Brazil is set to reconsider regulations for fintechs requiring transaction reporting to combat money laundering. This move follows evidence of abuse of lesser-known payment methods and a previously halted reporting mandate due to public backlash against perceived taxation on workers. The tax service remains focused on tracking financial activities to prevent organized crime financing.
Brazil is planning to revisit regulations that require financial technology companies (fintechs) to report transaction values to the tax revenue service. This was affirmed by Robinson Barreirinhas, head of the agency, during a recent Senate hearing. He highlighted evidence suggesting that lesser-known payment methods are being exploited for money laundering activities.
Barreirinhas emphasized the tax revenue service’s capabilities for monitoring transactions and is keen to extend these surveillance measures to fintechs. Initial plans to implement such regulations were paused due to public resistance following their announcement last year. He remarked, “I don’t want to demonize fintechs … but the truth is that many end up being used (for illicit transactions) due to the ease of opening accounts.”
In September, Brazil’s tax revenue service mandated that fintechs report transactions—including those via the popular Pix payment system—to tax authorities starting January, putting them on par with banks. This policy met with opposition from critics of President Luiz Inacio Lula da Silva, who viewed it as a means to tax workers. Consequently, the regulation was suspended mid-January amid declining popularity for the administration.
Barreirinhas expressed concerns over organized crime financing within Brazil, specifically involving operations related to smuggled products, cryptocurrencies, and online betting activities. The push for stricter regulations reflects an ongoing effort to enhance the financial monitoring landscape in Latin America’s largest economy.
Brazil is conducting a reassessment of fintech reporting rules amid concerns over money laundering. The tax revenue service aims to extend monitoring capabilities to fintechs following strong indications of their misuse for illicit transactions. The initial reporting mandate, halted due to public opposition, reflects both challenges and the necessity for tighter controls in the fintech landscape to combat organized crime financing in the country.
Original Source: www.usnews.com
