Brazil to Reassess Fintech Reporting Rules Amidst Money Laundering Issues

Brazil intends to re-evaluate fintech reporting rules due to money laundering concerns. Robinson Barreirinhas highlighted the need for stricter controls and noted that prior efforts faced public opposition. A previous rule to report transactions through the Pix system was suspended amid political backlash.

Brazil is poised to revisit the regulation of financial technology companies regarding transaction reporting to the tax revenue service. During a recent Senate hearing, Robinson Barreirinhas, head of the tax revenue service, indicated concerns over lesser-known payment institutions potentially facilitating money laundering activities. He emphasized that the agency possesses the necessary intelligence capabilities and plans to extend these to fintech companies, although previous attempts were halted due to public opposition.

Barreirinhas remarked, “I do not want to demonize fintechs… but the truth is that many end up being used (for illicit transactions) due to the ease of opening accounts.” He advocated for stricter account opening controls to combat these illicit activities. Furthermore, he expressed the service’s commitment to addressing the financing of organized crime in Brazil, including issues related to smuggled goods and online betting.

In September, the tax revenue service had introduced a rule mandating fintechs to report transactions made through the Pix instant payment system to align them with traditional banks. However, opposition to these measures has framed them as an effort to impose additional taxes on workers, leading to the suspension of the rule earlier this year amid declining popularity for President Luiz Inacio Lula da Silva’s administration.

In summary, Brazil’s tax revenue service is actively reconsidering regulations for fintech companies amidst concerns of money laundering. While the necessity for stronger control measures is acknowledged, previous efforts to enforce reporting requirements faced substantial public backlash. The government’s focus remains on curbing organized crime financing, reflecting an ongoing commitment to enhance financial regulation in the fintech sector.

Original Source: www.usnews.com