BRAZIL’S STEPS TO IMPROVE ITS AML/CFT
June 11th, 2025Brazil is trying to improve its Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) system with stronger penalties and more supervision, but some gaps remain.
Brazil, which is among the countries with the highest alerts (1.36 million in 2023) for financial crimes involving shell companies, as per the Moody’s Shell Company Indicator quoted by CNN (1), “has made important strides to improve” its Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) system and “is achieving some positive results”, but still “needs to strengthen cooperation and coordination between certain authorities and improve prosecution”, warned the Financial Action Task Force (FATF) in 2023 (2).
To deal with this, the bill 4398/24 under discussion at the Congress aims to increase the penalty for money laundering from three to ten years’ imprisonment and a fine to two to twelve years and a fine (3). Still, according to Pierpaolo Bottini, partner at São Paulo-based Bottini & Tamasauskas Advogados, and a former director of the Economic Criminal Law of the Brazilian Institute of Criminal Sciences, in Brazil, “banks usually comply with the rules established by COAF (Council for Financial Activities Control, which is Brazilian FIU).
However, several other institutions do not do so.” For instance, cryptocurrency operators and online betting companies “are not yet properly regulated, but that can contribute greatly to controlling ML”, he mentioned.
This might change soon, as the Ministry of Justice and Public Security is preparing rules to add cryptocurrencies and gold to the ML legislation and will send them to the Congress until June (2025) (4). However, said Bottini, “more important than increasing administrative sanctions is reorganizing Coaf”, whose “lack of structure to identify and punish these companies” is one of “biggest problems”. To him, Coaf needs more servers, technology and capacity.
In a note sent to MLB, Coaf rejected this view, saying that figures “demonstrate a clear increase, over the years, in the production of financial intelligence (from 11.693 reports in 2020 to 18.762 in 2024) and in its exchange with competent authorities”. Coaf only supervises sectors without a specific regulator, such as factoring companies, some trade in jewelry, precious stones and metals, trade in luxury or high-value goods, and negotiations of athletes’ transfer rights and artists’ performances.
It said it works under a “risk-based approach”, “adjusting control measures according to the level of risk identified”, therefore, entities must concentrate “compliance efforts in areas of greater risk” and have greater flexibility to adapt prevention strategies and respond “more quickly to new threats”. Coaf added that “promoting awareness and commitment of these sectors” in AML/CFT/CFP is “an important challenge”.
Coaf works with electronic compliance assessments, which “make it possible to reach thousands of obligated people simultaneously” and do objective and broad preliminary investigations, depending on their complexity and risk. In 2024, this work resulted in BRL 44.2 million (USD 7.5 million) in fines applied to legal entities and individuals, especially in the factoring and luxury or high-value goods sectors, while in 2023, BRL 38.2 million (USD 6.5 million) in fines were achieved.
However, there is still a lot to do. The United Nations Office on Drugs and Crime estimates that between USD 2.22 trillion and USD5.54 trillion is laundered annually (5).
NOTES:
2 – https://www.fatf-gafi.org/en/publications/Mutualevaluations/Brazil-mer-2023.html
Image Credit: Carlos Ebert from São Paulo, BrazilGRU, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons