Financial Crime World

Brazil Makes Progress in Combating Terrorist Financing Risks

Brazil has made significant strides in strengthening its system to combat money laundering and terrorist financing, as highlighted by a recent evaluation by the Financial Action Task Force (FATF) and the Group of Latin American Financial Intelligence Units (GAFILAT). However, despite these advances, vulnerabilities remain that need to be addressed.

Improved International Cooperation and Risk Assessment

Since its last evaluation in 2010, Brazil has demonstrated improved international cooperation, risk assessment, and policy coordination. The country’s understanding of money laundering risks is considered deep, particularly in areas such as:

  • Corruption
  • Organized crime
  • Tax evasion
  • Drug trafficking
  • Environmental crimes

Vulnerabilities Remain

Despite these advances, vulnerabilities remain in certain sectors. The report notes that Brazil needs to strengthen cooperation and coordination between authorities, including:

  • Police
  • Prosecution Authority
  • Tax Office

Additionally, prosecution of money laundering remains a challenge, particularly when it comes to tackling environmental crimes and laundering of proceeds.

Sector-Specific Vulnerabilities

Brazil’s banking and securities sectors are among the largest in South America, making the country a prime target for cross-border threats. The porosity of its borders further exacerbates these risks.

The report highlights several areas where Brazil needs to improve:

  • Non-Financial Sector Supervision: The non-financial sector is largely unregulated for anti-money laundering (AML), counter-terrorism financing (CFT), and combating proliferation finance (CPF) measures.
  • Asset Recovery: Confiscation results are not entirely in line with the risks faced by the country.
  • Business Entity Transparency: There is a need for greater transparency of business entities, including a largely underpopulated database for beneficial ownership information.

Terrorist Financing Risks

While risks are considered relatively low in Brazil, there is a need for significant advancements in implementation for measures to be more effective.