Financial Crime World

Title: Brazil’s Battle Against Financial Crime: Legal and Ethical Issues in Money Laundering

Brazil has taken rigorous steps to prevent and penalize money laundering activities within its jurisdiction. In this article, we will discuss the legal framework of money laundering in Brazil, the responsible authorities, and the consequences of non-compliance.

Prohibition of Money Laundering in Brazil

  • Criminalization of Money Laundering: With the enactment of Federal Law No. 9,613/98, later amended by Federal Law No. 12,683/2012, money laundering was criminalized in Brazil.
  • Federal Exclusive Jurisdiction: Given that criminal offenses fall under the exclusive domain of the federal legislative, there are no state or municipal laws against money laundering.

Establishing a Criminal Violation of Money Laundering Laws

Money laundering in Brazil is defined as the concealment or disguise of the true nature, origin, location, disposition, movement, or ownership of assets that result from a criminal offense. This crime is independent of the predicate offense.

Predicate Offenses to Money Laundering and Extraterritorial Jurisdiction

  • Any Crime as Predicate: Any crime or misdemeanor can serve as a predicate offense to money laundering.
  • Tax Crimes: Although tax crimes are not explicitly excluded, their ability to generate proceeds for laundering remains contentious.
  • Extraterritorial Jurisdiction: Money laundering offenses can carry extraterritorial jurisdiction if they harm national public assets, breach international conventions, or involve predicate offenses against the Brazilian public administration.

Corporate Criminal Liability for Money Laundering Offenses

Under Brazilian law, only individuals can be held criminally liable for money laundering offenses. However, companies and individuals may face administrative sanctions for failing to comply with AML (Anti-Money Laundering) compliance requirements.

Responsible Authorities for Investigating and Prosecuting Money Laundering Offenses

  • Criminal Investigations: State or federal police and/or federal or state prosecutors lead criminal investigations for money laundering.
  • Federal Prosecution: The Federal Prosecution is responsible for cases impacting the financial system, the financial-economic order, or the interests of the federal government.

Statute of Limitations and Penalties for Money Laundering Offenses

The limitation period for money laundering offenses ranges from 16 to 18 years, depending on the penalty:

  • Prison terms ranging from three to ten years.
  • Fines.

Civil Penalties and Asset Forfeiture

Brazilian law does not allow civil or non-conviction-based asset forfeiture for money laundering offenses. However, individuals and entities may face fines and penalties for non-compliance with AML regulations. Seizure and forfeiture of assets can occur once a criminal conviction has been obtained.

Compliance Requirements and Covered Institutions

The Brazilian AML Law imposes various AML requirements on:

  • Financial Institutions: Know-your-customer procedures, record-keeping, monitoring, reporting measures.
  • Other Businesses: Similar requirements to financial institutions.
  • Digital Assets: Subject to the same regulations as other assets.

Reporting Suspicious Transactions

Covered institutions in Brazil are required to monitor and report suspicious transactions to the authorities based on:

  • Parties involved
  • Geographic location
  • Type of transaction
  • Financial or legal basis for the transaction

Confidentiality requirements apply to the reporting of suspicious transactions.