Financial Crime World

Brazil Takes Steps to Combat Money Laundering, But Work Remains Ahead

Brazil has made significant progress in strengthening its anti-money laundering (AML) and combating the financing of terrorism (CFT) regimes. However, despite these efforts, more needs to be done to address key challenges and vulnerabilities.

Progress Made

According to a recent mutual evaluation report by the Financial Action Task Force (FATF) and the Latin American Financial Action Task Force (GAFILAT), Brazil has:

  • Improved international cooperation
  • Enhanced risk assessment
  • Strengthened policy coordination since the last evaluation in 2010
  • Demonstrated strong supervision of most of its financial sector

Areas for Improvement

However, the report highlights several areas where Brazil needs to improve:

Enhanced Cooperation and Coordination

  • The country needs to enhance cooperation and coordination among authorities, particularly the Police, Prosecution Authority, and Tax Office, to tackle money laundering effectively.

Strengthening Prosecution Efforts

  • Brazil must strengthen prosecution of money laundering cases, including those related to environmental crimes and laundering of proceeds.

Vulnerabilities

Brazil’s large banking and securities sectors make it vulnerable to cross-border threats. Additionally:

  • The porosity of its borders further exacerbates this risk.
  • The country has a deep understanding of its money laundering risks, particularly in areas such as corruption, organized crime, tax evasion, drug trafficking, and environmental crimes.

Non-Financial Sector Supervision

While Brazil has made strides in supervising its financial sector:

  • It still needs to address gaps in the supervision of its non-financial sector.
  • The country’s beneficial ownership database is largely unpopulated, making it difficult to ensure transparency in business entities.

Combating Terrorism Financing

Brazil’s measures have improved in recent years, but more needs to be done to implement these measures effectively:

  • Although the risk of terrorist financing is relatively low in Brazil, the country must enhance its understanding and mitigation of this risk.

Conclusion

While Brazil has made progress in combating money laundering, there is still work to be done to address key challenges and vulnerabilities. The country’s authorities must continue to strengthen cooperation, coordination, and prosecution efforts to effectively tackle money laundering and terrorist financing risks.