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Monday
Mar042019

Brazil unleashes AML agency with broad new powers

Last month Brazilian president Jair Bolsonaro and Ministry of Justice Sérgio Moro published the Decree No. 9.663/2019, changing the status of the Financial Activities Control Council (COAF), the Brazilian AML Agency. In addition to integrating it with the Ministry of Justice and Public Security (previously the agency was linked to the Ministry of Finance), the new rule also reformed its structure and gave it greater powers.

The decree created two new bodies within COAF: the Financial Intelligence and the Supervision boards.

The Financial Intelligence board is responsible from now on for analyzing the “suspicious transactions” reported by the obliged legal entities, indicated by Article 9 of the Brazilian AML Act (Law No. 9.613/1998, changed by the Law No. 12.683/2012), that was previously the responsibility of the COAF’s Executive Secretariat.

The Supervision board will be responsible for overseeing the obligations to prevent and combat money laundering and terrorist financing, as well as to propose new rules to the COAF Plenary, to organize its meetings and to supervise the administrative sanctioning processes. 

COAF may now enter into technical cooperation agreements with public and private entities, expanding the gathering of information on the assets of its jurisdictions.

COAF was also granted permission to share sensitive information, now without judicial authorization, to the government agencies which composes the Council (Central Bank; Securities and Exchange Commission; Superintendence of Private Insurance; Attorney General’s Office of the National Treasury; Federal Revenue Service; Brazilian Intelligence Agency; Ministry of Foreign Affairs; Ministry of Justice and Public Security; Federal Police; National Superintendency of Complementary Pensions; and Ministry for Transparency -- CGU), with the member of each of the agencies being responsible for maintaining the confidentiality. There was also a “debureaucratization” of the exchange of information, removing formal requirements.

The COAF’s president received more power and may now take monocratic decisions, subject to further confirmation by the Plenary, in "cases of urgency and relevant interest."

Finally, the decree also established new rules and guarantees for the administrative sanctioning process related to the offenses provided by the AML Act. The changes have been widely debated in the Brazilian media and have divided the opinions of lawyers and experts.

While some defend the new powers given to COAF, arguing that they will allow a better performance of its functions due to the greater speed of investigations and to integration of institutions, others warn of risks related to the centralization of power and to the damage of fundamental rights and guarantees, especially regarding bank secrecy and fiscal secrecy, as protected by the Brazilian Constitution and by the Code of Criminal Procedure.

____

Lucas Zanoni , pictured above, is a Compliance Analyst at Zanoni Equipment. He studied history and law at the University of São Paulo and was a researcher in the fields of Fiscal History and Anti-corruption. He interned at ID Global, an institute of research and experimental development in social and human sciences. He can be contacted here

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