title:“Brazil’s Battle Against Money Laundering: A Look at the Legal Framework and Enforcement”

Crime and Enforcement 1.1. Legal authority 1.2. Criminal offense and predicate offenses 1.3. Extraterritorial jurisdiction and foreign crimes 1.4. Investigation and prosecution 1.5. Corporate criminal liability 1.6. Penalties 1.7. Statute of limitations 1.8. Enforcement and forfeiture
Regulatory, Administrative Requirements and Enforcement 2.1. Legal and administrative authorities 2.2. Self-regulatory organizations and professional associations 2.3. Responsibilities of self-regulatory organizations 2.4. International treaties and conventions 2.5. Government agencies responsible for examination and enforcement 2.6. Financial Intelligence Unit (FIU) 2.7. Statute of limitations for competent authorities 2.8. Maximum penalties for non-compliance 2.9. Other sanctions 2.10. Criminal and administrative liability
Anti-Money Laundering Requirements for Financial Institutions and Other Designated Businesses 3.1. Scope of AML requirements 3.2. Payments and money transmission activities 3.3. Cryptocurrency industry 3.4. Types of payments or money transmission activities 3.5. Recordkeeping and reporting 3.6. Cross-border transactions

1. Crime and Enforcement

1.1 Legal authority

The Federal Prosecutor’s Office and State Prosecutor’s Office enforce anti-money laundering (AML) laws at the national level.

1.2 Criminal offense and predicate offenses

Money laundering is committed when someone conceals the origin of illegally-gained proceeds, with tax evasion being a predicate offense.

1.3 Extraterritorial jurisdiction and foreign crimes

Brazilian law does not apply extraterritorially; money laundering of foreign crime proceeds is not punishable unless the crime has been committed within Brazil’s territory.

1.4 Investigation and prosecution

The Federal Police and State Police are in charge of investigating money laundering crimes at the police level, while the Federal Prosecution Office and State Prosecution Office handle investigations within their respective jurisdictions.

1.5 Corporate criminal liability

Brazilian law requires the existence of intent (mens rea) for most crimes. However, corporate entities and their employees can be held liable for environmental crimes committed with their representatives’ or collegial decision-making body’s direction.

1.6 Penalties

Individuals face imprisonment for three to ten years and a fine, while legal entities are subject to administrative punishment, such as asset confiscation.

1.7 Statute of limitations

The statute of limitations for money laundering crimes is 16 years.

1.8 Enforcement and forfeiture

The judicial branch has the authority to order asset confiscation, with the Financial Activity Control Council (COAF), the Brazilian Central Bank, and the Traffic Department assisting in this process.

2. Regulatory, Administrative Requirements, and Enforcement

2.1 Legal and administrative authorities

The Federal Revenue Service (RFB) and the Financial Activities Control Council (COAF) are responsible for imposing AML requirements on financial institutions and other businesses and enforcing penalties for non-compliance.

2.2 Self-regulatory organizations and professional associations

While they cannot create laws, private organizations can develop governance rules that require AML activities and improve their records, operations, and communications.

2.3 Self-regulatory organizations’ responsibilities

These organizations are duty-bound to create mechanisms to monitor and fight suspicious activities by their members, adopting policies, procedures, and internal control mechanisms.

2.4 International treaties and conventions

Brazil is a signatory to various international treaties and conventions that establish parameters for fighting money laundering.

2.5 Government agencies responsible for examination and enforcement

Compliance requirements are set by the COAF, which collaborates with regulatory agencies, financial institutions, and other entities to define monitoring criteria and request financial information from suspicious transactions.

2.6 Financial Intelligence Unit (FIU)

The COAF, which was recently reattached to the Brazilian Ministry of Finance, is responsible for analyzing AML-related reports submitted by financial institutions and businesses.

2.7 Statute of limitations for competent authorities

The statute of limitations is five years from the date the subject matter became known to the authority with jurisdiction.

2.8 Maximum penalties for non-compliance

Administrative penalties, including warnings, fines, and the cancellation or suspension of licenses, can be imposed on entities and individuals for non-compliance with AML requirements.

2.9 Other sanctions

In addition to monetary fines and penalties, entities and individuals can be subject to suspension, temporary disqualification, or cancellation of their economic activity.

2.10 Criminal and administrative liability

Individuals face criminal liability, while managers of corporate entities can be subject to both criminal and administrative liability.

3. Anti-Money Laundering Requirements for Financial Institutions and Other Designated Businesses

3.1 Scope of AML requirements

AML requirements apply to regulated sectors and non-financial businesses and professions (DNFBPs).

3.2 Payments and money transmission activities

Payments and money transmission activities, including those of FinTech businesses and innovative payment systems, are subject to AML requirements.

3.3 Cryptocurrency industry

Virtual asset service providers (VASPs) will be subject to AML requirements from June 2023. Concerns regarding NFTs exist due to the lack of a regulatory framework.

3.4 Types of payments or money transmission activities

All financial institutions and DNFBPs must comply with AML requirements, including reporting large currency transactions and suspect transactions.

3.5 Recordkeeping and reporting

AML requirements include maintaining records of transactions for at least five years and reporting transactions considered suspicious to the COAF.

3.6 Cross-border transactions

Cross-border transactions involving sending or receiving funds require compliance with Brazilian foreign exchange regulations.