the capital market.

Key Laws and Regulations

Brazil’s AML legislative framework is built around two landmark laws:

Law 9.613/98
Law 12,683/12

These laws establish mechanisms for reporting suspicious transactions, provide clear definitions of ML activities, and outline penalties for non-compliance.

Circulars and Guidelines

Other regulatory bodies have issued AML-related circulars and guidelines, including:

Circular No 3,461/09: Emphasizes a risk-based approach to AML compliance.
Circular No 3,978/2020: Reiterates the importance of a risk-based approach and provides guidance on AML controls.

Reporting Entities

Reporting entities are required to implement robust customer due diligence procedures, including:

Verifying customer identities
Assessing the level of risk associated with their transactions
Implementing enhanced due diligence for customers and business partners who pose a higher risk

Brazil has implemented sanctions-related regulations, including:

Normative Instruction No. 1,634/2016: Provides guidance on sanctions related to ML and tax evasion.

Conclusion

Brazil’s AML/CFT regulatory framework is designed to prevent and detect financial crimes while promoting a culture of compliance within the country’s financial sector. By implementing robust regulations and guidelines, Brazil aims to maintain its position as a stable and secure financial hub in the region.