Financial Crimes Reporting Requirements in Brazil Tighten Up, Businesses Must Adapt

Introduction

Brazil has taken a decisive step towards combating money laundering by implementing stricter anti-money laundering (AML) regulations. The country’s financial system has evolved significantly over the years, presenting new challenges for regulators and businesses alike.

The AML Regulatory Framework in Brazil

At the heart of Brazil’s AML regulatory framework lies Law 9,613/98, which was later amended by Law 12,683/12. This legislation makes it a crime to engage in activities related to financial transactions that are linked to various offenses, including terrorism, organized crime, and extortion.

Key Legislation

• Law 9,613/98: Makes money laundering a crime and establishes the Financial Intelligence Unit (FIU).
• Law 12,683/12: Amends Law 9,613/98 and strengthens AML regulations.
• Circular 3,798/20: Mandates financial institutions to implement internal controls for detecting and managing money laundering risks.

AML Regulatory Authorities in Brazil

The Council for Financial Activities Control (COAF) is responsible for regulating financial institutions, enforcing sanctions policies, investigating suspicious transactions, and monitoring high-risk clients or accounts. The Central Bank of Brazil (BCB) serves as the primary monetary authority, ensuring that national financial institutions comply with AML regulations.

Key Responsibilities

• Registration: Entities must register with the local regulatory authority and/or COAF upon establishment.
• Internal Controls: Financial institutions must establish internal policies and procedures to effectively manage money laundering risks.
• Customer Due Diligence (CDD): Entities must collect and verify customer information and check for any sanctions or politically exposed person (PEP) status at the onboarding stage and on an ongoing basis, depending on the client’s risk level.
• Reporting: Entities must report any suspicious activity to COAF within 24 hours of detection.

The Importance of Staying Compliant

Non-compliance with AML regulations in Brazil can result in severe consequences, including warnings, suspension of operations, and fines that can reach up to twice the value of the transaction or BRL 20,000,000.00. Businesses operating in Brazil must ensure they stay updated with new rules and regulations to maintain compliance and avoid penalties.

Simplifying Compliance with KYC Hub

Compliance with AML regulations in Brazil can be simplified using solutions offered by KYC Hub. KYC Hub provides secure and straightforward solutions for checking for high-risk individuals and scanning names against various official lists, minimizing the time spent sorting through false matches. By utilizing these solutions, businesses can streamline their compliance process and stay ahead of the competition.

Conclusion

Brazil has made significant strides in strengthening its AML regulatory framework and aligning it with international standards. Businesses operating in the country must ensure they stay updated with new rules and regulations to maintain compliance and avoid penalties.