Brazil Making Strides Against Financial Crimes

August 10, 2010 International Tax CooperationTaxation in Brazil

Quarta é dia de cantar o hino!The Federative Republic of Brazil has been praised for the steps it has taken to combat money laundering and terrorist financing, through a series of legal changes and legal infrastructure improvements.

The Financial Action Task Force (FATF), an inter-government body created to develop international anti-money laundering policies, has evaluated and approved the Brazilian Government’s implementation of the National Strategy Against Corruption and Money Laundering (ENCCLA). According to FATF’s report, released August 9th, the Government has developed coherent and sound strategy for anti-money laundering (AML) and combating the financing of terrorism (CFT).

With the implementation of the ENCCLA the Government is deemed to have greatly enhanced its ability to carry out appropriate prosecutions on money laundering offenses, by creating a system of Specialised Federal Courts (SFC). The advent brings together the nation’s most prominent federal prosecutors and judges specialized and experienced in money laundering and financial crime investigation. In its lifetime, the SFC has initiated 4 760 investigations, started 780 indictments, leading to an approximate BRL 1.8 billion (approx. USD 1 billion) in seizures.

Brazil is also deemed to be making adequate progress in combating terrorist financing. Surveillance of potential high-risk activities has been thoroughly stepped up, through advents like regional intelligence structures and global inter-Government cooperation. However, at this stage, the results are considered to be marginally behind international standards.

Despite the overall commendations, the FATF has issued several further recommendations to the Government for future legislative enhancements. Currently, terrorist financing is not a stand-alone punishable offense, and while the Government’s provisional legal measures are deemed adequate, further legal progress would aid Brazil’s ability to extradite international offenders. Support should continue to be provided to the SFC system, which is deemed to be a keystone of the AML and CFT efforts. The Government is also advised to extend its legal framework regarding asset freezes and confiscations in instances of financial crimes. Further, despite no money laundering cases being recorded in the national closed pension funds sector, Brazil should extend reporting requirements for all categories of designated non-financial businesses and professions.

Photo by Conrado Tramontini (Conras)