Financial Crime World

Financial Crime Risk Assessment Templates Crucial for Brazil Amid Ongoing Money Laundering Concerns

Introduction

Brazil remains a high-risk jurisdiction for money laundering, with an estimated $25.8 billion to $64.4 billion laundered annually. The country’s decentralized public procurement system creates vulnerabilities in tackling corruption and financial crime.

Key Statistics:

  • Estimated annual money laundering: $25.8 billion to $64.4 billion
  • Number of investigations into financial crimes over a two-year period: nearly 5,000
  • Convictions resulting from these investigations: only 11

Key Risks and Challenges

  • Terrorist financing is a significant concern, with organized crime groups linked to terrorist entities funneling proceeds from drugs, robberies, and kidnappings into terrorist activities.
  • Corruption remains a major issue, with political interference in corruption investigations and institutions hindering efforts to tackle financial crime.
  • Information sharing between authorities varies in quality and state-to-federal coordination is not effective.

State-Owned Enterprises: A Risky Business

  • State-owned enterprises, such as energy, banking, and construction companies, create opportunities for public corruption and bribery in awarding contracts.
  • The Tri-Border Area between Brazil, Argentina, and Paraguay is a key area of financial crime, with organized crime trafficking drugs, minerals, and people with impunity.

AML Policy Summary

Brazil’s AML knowledge among obligated entities is weak, and prosecution rates are low. However, the country has made progress in prevention and investigation:

  • The government has formed a working group to prepare an NRA.
  • A risk-based approach for financial entities has been established, along with comprehensive monitoring and money laundering regulation.

Brazil has a mature money laundering framework with strong institutional basis for financial intelligence and information sharing across state and federal enforcement agencies:

  • Main money laundering laws in Brazil: Law 9.613/1998, Law 13.260/2016, Law 13.170/2015, and Central Bank of Brazil Circular 3.978/2020.

Weaknesses

  • Lawyers are seen as the top facilitators of financial crime in Brazil.
  • Real estate, gas stations, and shell companies are key conduits for money laundering.
  • Powerful business interests and politicians can obstruct the justice system, resulting in jurisdictional delays that lead to justice disappearing.

Strengths

Brazil has been strengthening its legislation in recent years:

  • A risk-based approach for financial entities has been established.
  • Comprehensive monitoring and money laundering regulation have been put in place.
  • New procedures for identifying and freezing terrorist assets have demonstrated substantial progress.