Financial Crime World

Brazil Takes a Tough Stance on Financial Crimes with COAF at the Helm

Introduction

In its ongoing efforts to combat financial crimes, Brazil has entrusted the Council for Financial Activities Control (COAF) with the responsibility of regulating financial institutions and preventing money laundering, terrorism financing, and tax evasion.

COAF’s Mandate

As a department of the Ministry of Finance, COAF was recently moved under the supervision of the central bank in Brasilia. Its primary goal is to curtail financial crimes by acting as a clearinghouse for information on suspicious transactions. The agency obtains this information through investigations and mandatory reports from financial institutions, which it then disseminates to relevant enforcement agencies.

Monitoring and Reporting

COAF requires financial companies to monitor and report any suspicious transactions, and its officers are authorized to request such details if they are not initially volunteered.

Control Mechanism for Anti-Money Laundering (AML)

The agency has designated certain companies in the financial and other industries as subject to its Control Mechanism for anti-money laundering (AML). This includes:

  • Financial institutions such as stock exchanges, banks, credit card issuers, money managers, insurers, and brokers
  • Real estate agents
  • Luxury goods salespeople
  • Public event organizers

These companies must establish their own know your customer (KYC) and onboarding processes in accordance with national AML laws. This means taking a risk-based approach, with the depth of background screening checks proportionate to the potential risk posed by an individual’s appointment.

Financial Intelligence Unit (FIU)

As Brazil’s financial intelligence unit (FIU), COAF is responsible for collecting and analyzing data on national financial crimes. The agency represents Brazil on international forums such as the Financial Action Task Force (FATF), a multilateral AML standards-setting organization.

Responsibilities

COAF’s responsibilities include:

  • Examining instances of money laundering
  • Disciplining and imposing penalties for non-compliance
  • Seizing assets of suspects at the request of the judiciary

The agency plays a crucial role in preventing financial crimes in Brazil, working to ensure that financial institutions are compliant with AML regulations and that criminals are brought to justice.