Brazil is, unfortunately, a country with a history of financial corruption and crime. In the past, money laundering has been linked with terrorism, arms dealing, drug trafficking, tax evasion and fraud. There were measures implemented in 1998 to criminalize money laundering more extensively. More recently, there have been even more changes to anti-money laundering laws in Brazil to attempt to stamp out corruption in the country.
In July of last year, the Brazilian government made changes to Brazil’s money laundering laws (Law 9613) to criminalize all transfers of monetary funds in which the source of the funds is concealed. The previous 1998 law only criminalized money laundering where the money was used to fund criminal enterprises, such as terrorism and arms and drug trafficking. The amendment to Law 9613 not only makes it illegal to launder money, but it also increases the criminal and civil penalties and punishments for the crime.
According to The Rio Times, prison sentences for money laundering have been increased from three to ten years. Not only that, fines have sky-rocketed from R$200,000 to R$20 million for those found laundering money, based on what the illegal funds were used for. These significant amendments to penalties and fines are being seen by many as a way to deter people from laundering money in the country. Furthermore, these changes to the law bring Brazil more in line with other developing countries like the US, where international money laundering laws have been strengthened since 9/11.
The Mutual Evaluation Report of Brazil prepared by the Financial Action Task Force discusses the legal changes that are taking place to fight money laundering activities. It states that the prime source of illegal proceeds of crime in Brazil is crimes against the national financial system. Significant illegal proceeds also stem from drug trafficking, smuggling and embezzlement of government money. The report also states that the banking sector in Brazil faces greater money laundering risk in the sectors of foreign exchange and private banking.
Due to these risks, the Brazilian government has enhanced its legal processes and ability to prosecute money laundering cases with the new law and by setting up specific task-forces. There is now the Conselho de Controle de Atividades Financeiras (COAF) and anti-money laundering training taking place in many banks and financial institutions to spot and report suspicious financial activities.
Avoid Money Laundering – Tips for Foreign Investors
- Increase scrutiny of all financial and banking processes.
- Enhance due diligence by investigating the business or person(s) you hope to conduct business with prior to exchanging any funds.
- Engage in continuous monitoring of all reports, transactions and monetary movements by an accountant or other reliable financial expert.
- Seek advice from a legal professional who is trained in financial matters.
