Brazil’s tax revenue service is reevaluating its stance on requiring FinTechs to report transaction values due to indications of money laundering. The decision to pause such discussions last year followed public backlash. With a significant portion of the population engaged in digital finance and the emergence of features like recurring payments in Pix, Brazil demonstrates notable advancements in digital payments.
Recently, Brazil’s tax revenue head, Robinson Barreirinhas, indicated that potential ties to money laundering may lead the country to reassess its position on FinTechs reporting transaction values. This consideration follows a suspension of discussions on this proposal, which was halted last year amid public dissent. Evidence suggests that certain lesser-known FinTechs are being exploited for illicit activities due to their ease of account setup.
In September, Brazil’s tax authorities mandated FinTechs to report transactions starting January, particularly those processed via Pix, the national instant payment system. However, this obligation was suspended in mid-January after a drop in public support for the initiative. Critics of the measure claimed it targeted workers unfairly.
During a Senate hearing, Barreirinhas expressed concern that activities such as smuggling of goods, cryptocurrency trading, and online gambling are funding organized crime in Brazil. The Pix system, which was launched by the central bank in late 2020, manages over $338 billion in monthly transactions, with an anticipated introduction of a new recurring payments feature expected to add approximately $30 billion to eCommerce.
Brazil stands out globally in various digital engagement metrics, with 75% of its 215 million population holding a debit card, 77% utilizing Pix, and nearly two-thirds accessing financial services via mobile platforms. Additionally, the nation is redefining the purpose of digital wallets, as many users engage them for bill payments and identity verification, diverging from the traditional eCommerce usage seen in other countries.
Brazil is considering reintroducing transaction reporting for FinTechs amidst concerns over money laundering. Despite earlier suspensions due to public opposition, evidence suggests some FinTechs are misused for illegal activity. The country’s high engagement in digital finance reflects its leadership in adapting to digital payments, with innovations such as Pix showing substantial transaction volumes. The evolution of digital wallets further illustrates Brazil’s unique approach to financial technology and consumer payment habits.
Original Source: www.pymnts.com
