In its 2023 evaluation, Brazil was rated Compliant with FATF Recommendation 16, which governs the transparency of wire transfers. This recommendation requires that financial institutions ensure accurate and complete originator and beneficiary information is included with wire transfers and retained throughout the payment chain. These measures are vital to preventing the misuse of wire transfers for money laundering or terrorist financing.

The evaluation concluded that Brazil had successfully implemented the necessary legal and regulatory framework to meet these requirements and demonstrated effective practices in its financial sector, particularly among major institutions supervised by the Central Bank of Brazil (BCB).

Regulatory Framework & Implementation

Brazil has established a robust legal foundation through its AML/CFT laws and Central Bank regulations, ensuring financial institutions are obligated to obtain, verify, and retain complete information on both originators and beneficiaries of wire transfers. The regulatory scope covers both domestic and cross-border transfers and includes thresholds for identification and verification, in line with FATF standards.

Financial institutions are also required to implement risk-based procedures for identifying non-compliant transactions and to take appropriate actions, including filing suspicious transaction reports (STRs) when necessary. The supervision by the BCB was highlighted as effective, with institutions under its purview exhibiting a high degree of compliance and awareness of wire transfer obligations.

Intermediary and beneficiary institutions are expected to retain accompanying information and monitor transactions for compliance, though the depth of implementation and supervision in some non-bank sectors was noted as still developing.

Remaining Gaps

While Brazil’s core financial institutions were fully compliant, certain supervisory and enforcement limitations were observed in other sectors. Virtual asset service providers (VASPs), lawyers, and some designated non-financial businesses and professions (DNFBPs) were either newly regulated or still in the process of adapting to AML/CFT requirements. Despite this, the wire transfer obligations applicable to formal financial institutions were sufficiently comprehensive to warrant a top compliance rating.

The FATF also noted that while technical compliance is strong, continued efforts are needed to ensure consistent enforcement across all sectors and to address risks arising from informal and cross-border financial flows, such as those linked to the "dólar cabo" system and unlicensed money transmitters.

Conclusion

Brazil has achieved full compliance with Recommendation 16, reflecting a well-developed regulatory and operational framework for wire transfers. The country's financial institutions, particularly those regulated by the Central Bank, demonstrate effective implementation of the required measures, ensuring the transparency and traceability of funds. While some areas such as VASPs and professional service providers continue to evolve under newer oversight frameworks, the overall system is well-aligned with international standards, strengthening Brazil’s ability to detect and prevent illicit financial flows through the wire transfer system.