Amid rising money laundering concerns, Brazil’s tax revenue service is considering new reporting requirements for fintechs. A Senate hearing indicated that lesser-known payment institutions are exploited for illicit transactions. Initial reporting rules were suspended following public backlash, as opposition framed the measures as a tax on workers, motivating a reassessment of regulatory approaches.
Brazil’s tax revenue service plans to revisit reporting requirements for fintech companies due to concerns over money laundering activities. At a Senate hearing, Robinson Barreirinhas highlighted that certain lesser-known payment institutions might be facilitating illicit transactions. He expressed intentions to extend the agency’s intelligence capabilities to fintechs, which had been paused after prior public backlash against the initiative.
Barreirinhas emphasized the ease with which accounts can be opened as a challenge, indicating that more stringent account opening processes are necessary. In September, a rule was introduced for fintechs to report transactions to tax authorities, aiming to align them with traditional banks. However, this measure faced opposition, being perceived as an attack on workers by detractors of President Luiz Inacio Lula da Silva’s government, leading to its suspension in January amid falling approval ratings.
The revenue agency remains vigilant regarding organized crime finances in Brazil, particularly concerning smuggling operations and the use of cryptocurrencies and online betting platforms for illicit activities. This underscores the growing need for improved regulatory measures in the fintech sector.
Brazil’s potential re-evaluation of fintech reporting rules underscores the government’s effort to combat money laundering and criminal financing. With concerns stemming from the ease of account setups within fintechs, there is a call for stricter regulatory measures. The initial reporting rule aimed to unify fintechs with banks but has faced significant public opposition, reflecting wider economic and political challenges.
Original Source: www.marketscreener.com
