Money laundering is an increasing concern for authorities around the world. In fact, experts estimate that criminals launder between $800 billion and $2 trillion every year, so it's easy to see why many countries continue to tighten their controls. If you need to send money to Brazil, you need to make sure you understand the local money laundering rules, or your recipient could face unnecessary delays and problems receiving the cash.
The money laundering problem in Brazil
Money laundering is a growing problem across Latin America, and Brazil is no exception. Experts believe that the amount of money laundered by domestic criminals in these countries continues to grow, despite efforts by the local authorities to curb the issue. That aside, it's difficult to estimate the scale of the issue, as the authorities do not keep accurate records of the number of convictions made.
While much of the problem stems from domestic criminals and drug cartels, the people behind money laundering regularly use international transactions to launder cash. In 2015, authorities broke up an $800 million laundering network that used various tactics, including the illegal withdrawal of currency from Venezuela through bogus imports. As such, with problems like this, anybody who wants to send money to Brazil must pay attention to money laundering laws.
Anti-money laundering laws in Brazil
Brazil first introduced anti-money laundering laws in 1998. At that time, the legislation criminalized money laundering under certain circumstances (such as arms trafficking and terrorism) and set out various administrative obligations that financial institutions had to meet when sending money to Brazil.
The Brazilian government further updated these laws in 2012 to tighten money laundering compliance in the country. Some of the changes that took effect in 2012 included:
- No more reference to underlying crimes. It is now illegal to conceal the source of your funds when sending any money to Brazil.
- Increased prison sentences. If found guilty, you could now face up to ten years in jail.
- Increased fines. The highest penalty for money laundering is now R$20 million, compared to R$200k under the old law.
Brazilian police and prosecutors also now have increased investigative powers. The new legislation aims to act as a stronger deterrent against criminals and brings Brazil more closely in line with other countries' anti-money laundering laws.
How anti-money laundering laws could affect your transaction
You may think that anti-money laundering laws will not apply to people who send small sums of money on a regular basis, but it's important to understand that financial institutions must apply the regulations to any transaction. While larger transactions are subject to more rigorous controls, don't think that small gift payments will fall under the radar.
Brazilian financial institutions must now have rigorous "know your customer" processes and policies in place. When sending money from the United States, you may decide to use a money transfer service. When you first do this, you will need to register your details and give the company various forms of official identification.
Money transfer services must screen all transactions. The U.S. Treasury Department's Office of Foreign Asset Controls (OFAC) maintains a list of certain individuals that cannot legally transfer money outside the United States. When you first register (and at any time after that), the money transfer service may need to check your details against this (and any other relevant) register.
What's more, Brazilian financial institutions must flag transactions that are suspicious. This definition is open to interpretation. For example, systems could flag up large, regular payments, or a single transfer that comes from a new customer. The money transfer service you use will explain any extra steps or delays in the process that may occur due to anti-money laundering rules.
If you need to send money to Brazil, make sure you understand how the country's anti-money laundering rules work. Talk to an approved international money transfer company for more info and detailed advice and information.