Anti-money Laundering : Brazil

1. What laws in your jurisdiction prohibit money laundering?

Brazil

Money laundering became a criminal offence in Brazil in 1998, with the enactment of the Brazilian Anti-Money Laundering Law, Federal Law No. 9,613/98 (AML Law), later amended by Federal Law No. 12,683/2012.

Criminal offences and their respective sanctions are part of the federal congress’ exclusive law-making powers and, therefore, must be established by federal statute. As such, there are no state or municipal laws prohibiting money laundering.

2. What must the government prove to establish a criminal violation of the money laundering laws?

Brazil

The crime of money laundering is defined in Federal Law No. 9,613/98 as the concealment or disguise of the true nature, origin, location, disposition, movement or ownership of assets, rights, and values that result directly or indirectly from a criminal offence. 

The law further establishes that the same penalties apply to those who:

• To conceal or disguise the use of assets, rights or amounts/value deriving from a criminal infraction:

• Convert them into legal assets;
• Acquire, receive, exchange, negotiate, grant or receive as
• guaranty, deposit in checks, or transfer;
• Import or export assets/goods at amounts that do not correspond to their real value.

• Use, in their financial and economic activity, assets, rights or amounts/value deriving from criminal infractions; and
• Participate in groups, associations or offices knowing that its main or secondary activity is directed at the crimes described in Law No. 9,613.

To prosecute an act of money laundering, the prosecution must establish a predicate offence.  The prosecution of the predicate and money laundering offences is independent. The defendant may be liable for both criminal acts, but does not need to be convicted of the predicate offence to be convicted of money laundering.

The prosecution must show an intent of the defendant to launder money/assets, reckless or negligent conduct does not constitute the crime of money laundering.

3. What are the predicate offences to money laundering? Do they include foreign crimes and tax offences?

Brazil

As of the 2012 reform in the AML Law (Federal Law No. 12,683/2012), any crime or misdemeanour can constitute a predicate offence to money laundering.

Tax crimes are not specifically excluded as a category of predicate offence, but it is controversial whether they can generate proceeds of crimes that could be laundered.

A crime is considered to be committed in Brazil if either the criminal conduct or omission or the result of the crime took place in Brazil (ubiquity theory). Therefore, even if the predicate offence was committed abroad, if money laundering acts took place in Brazil or harmed Brazilian entities, the individuals can be subject to criminal liability under Brazilian law. 

4. Is there extraterritorial jurisdiction for violations of your jurisdiction’s money laundering laws?

Brazil

The rules regarding extraterritorial jurisdiction are regulated by article 7 of the Brazilian Criminal Code and include: (i) crimes against the federal government, states, municipalities or the Federal District, or against government entities, government agencies, or government foundations (article 7, I, “b”); and (ii) crimes that due to treaties or conventions, Brazil has a duty to combat (article 7, II, “a”).

Based on the legal provisions above, the Brazilian Supreme Court and the Superior Court of Justice have recently ruled that Brazil has extraterritorial jurisdiction over money laundering offences when: (i) at least part of the money laundering acts were committed in national territory; (ii) the money laundering acts harmed national public assets, even when committed abroad; (iii) Brazil is required to repress such acts under international conventions; (iv) predicate offences were committed against the Brazilian public administration (STJ, AgRg HC No. 112,868/ STF, AgRG HC No. 185,223).

5. Is there corporate criminal liability for money laundering offences, or is liability limited to individuals?

Brazil

Legal entities are only subject to criminal liability for environmental crimes under Brazilian law. Therefore, criminal liability for acts of money laundering is limited to individuals.

Legal entities subject to AML compliance requirements can be held administratively liable for failure to comply with the applicable obligations. 

6. Which government authorities are responsible for investigating violations of the money laundering laws?

Brazil

Criminal investigations are conducted by the state or federal police and/or state and federal prosecutors. Prosecutors oversee investigations conducted by the police and have the prerogative to file criminal actions against individuals for white-collar offences. In general, white-collar offences are investigated by specialised police departments and prosecutors.

Money laundering offences are investigated by federal authorities when the acts are committed against the national financial system or against the financial-economic order, goods, services, and interests of the federal government, or when the Federal Justice is competent for the prosecution of the predicate offence (article 2 of the Anti-Money Laundering Law).

7. Which government agencies are responsible for the prosecution of money laundering offences?

Brazil

Criminal violations of the anti-money laundering law are prosecuted by federal, state or specialist prosecutors.

If there is no indication of an electoral or military crime, the money laundering offence will be prosecuted by ordinary federal or state prosecutors.

As discussed above, the Federal Prosecution will be responsible for prosecuting such offences when committed against the financial system or the financial-economic order, or against goods, services, interests of the federal government, its public companies, and entities or when the Federal Justice is competent to try the predicate offence.

The authority of Prosecutions from the different states of the Brazilian Federation is residual. State Prosecutors only prosecute money laundering offences that are not related to electoral, military or federal offences.

8. What is the statute of limitations for money laundering offences?

Brazil

As provided for by article 109 of the Criminal Code, the limitation periods for crimes ranges according to the applicable penalty. The maximum applicable penalty for money laundering is ten years of imprisonment. Therefore the limitation period to prosecute is of 16 years, counted from the date the crime was committed.

As a general rule, the limitation period runs from the day the crime was committed to the time when the charges are confirmed by a judge. After the charges are confirmed, the limitation period is only interrupted when a sentence has been issued by a criminal judge or by a court of appeals.

In the case of continuing offences, the limitation period starts to run when that course of conduct ceases. The Supreme Court has ruled (Criminal Action No. 683/2017) that the concealment element of a money laundering offence is a continued crime and the limitation period only starts when the concealment ends.

In recent decisions, the Superior Court of Justice ruled that money laundering in general is a continuing offence, regardless of the modality in which it was committed (ie, AgRg no HC no. 574.573).

As the prosecution of money laundering is independent from the predicate offence, the limitation period of the predicate offence will not bar a money laundering prosecution.

9. What are the penalties for a criminal violation of the money laundering laws?

Brazil

Penalties for the crime of money laundering range from three to 10 years of imprisonment, plus a fine. If the crime was committed through a criminal organisation or if there were reiterated acts of money laundering, the penalty may be increased from one-third to two-thirds, plus a fine.

10. Are there civil penalties for violations of the money laundering laws? What are they?

Brazil

There are administrative sanctions for the violation of AML compliance requirements of the law.

Failure to comply with these obligations may subject legal entities and individuals to administrative sanctions that include a warning, the withdrawal or suspension of authorisation of the legal entity or individual to function or to conduct the specific activity, and financial fines not exceeding: (i) twice the value of the operation; (ii) twice the real profit obtained or that could possibly be obtained from the operation; or (iii) 20 million reais.

11. Is asset forfeiture possible under the money laundering laws? Is it part of the criminal prosecution? What property is subject to forfeiture?

Brazil

Article 7 of the AML Law establishes that, as a result of a criminal conviction, individuals may lose, in favour of the federal government or the states, all assets, rights and values directly or indirectly related to money laundering offences. The object of the forfeiture under the AML Law is not only the profit obtained from the money laundering offence, but also the values that originated from the predicate offences.

Article 91 of the Brazilian Criminal Code, which is subsidiarily applied to money laundering offences, determines that a conviction automatically leads to the loss of the instruments of the crime – if its possession constitutes an illicit fact – and of the product or the profit of the crime. If the products or profits of the crime cannot be recovered or are located abroad, the forfeiture of equivalent goods and values may also be determined.

In 2019, the Anti-Crime Law introduced article 91-A to the Brazilian Criminal Code, which establishes the possibility of asset forfeiture when a sentence imposes an imprisonment penalty of over six years. Under these circumstances, the judge will determine the loss of the assets corresponding to the difference between the total amount of the wealth of the defendant and the amounts that are compatible with the defendant’s licit income.

12. Is civil or non-conviction-based asset forfeiture permitted under the money laundering laws? What property is subject to forfeiture?

Brazil

The Brazilian Anti-Money Laundering Law only sets forth asset forfeiture related to criminal convictions. There is no civil asset forfeiture permitted under the money laundering law.

13. Which laws or regulations in your jurisdiction impose anti-money laundering compliance requirements on financial institutions and other businesses?

Brazil

The Brazilian AML Law provides a list of supervised entities and individuals that are subject to anti-money laundering compliance obligations, including know your customer, record-keeping, monitoring and reporting measures.

The specific obligations vary in accordance with the activities and markets of the supervised entity or individual, such as banks and financial institutions, jewellers, realtors and brokers, and are imposed by their respective regulators.

14. What types of institutions are subject to the AML rules?

Brazil

The entities and individuals subject to AML compliance requirements are defined in article 9 of the AML Law. 

 The supervised institutions are those operating in the financial market (regulated by the Brazilian Central Bank); securities market (regulated by the Brazilian Securities Exchange Commission (CVM)); insurance market (regulated by the Superintendency of Private Insurance (SUSEP)); as well as other designated non-financial business and professions (DNFBPs).

Some examples of DNFBPs are: trading of notaries, dealers of jewellery and precious stones and metals, accountants, etc.

For the supervised actors who are not subject to a self-regulatory body, the Brazilian Financial Intelligence Unit (COAF) is the competent authority to issue relevant regulations. COAF currently regulates the following markets: (i) factoring institutions; (ii) dealers of jewellery and precious stones and metals; (iii) trading of high-value goods and luxury items; and (iv) sports and entertainment transfer market.

15. Must payment services and money transmitters be licensed in your jurisdiction? Are payment services and money transmitters subject to the AML rules and compliance requirements?

Brazil

Payment institutions and money transmitters must generally be authorised by the Brazilian Central Bank to operate.

Any institution that must be authorised by the Central Bank to operate is subject to the AML requirements established by the Central Bank Circular No. 3,978/2020.

16. Are digital assets subject to the AML rules and compliance requirements?

Brazil

Currently (as at November 2022), there are no regulations regarding crypto assets under Brazilian Law, except for the obligation imposed on virtual assets exchanges to provide information to the Brazilian Tax Authority.

There is a Bill currently pending before the Federal Congress (Law No. 4,401/2021) for the regulation of the virtual assets market. Among its provisions, the bill determines that virtual assets services providers must be considered a regulated entity and required to comply with AML obligations.

For a period, COAF allowed virtual assets exchanges to register in the SISCOAF system to report suspicious operations, even though they were not legally required to do so. However, on August 2022, COAF discontinued the trial period. 

17. What are the specific AML compliance requirements for covered institutions?

Brazil

The Brazilian AML Law establishes a general framework for AML compliance requirements. Specific AML obligations, however, are only applicable upon the issuance of rules by the responsible regulator for the respective market.

General AML requirements include developing and implementing specific AML internal policies and procedures, know-your customer procedures, identifying and maintaining client’s registration data, registering and monitoring operations that exceed the limit fixed by regulators, registering before the regulator (if inexistent, COAF), providing requested information to regulators, reporting suspicious operations.

18. Are there different AML compliance requirements for different types of institutions?

Brazil

Yes. The AML Law establishes general compliance requirements, but specific AML obligations are imposed by the different regulators, depending on the market the institution operates.

19. Which government authorities are responsible for the examination and enforcement of compliance with the AML rules?

Brazil

COAF is responsible for receiving suspicious transactions reports and currency transaction reports from supervised entities.

COAF also regulates and supervises entities that are not supervised by other regulators in Brazil. Currently, COAF regulates the following markets: (i) factoring institutions; (ii) dealers of jewellery and precious stones and metals; (iii) trading of high-value goods and luxury items; and (iv) sports and entertainment transfer market.

Enforcement of AML compliance provisions for other sectors is the responsibility of the respective regulators, such as the Brazilian Central Bank (financial institutions), CVM (capital markets), SUSEP (insurance market), etc.

The Appeal Council of the National Financial System (CRSFN) is the appellate body for administrative decisions issued by BCB, CVM, COAF, SUSEP and other regulators.

20. Are there requirements to monitor and report suspicious activity? What are the factors that trigger the requirement to report suspicious activity? What is the process for reporting suspicious activity?

Brazil

Supervised entities must monitor and report suspicious activities to COAF. The criteria for reporting suspicious transactions are established by the specific AML regulations and will depend on the sector of operation. Some of the factors usually considered are parties involved, geographic location, type of transaction, financial or legal basis for the transaction, etc.

21. Are there confidentiality requirements associated with the reporting of suspicious activity? What are the requirements? Who do the confidentiality requirements apply to? Are there penalties for violations of the confidentiality requirements?

Brazil

The Brazilian AML Law determines that supervised entities must maintain the confidentiality of their suspicious transaction reports (STRs) and currency transaction reports (CTRs), including in respect of the client involved (“no-tipping off").

Financial Intelligence Reports produced by COAF are also protected by legal confidentiality. The duty to preserve such confidentiality is transferred to the public authorities that receive such Reports.

Companies, individuals and government officials may be sanctioned if they violate confidentiality requirements.

22. Are there requirements for reporting large currency transactions? Who must file the reports, and what is the threshold?

Brazil

The Brazilian AML Law determines that regulated entities must keep records of currency transactions and file a currency transaction report whenever they exceed the threshold established by the competent regulators.

The thresholds for CTRs will depend, therefore, on the regulations applicable to each sector (50,000 reais for financial institutions, 30,000 reais for transactions with high-value goods, 50,000 reais for factoring operations, etc).

23. Are there reporting requirements for cross-border transactions? Who is subject to the requirements and what must be reported?

Brazil

There are no specific AML requirements for reporting cross-border transactions. These transactions must, however, be reported to COAF if there are other criteria, such as the involvement of people from high-risk jurisdictions.

Under Central Bank Resolution No. 4,844/2020, transactions equal to or larger than 100,000 reais of deposit accounts of individuals or legal entities, residing, domiciled, or with headquarters abroad, must be registered in Central Bank’s system, Sisbacen.

Also, Central Bank Resolution No. 4,841/2020 establishes that individuals or legal entities resident, domiciled or headquartered in Brazil, may only maintain up to U$1 million, without the need to communicate such values to the Brazilian authorities.

24. Is there a financial intelligence unit (FIU) or other government agency responsible for analysing the information reported under the AML rules?

Brazil

COAF receives and reviews suspicious and currency transaction reports (STRs and CTRs).

The information identified as relevant is included in financial intelligence reports (RIFs), which are sent to the competent authorities such as the Federal and State Prosecution, police, the Federal Revenue Agency and foreign financial intelligence units.

25. What are the penalties for failing to comply with your jurisdiction’s AML rules, and are they civil or criminal?

Brazil

The AML Law establishes administrative penalties for failing to comply with anti-money laundering regulations, which include a warning, the withdrawal or suspension of authorisation of the legal entity or individual to function or to conduct the specific activity, and financial fines not exceeding: (i) twice the value of the operation; (ii) twice the real profit obtained or that could possibly be obtained from the operation; or (iii) 20 million reais.

Individuals may also be held criminally liable, for aiding and abetting, if there is evidence that they intentionally did not comply with AML rules to assist in a criminal offence.

26. Are compliance personnel subject to the AML rules? Can an enforcement action be brought against an individual for violations?

Brazil

As previously indicated, the AML Law is applicable to both individuals and legal entities.

Administrative enforcement actions can, therefore, be brought against individuals for failure to comply with AML provisions. Officers of legal entities frequently face administrative liability for failure of the entity to comply with AML obligations.

27. What is the statute of limitations for violations of the AML rules?

Brazil

The statute of limitations for administrative proceedings for violations of AML obligations is of five years.

28. Does your jurisdiction have a beneficial ownership registry or an entity or office that collects information on the beneficial ownership of legal entities?

Brazil

There is no centralised registry or entity that collects information on the beneficial ownership of all legal entities.

Information related to beneficial ownership of companies can be obtained from the commercial registry in which the legal entity is registered. It is also possible to access publicly available information regarding shareholders and partners of legal entities through the Federal Revenue website.