Following Operation Hidden Carbon , which targeted the use of gas stations and financial institutions to launder money from organized crime, Brazilian banks will adopt new rules to cancel betting sites operating without authorization from the Ministry of Finance and accounts with suspicious transactions held in the names of straw men—when an account is opened in one person’s name but used by another to hide the origin of the money.
What happened
- To close the accounts, banks will need to inform the Central Bank about the suspicion. This will allow for the sharing of information among other financial institutions. The objective is to “strengthen the banking sector’s commitment against organized crime and prevent the use of accounts for any illicit activity,” says Febraban (Brazilian Federation of Banks) in a statement released today.
- The action is a “milestone” in correcting “toxic” relationships between banks and clients. This relationship serves to “channel resources from scams, fraud, and cyberattacks, as well as to launder dirty money from crime,” wrote the president of Febraban, Isaac Sidney.
Banks cannot allow the opening and maintenance of dummy accounts, cold accounts, and illegal betting accounts, and that is why we are establishing mandatory procedures for all banks to regulate the sector and curb this type of crime. -Isaac Sidney, president of Febraban.
Here’s what banks will need to do:
1.Policies for verifying fraudulent accounts and accounts used by illegal betting sites;
2.Reporting fraud to the Central Bank with the sharing of information between banks;
3.Supervision by Febraban, which may request evidence regarding the closure of illegal accounts;
4.Refusal of suspicious transactions and closure of illicit accounts, with notification to the account owner;
5.Active participation from banking sectors dedicated to fraud prevention, money laundering, legal matters, and ombudsman services;
6.Banks must submit a statement of compliance to Febraban, prepared by an independent area, such as internal audit, compliance, or internal control.
- If they fail to comply, financial institutions will be punished with warnings or even exclusion from the self-regulation system . This is a set of conduct standards and recommended practices that financial institutions associated with Febraban adopt.
Hidden Carbon
The announcement relates to Operation Hidden Carbon, a Federal Police investigation against the PCC (Primeiro Comando da Capital). The investigation dismantled a money laundering scheme involving gas stations and fintech companies . More than 350 people and companies were suspected, and 15 were the targets of search and arrest warrants.
- Febraban is also focusing on recent hacker attacks on the financial system. In July, for example, a crime against the company C&M Software resulted in the diversion of R$ 800 million.
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