Financial Institution Security Measures in Brazil Fall Short

A recent report from a leading international organization has found that financial institution security measures in Brazil are not meeting global standards.

Background

The Mutual Evaluation Report assesses countries’ implementation of anti-money laundering and combating terrorist financing (AML/CFT) measures. The report gives Brazil largely compliant ratings on most fronts, but highlights several areas where improvement is needed.

Key Findings

Risk assessment and national cooperation and coordination efforts: Brazil scored largely compliant in these areas.
Regulation and supervision of financial institutions, DNFBPs, and powers of supervisors: The country scored partially compliant in these areas.
Financial secrecy laws: Brazil’s financial secrecy laws were deemed somewhat lacking, with a compliant rating.
Customer due diligence, record-keeping, and reliance on third parties: These areas scored largely compliant ratings.
Correspondent banking and money or value transfer services: These areas scored partially compliant ratings.

Areas for Improvement

The report notes that Brazil has made progress in implementing AML/CFT measures but highlights several areas where improvement is needed. These include:

Powers of law enforcement and investigative authorities
Financial intelligence unit effectiveness

Ratings Breakdown

Brazil’s ratings were as follows:

R.1 - Assessing risk & applying risk-based approach: largely compliant (LC)
R.2 - National cooperation and coordination: largely compliant (LC)
R.3 - Money laundering offence: largely compliant (LC)
R.4 - Confiscation and provisional measures: largely compliant (LC)
R.5 - Terrorist financing offence: partially compliant (PC)
R.6 - Targeted financial sanctions related to terrorism & terrorist financing: partially compliant (PC)
R.7 - Targeted financial sanctions related to proliferation: largely compliant (LC)
R.8 - Non-profit organisations: partially compliant (PC)
R.9 - Financial institution secrecy laws: compliant (C)
R.10 - Customer due diligence: largely compliant (LC)
R.11 - Record keeping: compliant (C)
R.12 - Politically exposed persons: largely compliant (LC)
R.13 - Correspondent banking: partially compliant (PC)
R.14 - Money or value transfer services: partially compliant (PC)
R.15 - New technologies: partially compliant (PC)
R.16 - Wire transfers: compliant (C)
R.17 - Reliance on third parties: largely compliant (LC)
R.18 - Internal controls and foreign branches and subsidiaries: largely compliant (LC)
R.19 - Higher-risk countries: partially compliant (PC)
R.20 - Reporting of suspicious transactions: largely compliant (LC)
R.21 - Tipping-off and confidentiality: compliant (C)
R.22 - DNFBPs: Customer due diligence: partially compliant (PC)
R.23 - DNFBPs: Other measures: partially compliant (PC)
R.24 - Transparency and beneficial ownership of legal persons: partially compliant (PC)
R.25 - Transparency and beneficial ownership of legal arrangements: partially compliant (PC)
R.26 - Regulation and supervision of financial institutions: partially compliant (PC)
R.27 - Powers of supervisors: compliant (C)
R.28 - Regulation and supervision of DNFBPs: partially compliant (PC)
R.29 - Financial intelligence units: compliant (C)
R.30 - Responsibilities of law enforcement and investigative authorities: compliant (C)
R.31 - Powers of law enforcement and investigative authorities: compliant (C)
R.32 - Cash couriers: partially compliant (PC)
R.33 - Statistics: largely compliant (LC)
R.34 - Guidance and feedback: largely compliant (LC)
R.35 - Sanctions: largely compliant (LC)
R.36 - International instruments: largely compliant (LC)
R.37 - Mutual legal assistance: largely compliant (LC)
R.38 - Mutual legal assistance: freezing and confiscation: largely compliant (LC)
R.39 - Extradition: largely compliant (LC)
R.40 - Other forms of international cooperation: largely compliant (LC)