By Rubens Velloza and Ronald Grant of Velloza & Girotto
|Velloza & Girotto
Av. Paulista, 901
17º & 18º Andares
01311-100 São Paulo, SP Brazil
Telephone: +55 11 3145 0055
Fax: +55 11 3145 0050
Visit website: www.vellozaegirotto.com.br/english
In Brazil, money laundering (ML) has been a crime in itself (as opposed to an element of another crime) since the enactment of Law 9613 in 1998.
However ML cannot be prosecuted unless the cash and other assets being cleaned are a byproduct of drug or arms trafficking, terrorism or a number of other named predicate offences (including extortion through abduction, crimes against public administration and the financial system, and crimes committed by criminal organisations).
But not for long. By the end of June 2012 President Dilma Rousseff is set to sign into law a bill that amends Law 9613 so dramatically that the bill is being viewed as a new ML law. At the time of writing, there is no indication that she will issue any veto.
The bill marks a turning point insofar as ML will become a crime regardless of the nature of the underlying criminal activity. Therefore it can be said that any offence, however minor, that generates funds triggers laundering charges as well.
At the same time, the bill bolsters ML law enforcement and effectiveness. To expedite investigations, for example, police authorities and prosecutors will no longer need to seek a court order to access suspect ID information on bank, phone carrier and internet provider databases.
Typically, assets suspected of originating from ML are seized and left to deteriorate over the course of the trial. To avoid this, the bill empowers the court to auction them off (including those in the name of straw men and front businesses) any time prior to sentencing and, in the meantime, deposit the proceeds from the sale in an interest-bearing account.
Significantly, now not only entities but natural persons whose primary activity lies in the financial and capital markets are also subject to record keeping and transaction reporting requirements. The bill expands these activities, among others, to athlete agency and trading in livestock and agricultural products of material value.
Noncompliance with reporting requirements can attract a fine of as much as R$20 million ($9.66 million).
A striking feature here is that ‘persons’ who provide advisory, consultancy, accountancy and auditing ‘of any nature’ in connection with transactions involving, among others, the purchase and sale of real estate, commercial and industrial assets or business ownership interests and asset management will be under a duty to disclose customer information and customer transactions in excess of the threshold set by the competent authorities.
The question comes to mind of whether lawyers would be one of those service provider ‘persons’. They think not and remind - and appropriately so - that this would violate the constitutional guarantee of inviolability of the secrecy of the attorney-client relationship.
As often is the case, the new law is welcome yet not without reservation.
LL.B. from Universidade de São Paulo (USP) in 1991, currently seeking Master's Degree in Commercial Law.
Former Tax Law and Administrative Law Professor at Pontifícia Universidade Católica (PUC-SP).
Worked for a law firm specialized in corporate consulting. Former Senior Tax Consultant of a major American bank. One of the founders of this law firm.
Practice Areas: Administrative Law; Civil and Commercial Law; Tax - Direct Tax
Languages: Portuguese and English