Financial Crime World

Brazil Takes Steps to Prevent Terrorist Financing, But More Work Needed, Says FATF

The Financial Action Task Force (FATF) has published a report evaluating Brazil’s efforts to combat money laundering and terrorist financing. While Brazil has made significant progress in developing a comprehensive strategy to prevent these crimes, the report identifies several areas where improvements are needed.

Key Findings

  • Brazil has not yet criminalized terrorist financing as a standalone offense, which is inconsistent with international requirements.
  • The country needs to enhance its ability to confiscate assets linked to money laundering and terrorist financing.
  • Regulation of non-bank financial institutions, such as insurance companies and securities dealers, requires improvement.
  • The number of convictions for money laundering offenses remains low compared to the size of the country’s financial system.

Recommendations

  • Criminalize terrorist financing as a standalone offense and provide for appropriate penalties.
  • Enhance asset confiscation procedures to ensure that assets are ultimately confiscated and used to compensate victims of crime.
  • Extend anti-money laundering and counter-terrorism financing requirements to all categories of designated non-financial businesses and professions.
  • Continue to support specialized federal courts and other measures to enhance the ability to apply final sanctions for money laundering.

Brazil’s Progress

  • The country has developed a comprehensive strategy to prevent money laundering and terrorist financing through its National Strategy Against Corruption and Money Laundering (ENCCLA).
  • ENCCLA has enabled Brazil to make systematic progress in enhancing its implementation of anti-money laundering and counter-terrorism financing measures.
  • A bill to amend Federal Law 9613/1998, which will criminalize terrorist financing, has been approved.

Challenges

  • The banking sector is perceived to face greater money laundering risk in certain areas, such as foreign exchange and private banking.
  • Money laundering risks have also been detected in other sectors, including securities and insurance.
  • Brazil’s criminal justice system faces challenges, including a lack of specialization among judges and prosecutors.

Conclusion

While there is still more work to be done, the FATF report highlights the progress that Brazil has made in preventing terrorist financing and money laundering. The report provides recommendations for continuing this important work and improving the country’s efforts to combat these crimes.