The Council for Financial Activities Control (COAF) is Brazil’s national Financial Intelligence Unit (FIU) and is the supervisory body responsible for fighting financial crime.
Founded in 1998 and headquartered in the capital city, Brasilia, COAF is part of Brazil’s Ministry of Finance and operates under the authority of the Central Bank of Brazil. As a financial intelligence unit and regulator, COAF is a key component in Brazil’s crackdown against financial crime and focuses primarily on the crimes of money laundering, terrorism financing, and tax evasion. COAF is led by its Comptroller General and Executive Secretariat, but also maintains eight leadership positions filled by civil servants.
In addition to its regulatory focus on AML/CFT, COAF maintains a branch dedicated to Corruption Prevention and Strategic Information, and a branch dedicated to imposing legal penalties for financial crimes.
COAF works to ensure that financial institutions operate in compliance with Brazil’s AML/CFT regulations by implementing suitable AML policies and controls such as customer due diligence, transaction monitoring, sanctions screening, and suspicious activity reporting. In that regulatory role, COAF assesses the compliance performance of firms operating within Brazil and analyzes the suspicious activity reports that they submit. Where compliance violations are detected, or where suspicious activity indicates that financial crime is taking place, COAF conducts an investigation or disseminates information to the relevant law enforcement authorities.
COAF also serves an educational role, providing the Brazilian public with information and statistics relating to financial crime and compliance. COAF’s educational goal is to promote a greater understanding of AML/CFT regulation and the damage that financial crime causes: accordingly, COAF also releases a range of AML/CFT publications.
In order to comply with Brazil’s AML/CFT regulations, firms should put the following risk-based AML/CFT measures and controls in place:
- Customer due diligence: Firms in Brazil must establish and verify the identities of their customers and the beneficial ownership of customer entities in order to build accurate risk profiles.
- Transaction monitoring: In order to detect money laundering and other financial crimes, firms must monitor customer transactions for unusual activity, such as unusual transaction patterns, transactions that do not match risk profiles, or transactions with high risk countries.
- Sanctions screening: Firms in Brazil must screen their customers to ensure they are not subject to international sanctions or doing business with sanctioned persons.
- PEP screening: Since elected officials and government employees pose a higher AML risk, firms in Brazil should screen customers to establish their politically exposed person (PEP) status.
Adverse media monitoring: News media is often a good indicator that a customer is involved in financial crime. Accordingly, firms in Brazil should monitor media sources, including traditional screen and print and online outlets, for adverse stories that involve their customers.