Money launderingCriminal enforcement
Which government entities enforce your jurisdiction’s money laundering laws?
In Brazil, the enforcement on money laundering is divided between government entities at the administrative and judicial levels.
In the administrative sphere, according to Law 9,613/98, the Financial Activities Control Council (COAF) is responsible for receiving and processing data provided by private entities related to suspicious financial transactions and for reporting the results of its analysis to the authorities responsible for the investigation and prosecution of the crime of money laundering. The relevant applicable rules are all federal, but the enforcement relies on both federal and state prosecution agencies, as the crime can be subject to either federal or state jurisdictions depending on its factual circumstances (see below).
The federal and state police are responsible for investigations, as well as the Public Prosecutor’s Office in more exceptional cases, to identify the elements of the crime and its authors. After the investigative phase, in the judicial sphere, federal and state prosecutors – as applicable – lead prosecution before courts, and judges are responsible for overseeing the relevant criminal cases and for the application of penalties defined by the Law 9,613/98 both in federal and state jurisdictions. Since the early 2000s, some courts in Brazil, both federal and state courts, have established specialist courts on money laundering and financial crimes, which have ever since played an important role in handling several high-profile money laundering cases in the country. As an illustration, the lower federal courts overseeing Car Wash investigations in each of the cities of Curitiba, Rio de Janeiro, São Paulo and Brasilia are courts specialising in financial crimes and money laundering-related matters.
From the legislative standpoint, Brazil has a federal system of government, and according to article 22, I of the Federal Constitution only the Brazilian Congress can legislate on criminal law and on procedural law, including money laundering. The regulation of Law 9,613/98 in the various sectors is attributed to different federal authorities, such as COAF, the Brazilian Central Bank and others.
Brazilian law prohibits the investigation or prosecution of the same set of facts in two different jurisdictions concurrently. Thus, to determine the correct authority for the proceedings in either federal or state jurisdiction, the criteria of jurisdiction set forth by Law 9,613/1998 (article 2, III), the Federal Constitution (article 109, IV) and in the Criminal Procedure Code (Title V) shall be observed.
According to Law 9,613/98 (article 2, III), there must be a federal prosecution if: (1) the conduct of money laundering is practised against the economic-financial system or against assets, services or interests of the federal government; or (2) the predicate offence has been prosecuted at the federal level. This definition of Act 9,613/98 is in line with relevant provisions of the Federal Constitution (article 109, IV).
In the absence of those cases, the crime shall be investigated or prosecuted by local state authorities and follow the rules of competence set out in the Criminal Procedure Code (Title V).Defendants
Can both natural and legal persons be prosecuted for money laundering?
Currently in Brazil, only individuals are subject to criminal prosecution for money laundering, as in most crimes, with the sole exception of environmental offences – to which corporate criminal liability may apply. Notwithstanding, there have been increasing discussions about the possibility of extending the corporate criminal liability, particularly in relation to financial and corruption-related crimes. A few bills of law have already been submitted to Congress in this regard, but to date, none of them have evolved significantly.The offence of money laundering
What constitutes money laundering?
According to Law 9,613/1998, in general terms, engaging in financial transactions to conceal the identity, the source or destination of illegal goods or assets constitutes the crime of money laundering, provided that those illegal assets must derive from a previous criminal offence.
The legal concept of money laundering in Brazil requires criminal intent or malice, once this is considered a wilful crime. As opposed to a few other jurisdictions, negligence standard is not applicable to constitute the crime.
Thereby, since it is a malicious act or omission, the configuration of the crime of money laundering is not compatible with strict liability – which is a standard entirely refused by Brazilian criminal law.
In the absence of the strict liability or corporate liability in relation to money laundering crimes, money-centred businesses or financial institutions cannot be prosecuted or pursued for crimes of this nature that may be committed by their customers.
Despite the lack of criminal liability for the legal entities, if an executive or employee of a financial institution or any other entity acts in criminal association with the client to practice money laundering, this individual may be prosecuted and held accountable for committing the crime alongside the main author or beneficiary of the offence. However, a legal entity that benefited from the crime of money laundering may not only be subject to non-criminal liabilities (eg, in civil or administrative procedures) but could also be subject to enforcement actions ordered by criminal authorities such as freezing of assets and search and seizures.Qualifying assets and transactions
Is there any limitation on the types of assets or transactions that can form the basis of a money laundering offence?
From a criminal perspective, there is no monetary threshold to the prosecution of money laundering crimes.
However, in the administrative sphere transactions that may be considered suspicious usually have features and thresholds described in specific regulations (see all regulations from COAF). Moreover, COAF must report to the authorities responsible for the investigation and prosecution of the crime of money laundering any data related to suspicious financial transactions.Predicate offences
Generally, what constitute predicate offences?
According to article 1 of Law 9,613/98, any criminal offence may constitute a predicate offence of money laundering. Mere civil or administrative violations are not considered predicate offences for the crime of money laundering.
Besides that, breach of criminal foreign laws might serve as a predicate offence if the same fact is also deemed a criminal offence in Brazil.
Brazilian legal theory and case law have raised discussions about the possible configuration of money laundering in certain situations of tax or currency exchange crimes as predicate offences. These discussions have to do with the absence of a product of the foregoing infraction, which should pass through layering and integration processes. In other words, the practice of tax or currency exchange fraud does not generate any illegal conduct in cases where the assets related to these crimes are those that the individual did not transfer to the state, but had already integrated into his or her property. Thus, in accordance with such understanding, in those cases there would be no product of a predicate offence to pass through a money laundering proceeding.
Besides, there are two serious problems concerning the definition of tax or currency exchange fraud as a predicate offence: (1) the necessary indication that the assets concealed or layered came from the tax or currency exchange fraud; and (2) the necessary occurrence of the act of money laundering after the execution of the predicate crime. Regarding the first point, in almost all situations, the product of the previous offence is money as a fungible asset that cannot be distinguished from the patrimony of the taxpayer. With reference to the second point, according to the Brazilian Supreme Court (Binding judicial understanding No. 24), the criminal offence of tax evasion should only be considered completed and enforceable after the final assessment of the related tax offence, which depends on administrative proceedings and might take months or even years. In this regard, before this final assessment, any act of concealing the product of this predicate offence will not constitute money laundering.
In view of the above, there is no legal restriction to the prosecution of money laundering related to tax or currency exchange crimes, but Brazilian case law offers no clear interpretation on some important specificities of this discussion.Defences
Are there any codified or common law defences to charges of money laundering?
There are no codified defences to charges of money laundering. The Federal Constitution provides as a fundamental guarantee the right to an ample defence (article 5, LV), so that there is a large scope for articulating defence arguments.
However, there are some typical defence arguments related to the potential absence of (1) the elements of the crime, as defined by the Law 9.613/98; (2) the conduct to conceal assets; (3) profits originated in a predicate offence; and (4) wilful misconduct.Resolutions and sanctions
What is the range of outcomes in criminal money laundering cases?
Under article 1 of Law 9,613/98, a conviction for money laundering can result in imprisonment varying from three to 10 years and a fine, which means that the judge has a broad range to determine which is the most suitable punishment to each case. The fine shall be established according to the general provision set forth by the Penal Code (article 49) and can go up to 1,800 times the minimum wage – which in 2021 means 1.98 million Brazilian reais.
Law 9,613/98 (article 7) defines two additional effects of the conviction for money laundering. The first is the loss, in favour of the federal government or the states, as the case may be, of all property, rights and values related, directly or indirectly, to the practice of money laundering, provided that the rights of a third party acting in good faith shall be preserved. The second is the prohibition from exercising public roles or functions and to act as director, member of the board of directors or management of the legal entities subject to control mechanisms, for twice the time of imprisonment. Moreover, as a conviction for any of the money laundering crimes, the Penal Code (article 91) establishes the obligation to indemnify for any damages resulting from the crime and the loss of property in favour of the federal government.
Although public prosecutors in Brazil have no discretionary powers regarding indictments, as their practice is governed by the principle of mandatory criminal action, a criminal money laundering conduct can be resolved through plea agreements with the defendant (the individuals, as there is no corporate criminal liability in connection with this type of crime), in accordance with Law 9,613/98 (article 1, section 5). In this case, the defendant must collaborate in the prosecution, identifying the authors, co-authors and participants, or the location of the property, rights or values object of the crime.
As of 23 January 2020, with the entrance into force of Law 13,964/19 (which amended the Code of Criminal Procedure to include the article 28-A therein), it is also possible to resolve some cases at the beginning of judicial proceedings by means of a non-prosecution agreement. As the law restricts the applicability of the non-prosecution agreement to charges whose correspondent minimum penalties in the case of conviction do not reach or exceed four years of imprisonment – among other conditions – this kind of resolution will only be available to cases where there are no concurrent offences which added penalties would exceed the legal limit.Forfeiture
Describe any related asset freezing, forfeiture, disgorgement and victim compensation laws.
Law 9,613/98 establishes the possibility of (1) asset blocking, as a provisional measure before the final sentence in the criminal proceedings, if there is minimum evidence of the occurrence of the money laundering crime (article 4); and (2) the public selling of constrained assets (article 4-A).
In the case of conviction, the law stipulates that all property, rights and values related, directly or indirectly, to the practice of money laundering must be lost in favour of federal government, except for the rights of the victim or third party in good faith. Besides, the Penal Code establishes the obligation to indemnify the damages caused by the crime.Limitation periods on money laundering prosecutions
What are the limitation periods governing money laundering prosecutions?
In Brazil, the limitation period runs from the date of the commitment of a crime and is calculated according to the sanction provided for each offence, as per article 109 of Brazilian Penal Code. As the maximum penalty for money laundering is 10 years of imprisonment, the corresponding limitation’s time lapse is 16 years since the last laundering act committed by the defendant.
The Brazilian Penal Code provides more detailed and very intricate rules on this matter, which are applicable to all sorts of crimes. The counting of this time lapse is interrupted and restarted in certain procedural moments such as (1) the commencement of the criminal action (when the judge accepts the indictment); (2) a condemnatory sentencing; (3) the commencement of the execution of the sentence; and (4) recidivism. In addition, according to the Penal Code, in the case of a conviction, the limitation period must be recalculated in accordance with the specific penalty established by the judge and can be backdated in some situations.Extraterritorial reach of money laundering law
Do the money laundering laws applicable in your jurisdiction have extraterritorial reach?
All crimes committed within the Brazilian jurisdiction may be subject to the Brazilian legislation irrespective of the citizenship of the perpetrator. According to the Brazilian Penal Code, a crime is punishable in Brazil if either the prohibited conduct or its prohibited outcome occurs entirely or partially within Brazilian borders. Further, should assets deriving from a crime committed within the Brazilian jurisdiction be laundered outside of the country, Brazilian law may also apply, whereas Brazilian enforcement can cooperate with foreign enforcement authorities in relation to assets, values or goods resulting from predicate offences occurred abroad (Law 9,613/1998, article 8).
Law stated dateCorrect on
Give the date on which the above information is accurate
31 July 2020.