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Brazil’s Anti-Money Laundering (AML) Rules: Key Requirements and Penalties

In Brazil, the AML Law establishes a comprehensive framework to prevent money laundering and terrorist financing. Here are some key requirements and penalties:

Client Registration Data

Financial institutions must register clients’ data with the relevant regulator, including personal and financial information.

Monitoring and Reporting Operations

Institutions must monitor transactions that exceed the limits set by regulators and report suspicious activities to the Brazilian Financial Intelligence Unit (COAF).

Reporting Suspicious Transactions

Entities must report suspicious transactions within 48 hours of identification. The criteria for reporting suspicious transactions are established by specific AML regulations, taking into account factors such as:

• Parties involved
• Geographic location
• Transaction type
• Financial or legal basis

Confidentiality Requirements

Institutions must maintain the confidentiality of suspicious transaction reports (STRs) and currency transaction reports (CTRs), including information about the client involved. Violations of this requirement can result in penalties for companies, individuals, and government officials.

Large Currency Transactions

Regulated entities must keep records of currency transactions and file a CTR whenever they exceed the threshold established by competent regulators.

Cross-Border Transactions

While there are no specific AML requirements for reporting cross-border transactions, COAF may require reports if certain criteria are met, such as:

• Involvement of individuals from high-risk jurisdictions

Financial Intelligence Unit (FIU)

COAF is responsible for receiving and reviewing suspicious and currency transaction reports, and for producing financial intelligence reports to support the investigation and prosecution of money laundering and terrorist financing offenses.

Penalties for Non-Compliance

Failure to comply with AML rules can result in civil or criminal penalties, including:

• Fines
• Imprisonment

The severity of the penalty depends on the nature and extent of the non-compliance.

Conclusion

Brazil’s AML regulations are designed to prevent money laundering and terrorist financing by requiring financial institutions to register clients, monitor transactions, report suspicious activities, and maintain confidentiality. Non-compliance can result in severe penalties, emphasizing the importance of strict adherence to these requirements.