Money laundering is a transnational crime. In order to avoid this type of practice the Brazilian government created the Money Laundering Law. This article gives the main aspects of this legislation.
Money laundering is a crime that has a transnational character and moves 500 billion to 1.5 trillion USD on a global scale. In this process, in order to made the unlawfully money legitimate capital, the money runs through the economic-financial systems of many countries, compromising the security of the economic-financial order.
The money laundered can also be used in drug trafficking, terrorism, extortion, kidnapping, weapons trafficking, corruption and many other type of organized crime. In an attempt to prevent and punish those who use the process of washing, many countries have published standards with the specific purpose of incriminating the conduct related to money laundering.
The Brazilian Law
Brazil was one of these countries. The Brazilian government launched the Money Laundering Law. The law is valid since 1998, but was reformulated in 2012. The Law 9.613/98 aims to regulate the fine and punishments administered to those involved with this practice, as well as established requirements to companies that performed some specific activities.
Who is Guilty
According to the Law, all individuals that performed any of the activities and practices below are criminals and must be subjected to fines and penalties. A sentence of three to ten years and a fine are applicable to those who:
- Conceal or disguise the nature, source, location, disposition, movement or ownership of assets, rights and valuables resulting, directly or indirectly, a criminal offense.
- Convert these assets, rights and values into licit assets.
- Acquire, receive, exchange, trade, give, keep on deposit, move or transfer these assets.
- Import and export goods at prices that don't correspond to their true price.
- Use in economic or financial activity, assets, rights or values that are the results of money laundering practices.
Sentences and Penalties
The sentence may be reduced to one or to two thirds and be fulfilled in an open or semi-open regime, if the author or coauthor participant of money laundering practices spontaneously cooperates with authorities.
Which means that if the sentenced provide important and useful information about the crime – such as identification of authors, co-authors and participants and others – he could have his sentence diminished.
On the one hand, the guilty may have his sentence reduced if he cooperates to the investigation of the crime, on the other hand the guilty can get more years in jail if he was a participant of criminal organization.
Mandatory Accountability for Whom?
The law not only established which practices characterize money laundering, but also defined the necessity of accountability for some types of activities developed by private persons and legal entities, such as:
- Raising, brokering and application of funds from third parties, in national or foreign currency.
- Purchase and sale of foreign currency or gold as a financial asset or exchange instrument.
- Safekeeping, issuance, distribution, settlement, trading, brokerage and administration of securities or marketable securities.
The companies that are involved with this practices and are mentioned below are also subjected to accountability:
- Insurers, insurance brokerage companies and private entities of pension and capitalization.
- Card management companies of accreditation or credit cards, as well as consortium management companies for acquisition of goods or services.
- Administrators or companies that use cards or any other electronic, magnetic or equivalent, that allows the transfer of funds.
- Leasing companies and factoring companies.
- Societies that arrange distribution of cash or any assets, property, goods, services, or even grant discounts on purchases by drawing lots or by similar methods.
- Subsidiaries and representations of foreign entities that are engaged in Brazil with any of the economic and financial activities already mentioned.
- Other entities whose functioning depends on the authorization of a regulator organization of financial markets, exchange rates, capital and insurance.
- Individuals or corporations, domestic or foreign, operating in Brazil as agents, officers, attorneys or others that represents the interests of foreign entity performing any of the activities already mentioned in this article.
- Individuals or companies who sell jewelry, precious stones and metals, objects of art and antiques.
- Individuals or entities that sell luxury goods or high value goods, that are intermediaries in their trading or engaged in activities that involve large amounts of cash.
- The boards of trade and public records.
- Individuals or entities which provide advisory services, consulting, bookkeeping, audit, advice or assistance of any kind, in some operations.
- Individuals or entities that operate in the promotion, brokerage, marketing, brokering or negotiating rights to transfer athletes, artists, exhibitions or similar events.
- Transport companies.
- Individuals or legal entities that trades high value goods of rural or animal origin.
- Foreign branches of the entities mentioned in this article.
Requirements for Proper Accountability
All companies subjected to the mandatory accountability must provide some information to the Brazilian government by their register in the Council of Financial Activity Control – known as Coaf.
In Coaf companies must inform and identify all their clients as well as keep an updated register of them. The register shouldn't be limited to clients, but also must comprise all type of financial transaction in the national or foreigner currency, and the assets that can be converted in money.
Companies must also adopt policies, procedures and internal controls that permit the obtaining of the information required by the law.