Financial Crime World

Title: Brazil’s Financial Crimes Watchdogs: COAF and the Central Bank Enforce AML/CTF Compliance

Introduction

Brazil’s financial sector is fortified by two key entities in the fight against money laundering and terrorist financing (ML/TF)— the Council for Financial Activities Control (COAF) and the Central Bank of Brazil (BCB). In this report, we delve into their responsibilities and how financial institutions can comply with COAF regulations.

Council for Financial Activities Control (COAF)

[COAF as the Brazilian financial intelligence unit]

As the Brazilian financial intelligence unit, COAF’s primary objectives include:

  1. Regulating financial institutions
  2. Enacting and enforcing sanction policies
  3. Investigating suspicious transactions
  4. Monitoring and maintaining a watchful eye on clients or accounts that pose a serious risk to the financial sector

COAF’s Responsibilities

  • Regulating financial institutions
  • Enacting and enforcing sanction policies
  • Investigating suspicious transactions
  • Monitoring clients or accounts that pose a serious risk to the financial sector

Central Bank of Brazil (BCB)

[BCB as the competent authority]

The Central Bank of Brazil (BCB) serves as the:

  1. Competent authority for ensuring that National Financial System (SFN) institutions comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) legislation and regulations.
  2. Authority to prevent the Brazilian financial system from being exploited for illegal purposes like money laundering or terrorism funding, guided by the National Monetary Council’s guidelines.

Institution Compliance Requirements

Financial institutions subjected to regulations are required to:

  1. Implement internal controls for client identification and updating records
  2. Conduct effective training programs for employees on AML/CFT legislation and regulatory requirements
  3. Monitor and report transactions exceeding a limit set by the regulatory authority
  4. Implement policies, procedures, and internal controls to meet legal requirements
  5. Register with the regulatory authority and/or COAF under prescribed terms
  6. Regularly comply with COAF’s requirements in the specified manner and conditions, maintaining the confidential information in accordance with the law.

Reporting Requirements

Special attention must be paid to transactions that could be evidence of money laundering and terrorism financing, requiring reporting to COAF in complete confidentiality:

Brazilian Institutions Reporting Obligations

  • Cash transactions from an insured totaling BRL 10,000 or more
  • Any transaction to a non-Brazilian bank account exceeding BRL 100,000
  • Immediate reporting of suspicious transactions within 24 hours of identification
  • Sanctions matches
  • Serious evidence of terrorism financing or individuals intending to commit, participate in, or facilitate terrorist acts.
Sources:
1. SUSEP Circular no. 612/2020