Title: Brazil’s Progress in Combating Money Laundering and Terrorist Financing: Key Challenges Remain
FATF/GAFILAT Mutual Evaluation Report praises Brazil’s advancements
Paris, December 21, 2023 – The latest FATF/GAFILAT mutual evaluation report reveals that Brazil is making substantial progress in enhancing its financial crime prevention framework. As the largest economy in South America, Brazil is taking steps to strengthen its defenses against money laundering and terrorist financing.
Commendable Improvements
- Improved international cooperation: Brazil’s international cooperation in combating financial crimes has grown stronger since the last evaluation in 2010.
- Risk assessment and policy coordination: Brazil’s risk assessment and policy coordination have also seen improvements.
Understanding Money Laundering Risks
Brazil has broadened its understanding of money laundering risks, especially those linked to corruption, organized crime, tax evasion, drug trafficking, and environmental crimes. This comprehension is crucial for effective countermeasures.
Robust Financial Sector Supervision
Brazil’s strong supervision of its financial sector has earned recognition. This sector, which dominates the South American economy, plays a crucial role in financial crime prevention.
Ongoing Challenges
Despite these commendable improvements, Brazil faces significant challenges.
Need for Enhanced Collaboration and Coordination
Brazil needs to improve collaboration and coordination between key law enforcement agencies, such as the Police, Prosecution Authority, and Tax Office. Better coordination can lead to more comprehensive responses to money laundering and terrorist financing threats.
Lack of Regulation in Non-Financial Sector
The country’s non-financial sector, which includes industries like law, remains largely unregulated, making it susceptible to money laundering, terrorist financing, and counter-proliferation financing. Brazil needs to legislate AML, CTF, and CPF measures to regulate non-financial businesses and professional services.
Recovering Assets Linked to Crime and Terrorism
Brazil must intensify its efforts to recover assets associated with financial crimes and terrorism. These assets pose a threat to the financial system and need to be confiscated and managed effectively.
Transparency in Business Entities
Beyond anti-money laundering measures, the report suggests Brazil could expand transparency in business entities to minimize the potential misuse of companies. Current challenges include incomplete business entity transparency, demonstrated through a largely unfilled beneficial ownership information database.
Combating Financing of Terrorism
Though Brazil’s measures against the financing of terrorism have improved, substantial progress is required to make them more effective. The report emphasizes the importance of enhancing risk understanding and mitigation to safeguard the financial sector and maintain an effective regulatory framework.
Lower, but Persisting Terrorist Financing Risks
Despite lower risks for terrorist financing in Brazil, the report emphasizes the crucial role of robust risk understanding and mitigation to protect the financial system and maintain regulatory effectiveness.