Financial Crime World

Brazil Tightens Grip on Financial Crime: Understanding the Role of AML Risk Assessment Templates

As Brazil continues to strengthen its anti-money laundering (AML) regulations, financial institutions operating in the country must be aware of the complex landscape and adapt their risk assessment templates accordingly. In this article, we delve into the key aspects of AML in Brazil, including the regulatory framework, entities impacted, and compliance requirements.

Brazil’s AML Regulatory Framework

The Brazilian Central Bank Circular 3,798/20 introduced a risk-based approach to AML compliance, mandating financial institutions to implement internal controls for detecting and managing money laundering risks. The law also requires institutions to register all transactions, identifying the involved parties and the origin and recipient of funds.

Key Laws and Regulations

  • Law 9,613/98 established money laundering as a criminal offense.
  • Law 12,683/12 broadened the definition of illicit activities constituting money laundering and strengthened penalties for these crimes.

AML Regulatory Authorities in Brazil

The Council for Financial Activities Control (COAF) is Brazil’s Financial Intelligence Unit, responsible for regulating financial institutions, enforcing sanctions policies, investigating suspicious transactions, and monitoring high-risk clients or accounts. The Central Bank of Brazil (BCB) ensures national financial institutions comply with AML regulations.

Compliance Requirements for Businesses

To stay compliant with AML in Brazil, entities must:

1. Register

  • Register with the local regulatory authority and/or COAF upon establishment.
  • Ensure all transactions are registered, identifying involved parties and origin/recipient of funds.

2. Internal Controls

  • Establish internal policies and procedures to effectively manage money laundering risks.
  • Implement a risk-based approach to AML compliance.

3. Customer Due Diligence (CDD)

  • Implement CDD procedures at the onboarding stage and on an ongoing basis, depending on the client’s risk level.
  • Monitor high-risk clients or accounts.

4. Reporting

  • Report any suspicious activity to COAF within 24 hours of detection.
  • Ensure all transactions are registered, identifying involved parties and origin/recipient of funds.

5. Fines and Penalties

  • Non-compliance can lead to warnings, suspension of operations, or fines reaching up to twice the value of the transaction or BRL 20,000,000.00.

Streamlining Compliance with KYC Hub

Businesses can simplify compliance with AML regulations in Brazil using solutions offered by KYC Hub. This platform provides secure and straightforward solutions for checking for high-risk individuals and scanning names against various official lists.

By understanding the complex landscape and adapting their risk assessment templates accordingly, financial institutions can mitigate the risks associated with money laundering and ensure a smoother operation.