Despite enacting new laws this year aimed at money laundering and terrorist financing, Brazil has again come under fire for apparent weakness in its ability to meet international enforcement standards.
Earlier this month the president of the Financial Action Task Force (FATF), Xiangmin Liu, said “FATF expresses its serious concerns regarding Brazil’s ability to comply with international standards and combat money laundering and terrorist financing that result from the limitation placed by a recent provisional injunction issued by one judge of the Brazilian Supreme Court on the use of financial intelligence in criminal investigations.”
Liu said FATF is also “concerned that the court decision is impacting Brazil’s [Financial Intelligence Unit] to share information with law enforcement authorities.”
FATF first identified weakness in Brazil’s AML and terrorist financing regime in 2010. In 2016, FATF expressed its continuing concern about Brazil’s continued failure to remedy the serious deficiencies identified in 2010.
This year Brazil published Law No 13.810 and Decree No 9.825 with a new framework for identifying and freezing terrorist assets. FATF said then that it was “satisfied that Brazil has made substantial progress and addressed most of its targeted financial sanctions deficiencies, which concludes the process.”
An earlier law — No 13,260 — did not have a criminal classification for terrorism nor the manner of adopting specific measures to combat its financing.
In addition, another law — 13,170 — established legal action to execute freezing assets, but the freezing regime turned out to be slow and bureaucratic, requiring the President of Brazil to issue a decree before the public attorney could act to freeze the assets of persons and entities internationally investigated or accused of involvement in crimes such as terrorism.
Paris-based FATF, also known as Groupe d’action financière, is an intergovernmental organization established in 1989 on the initiative of the G7 to set standards and promote effective implementation of legal, regulatory and operational measures to fight money laundering. The organization has 35 members, including the United States as well as several European countries such as the UK, Turkey, Switzerland, Sweden, Spain, Norway, Netherlands, Luxembourg, Italy, Ireland, Iceland, Greece, Germany, France, Finland, Denmark, Belgium, and Austria.
Brazil’s new legislation this year allowed the immediate enforceability of freezing requests without further court review or administrative order.
However, in July, Supreme Court President Dias Toffoli suspended investigations undertaken without judicial endorsement of data from the Brazilian Financial Intelligence Agency. The ruling also restricted the use of reports from Brazil’s current Financial Intelligence Unit.
That judicial action is what led to the most recent concerns expressed by FAFT president Xiangmin Liu.
Liu said FATF “is following this situation closely and it looks forward to timely updates and reassurances from Brazil in this regard.”