Introduction

Money laundering prevention

The money laundering consists of engaging in financial or business transactions to conceal or dissimulate the nature, source or the ownership of assets and rights or values as the direct or indirect result of illegal activities, so that making feasible the use of these assets without calling the authorities’ attention. Briefly, money laundering is the activity aiming at disguising the fact that property is the proceeds of organized crime.

It is worth mentioning that in any crime, the money laundering always benefits a certain group of criminals, but on the other hand, the company is the most aggrieved party. As a result, the Law 9613/98 (amended by Law 10701/03) was enacted in 1998 which typifies money laundering crimes and respective penalties imposed to criminals and also created the Council for Financial Activities Control - COAF.

The Brazilian Central Bank, aligned with the international rules and regulations implemented in developed economies and aiming the banking regulation of the procedures to be adopted to combat money laundering, formally started the process to issue the Circular Letter 2852/98 and the Circular 2826/98, comprising policies and procedures that should be established in order to prevent the occurrence of illegal activities in the financial sector. In July 24, 2009, Central Bank of Brazil revoked the Circular Letter 2852/98 by Circular Letter 3461 and in March 12, 2012 Circular Letter 2826/98 was repealed by Circular Letter 3542.

The banks, on the other hand, made available to the market more and more financial products and services. Money laundering criminals use banking products and services by means of sophisticated techniques to generate funds which are originally illegal through the formal economy. Thus, banks now are crucial instruments to prevent and detect money laundering crimes.

Notwithstanding the legal requirements attributed to the financial institutions by the monetary authority, Banrisul S.A. adopted the following measures necessary to monitor and prevent money laundering:

  • to appoint a senior executive in charge of implementing internal policies, procedures and controls and communicate suspicious operations to the proper authorities;
  • to implement the Money Laundering Prevention Policy;
  • to create a specific money laundering monitoring and prevention area;
  • monitoring specialized system based on rules and on neural network, operations and records to track the compatibility among clients financial transactions, business activity and financial capacity;
  • keep records up to date with adequate client identification, a condition to conduct any negotiation or operation;
  • to monitor the compatibility among clients financial transactions and their business activities and financial capacity;
  • to register and safekeep all the operations and documents related to transactions, operations carried out by clients, whether related to debt and capital instruments or any other assets convertible into cash;
  • to monitor the operations not characterized as usual profile and indicating the occurrence of money laundering activity;
  • to continuously train employees;
  • periodic, internal and external audits;
  • to participate in study groups and Brazilian banks workshops, with a view to updating and improving the internal control activities.

Money Laundering Prevention Rules

Among the Brazilian laws and regulations enacted with a view to preventing, forbidding or punishing money laundering, terrorism financing or any other illegal activity, we point out the following:

Law 9613 of March 3, 1998.

This Law provides for money laundering crimes or concealing of assets, rights and values; to prevent the financial system is used in illegal acts provided for by this Law; it creates the Council for Financial Activities Control - COAF.

  • It typifies the money laundering crime and defines its preceding crimes;
  • It defines the process, the judgment and the punishment for the money laundering crime;
  • It indicates the individuals subject to this Law, their obligations, the way of communicating suspicious operations, the sanctions to which they are subject by proper authority;
  • It establishes and defines the structure of COAF, whose purpose is to rule, apply administrative penalties, receive, examine and identify the suspicious occurrences of illegal activities provided for in this Law, without compromising the authority of other agencies and entities.

Notice 17203 of August 5, 2008

It publishes notice of the Financial Action Task Force on Money Laundering and Terrorism Financing (GAFI/FATF).

Circular Letter 3342 of October 02, 2008.

This Circular provides for the reporting of financial transactions linked to terrorism and its financing.

Circular Letter 3461 of June 24 2009.

This Circular consolidated, as indicated below, the rules on the procedures to be adopted to prevent and combat activities related to the crimes defined in Law 9613, and revocated the Circular Letter 2852 of December 22, 2006, the Circular Letter 3422 of November 27, 2008 and Articles 1 and 2 of the Circular Letter 3290 of May 09, 2005.

  • Customers’ information permanently updated;
  • Politically Exposed Persons;
  • Commencement or continuation of business relationship;
  • Records of financial services and financial transactions;
  • Records of transactions with amounts of more than R$100,000.00 in cash;
  • Special attention in specific situations;
  • Maintenance of information and records;
  • Reports to the Board of Control of Financial Activities (Coaf);
  • Internal control procedures.

Circular Letter 3430 of February 11, 2010.

This Circular clarifies issues related to prevention and control activities related to the crimes defined in Law 9613 of March 3, 1998, dealt with in Circular Letter 3461 of July 24, 2009.

Circular Letter 3,409 of August 14, 2009.

This Circular provides communication instructions referred for in Articles 12 and 13 of Circular 3,461, regarding the issuance and charges of prepaid cards.

Circular Letter 3517 of December 7,2010.

This Circular changes in Circular 3461 of July 24, 2009, which consolidates the rules on the procedures to be adopted to prevent and combat activities related to the crimes defined in Law 9613 of March 3, 1998.

Circular Letter 3542 of March 12, 2012.
This Circular presents the list of operations and events that may constitute evidence of crimes provided for in Law no. 9613 of March 3, 1998, which should be communicated to the Council for the Control of Financial Activities (COAF). It includes situations as described below, considering parties and the amounts involved, the manner in which they were carried out, the instruments used or the absence of economic or legal grounds:

  • situations related to operations in cash in domestic currency;
  • situations related to operations in cash in foreign currency and traveler’s checks;
  • situations related to clients’ registration information;
  • situations related to checking account transactions;
  • situations related to internal investment operations;
  • situations related to payment cards;
  • situations related to domestic credit operations;
  • situations related to transactions made with funds originated from agreements with the public sector;
  • situations related to consortiums;
  • situations related to individuals suspected of being involved in terrorist acts;
  • situations related to international activities;
  • situations related to international credit operations;
  • situations related to external investment operations;
  • situations related to employees of financial institutions and their representatives.