By FATF/OECD - GAFILAT 

This report summarises the AML/CFT measures in place in Brazil as at the date of the on-site visit, 13-31 March 2023. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Brazil’s AML/CFT system, and provides recommendations on how the system could be strengthened. Key Findings a) Brazil has a strong domestic coordination mechanism to address risks from money laundering, ENCCLA. Brazil has built a legal and structural framework largely enabling competent authorities to prevent and combat ML. More recently, Brazil has also improved its framework to fight terrorist financing (TF) by passing legislation criminalising the offence and enabling implementation of targeted financial sanctions (TFS). Informed by the longstanding coordination within ENCCLA and a National Risk Assessment conducted in 2021, authorities have shared and robust understanding of national ML threats, namely, corruption, drug trafficking and organised crime, environmental crimes, and tax crimes. There is a precise understanding of the ML risks and vulnerabilities linked to most threats— including informal and illicit value transfers, misuse of cash, and front companies—however, there is a lack of depth in the understanding of financial flows linked to environmental crimes. b) Through ENCCLA, since 2003, Brazil has developed and refined policies to tackle many of its higher ML risks, particularly those stemming from corruption. Brazil has taken many steps to address other higher risk areas, however, these actions are taken without longer-term, comprehensive strategies, which results in occasional disjointed efforts and misalignment of objectives and priorities (such as ML from environmental crimes where interagency cooperation is growing but limited, and where some keyauthorities lack sufficient resources). At times, structural issues inhibit effective coordination in combatting ML/TF, including cooperation between police and prosecution offices and resources to handle the complex criminal justice system. In addition, the tax authority (RFB) has a central role in the AML/CFT system given that it controls access to many pieces of relevant information, but legal obstacles frustrate its full ability to assist other authorities in tackling ML/TF and its own AML/CFT activities are not adequately prioritised. c) Brazil has successfully prosecuted high-end cases of ML, including from corruption, reflecting the capacity to conduct financial investigations and the development of supportive institutional structures. Despite important successes, there is a mismatch between the investigative input and the results seen in terms of prosecutions and convictions. Structural issues have a major impact. Among other things, ML proceedings take too long due to appeals and when convictions are obtained, sometimes a decade or more after charges, and the sanctioning regime needs major improvements. Criminal assets are generally identified and temporarily seized, and in some major cases Brazil was able to recuperate large sums of criminal money; however, there was not sufficient evidence of final confiscation and asset recovery is mainly accomplished through agreements. While there is highlevel commitment to fighting ML/TF, the resources available to competent authorities are largely insufficient, particularly those of COAF and prosecutors. Lack of resources hinders the production of deeper financial intelligence to identify a larger number of complex ML schemes and frustrate efforts to trace criminal financial networks. d) Brazil is committed to fighting terrorism and terrorist financing and has an improving understanding of its TF risks including those stemming from farright extremism. While it has expertise to investigate TF activity, the legal framework in place and the corresponding view of the authorities hinder successful prosecutions. The authorities are not always well coordinated to identify, prosecute, or prevent TF. The framework to implement targeted financial sanctions without delay for TF and proliferation financing is in place, although it remains largely untested at the time of the onsite visit as no designations had been made by Brazil and no funds or assets were frozen. Sanctions implementation by the private sector is improving particularly in the financial sector, thanks to the supervisory activity of the Central Bank of Brazil (BCB), and more slowly in other sectors. There is a lack of interagency coordination on issues related to the financing of proliferation and guidance is needed for the private sector. NPOs are not yet subject to risk-based measures specifically to prevent TF. e) As a major regional and global economy, Brazil has a large and diverse universe of financial and non-financial sectors with increasing sophistication. BCB is the key supervisor for the most material financial institutions and its long-standing risk-based activities have contributed to significantly improve the ability of financial institutions to detect and prevent ML and TF, particularly the largest ones. With few exceptions, other supervisors have not been able yet to take sufficient measures to ensure sufficient implementation of the AML/CFT framework. At the time of the on-site visit, some activities remained unregulated, notably those of lawyers and virtual asset service providers, leaving serious vulnerabilities. f) The misuse of companies is a feature in many ML schemes and Brazil has been able to detect abusers in many cases by using the information available through REDESIM to map out the company structure. Brazil has also created a requirement for companies to provide beneficial ownership (BO) information to RFB, however, this database is largely unpopulated. Moreover, declaratory BO information is considered by law to be “tax secret,” which means that LEAs need to request a court order to obtain it and that COAF and other administrative authorities (including those involved in the fight against corruption) cannot access it for their analysis. g) Brazil generally cooperates well in ML/TF areas with its international partners. As many ML schemes include the sending of money abroad, LEAs and COAF are very proactive in seeking assistance to obtain information and restrain criminal assets. As a major financial centre, Brazil also receives requests for cooperation from abroad, and competent authorities provide high quality assistance, with soon-site visit, some activities remained unregulated, notably those of lawyers and virtual asset service providers, leaving serious vulnerabilities. f) The misuse of companies is a feature in many ML schemes and Brazil has been able to detect abusers in many cases by using the information available through REDESIM to map out the company structure. Brazil has also created a requirement for companies to provide beneficial ownership (BO) information to RFB, however, this database is largely unpopulated. Moreover, declaratory BO information is considered by law to be “tax secret,” which means that LEAs need to request a court order to obtain it and that COAF and other administrative authorities (including those involved in the fight against corruption) cannot access it for their analysis. g) Brazil generally cooperates well in ML/TF areas with its international partners. As many ML schemes include the sending of money abroad, LEAs and COAF are very proactive in seeking assistance to obtain information and restrain criminal assets. As a major financial centre, Brazil also receives requests for cooperation from abroad, and competent authorities provide high quality assistance, with so on-site visit, some activities remained unregulated, notably those of lawyers and virtual asset service providers, leaving serious vulnerabilities. f) The misuse of companies is a feature in many ML schemes and Brazil has been able to detect abusers in many cases by using the information available through REDESIM to map out the company structure. Brazil has also created a requirement for companies to provide beneficial ownership (BO) information to RFB, however, this database is largely unpopulated. Moreover, declaratory BO information is considered by law to be “tax secret,” which means that LEAs need to request a court order to obtain it and that COAF and other administrative authorities (including those involved in the fight against corruption) cannot access it for their analysis. g) Brazil generally cooperates well in ML/TF areas with its international partners. As many ML schemes include the sending of money abroad, LEAs and COAF are very proactive in seeking assistance to obtain information and restrain criminal assets. As a major financial centre, Brazil also receives requests for cooperation from abroad, and competent authorities provide high quality assistance, with some improvements needed in extradition and the speed of responses.

Paris, FATF, 2023. 354p.

By Michael E. Clements and Gretta L. Goodwin

This Study Drug and human trafficking are longstanding and pervasive problems. Federal law enforcement agencies have noted the use of online marketplaces, such as social media sites and messaging platforms, in drug and human trafficking. Further, agencies have expressed concern about traffickers’ increased use of virtual currencies—that is, digital representations of value that are usually not government-issued legal tender. The National Defense Authorization Act for Fiscal Year 2021 includes a provision for GAO to review how a range of methods and payment systems, including online marketplaces and virtual currencies, are used to facilitate drug and human trafficking. This report examines what is known about drug and human traffickers’ use of online marketplaces and virtual currencies, efforts by federal and state agencies to counter such trafficking, and benefits and challenges virtual currencies pose for detecting and prosecuting drug and human trafficking, among other objectives. GAO reviewed federal agency and industry documentation and GAO’s relevant body of past work; interviewed officials at federal and state agencies and industry and nonprofit stakeholders; and reviewed recently adjudicated cases involving the use of virtual currencies in drug or human trafficking.

  GAO-22-105101., Washington DC: U.S. Government Accountability Office, 2022. 57p.

By Jeremy Slack and Daniel E. Martınez

What happens after deportation? What contexts must Mexican deportees navigate and contend with after removal from the United States? This article explores the challenges for people post-removal in Mexico, particularly by drawing on fieldwork conducted in Tamaulipas, which is home to the Zetas drug trafficking organization and the infamous massacre of seventy-two migrants. We argue that incidental exposure to violence and crime began as an implicit aspect of immigration enforcement and has grown into one of the central tenets of current policy. We take a feminist geopolitical approach to connect the post-deportation experiences of migrants to the policies of deportation, incarceration, and punishment levied against them by the U.S. government. Migrants, particularly those apprehended through the Criminal Alien Program, have been returned to Tamaulipas in concentrated numbers despite its violent reputation. The processes of criminalization have led to a system that prioritizes punishment for migrants, meaning that we cannot extricate experiences that occur after removal from enforcement measures that create those situations. These practices are directly connected to the current wave of policies aimed at stopping asylum seekers, including “metering,” where people are made to wait at the border to apply for asylum at the port of entry, and the Remain in Mexico program (otherwise known as the Migrant Protection Protocols). We argue that enforcement is more complex than “prevention through deterrence” narratives and exposure to nonstate violence in Mexico has slowly become a more integral part of enforcement plans.

Annals of the American Association of Geographers, 2020

By M.N. Parsons, M. Camello, T. Craig, M. Dix, M. Planty, J.D. Roper-Miller

This technology brief is part of a series of documents that focuses on contraband in corrections. The first brief provides an overview of contraband, including types and associated technologies and products used to detect contraband on people, in vehicles, and in the environment. This brief focuses specifically on strategies to detect and manage drug contraband. The goal of this series is to offer foundational insights from use cases, highlight challenges of contraband detection, compare illustrative products, and discuss the future of contraband detection and management.

Washington, DC: U.S. National Institute of Justice, 2021. 14p.

By  Christopher Horwood

Just as the world’s governments have, for some decades, waged war on international drug trafficking, there are increasing signals that global authorities have embarked on a major offensive against the growing phenomenon of migrant smuggling in addition to their existing fight against human trafficking.1 One of the most unambiguous of these signals came in April 2015, when Dimitris Avramopoulos, the European Union’s top official for migration,2 told a news conference: “we will take action now. Europe is declaring war on [migrant] smugglers. Europe is united in this effort. We will do this together with our partners outside Europe. We will work together because smuggling is not a European problem — it is a global one.”3 Largely because of its clandestine nature, there is insufficient data available to gauge the global extent of migrant smuggling. Still, existing research offers some hints: according to one recent estimate, some 2.5 million migrants across the world used smugglers in 2016, generating an economic return of at least $5.5 billion dollars.4 ‘Since the migration crisis in 2015 the migrant smuggling business has established itself as a large, lucrative and sophisticated criminal market.’5 This paper, like others before it, argues that the main motivation behind the new offensive against migrant smugglers is not only the much-vaunted concern for the safety and protection of migrants and refugees6 (Avramopoulos prefaced his declaration with the words ‘one more life lost [at sea] is one too many’) but also the fact that migrant smugglers are the main vector and means for irregular migration. Rightly or wrongly, irregular migration is portrayed, even if disingenuously, by governments and many electorates as undesirable from a socio-political, security and economic perspective, and as a potential cause of future social unrest and political disruption.   

Geneva: Mixed Migration Centre, 2019. 78p.