Brazil to Reconsider Fintech Reporting Regulations Amid Money Laundering Concerns

Brazil plans to revisit reporting rules for fintech firms due to money laundering concerns, with discussions led by tax revenue service head Robinson Barreirinhas emphasizing the need for stricter accountability measures and the expansion of transaction tracking capabilities.

Brazil is set to revisit its regulatory framework concerning financial technology companies and their reporting obligations to the tax authority. The head of the tax revenue service, Robinson Barreirinhas, emphasized the need for a renewed discussion following evidence suggesting that lesser-known payment institutions may facilitate money laundering activities.

At a recent Senate hearing, Barreirinhas stated that the agency possesses intelligence capabilities for tracking financial transactions and aims to expand these capabilities to include fintechs. These plans were previously put on hold due to significant public opposition earlier this year.

He urged caution regarding fintechs, asserting that while they should not be demonized, many facilitate illicit transactions due to the simplicity involved in account openings. Stricter accountability measures for account creation are deemed necessary to mitigate these risks.

In September, the tax revenue service had issued a directive mandating fintechs to report transactions, including those initiated through the popular Pix instant payment system. However, this requirement was met with opposition and was suspended in January after allegations that it would disproportionately affect workers, coinciding with a drop in President Luiz Inacio Lula da Silva’s popularity.

Barreirinhas noted concerns over the financing of organized crime in Brazil, citing issues stemming from smuggled goods, such as cigarettes and e-cigarettes, as well as the use of cryptocurrencies and online gambling in such activities.

In summary, Brazil’s tax revenue service is considering reinstating reporting requirements for fintech companies amid rising concerns regarding their potential use in money laundering. While discussions were previously halted due to backlash, enhanced accountability measures are essential to combat illicit activities within the fintech sector. Regulatory changes may soon be introduced to align fintechs with traditional banks in reporting obligations to safeguard the financial system.

Original Source: www.marketscreener.com