Brazil is reconsidering requiring FinTechs to report transaction values due to money laundering concerns highlighted by tax service head Robinson Barreirinhas. A previously suspended rule may be revisited amid evidence of lesser-known FinTechs facilitating illicit activities. The country’s digital engagement metrics are high, with significant usage of the Pix payment system and growing reliance on digital wallets.
The head of Brazil’s tax revenue service, Robinson Barreirinhas, indicated that ongoing concerns regarding money laundering may prompt the government to reconsider mandating that FinTechs report transaction values. This proposal had previously been suspended last year following public discontent, as reported by Reuters.
Barreirinhas articulated during a Senate hearing that evidence suggests lesser-known FinTechs may enable money laundering due to their uncomplicated account-opening processes. In September, a rule was introduced requiring FinTechs to report transactions, particularly those via the Pix instant payments system, set to commence in January; however, the authorities halted the implementation in mid-January due to waning public support.
Critics argued that the reporting requirements aim to tax the working population. Additionally, Barreirinhas noted that the revenue service is alarmed by potential funding of organized crime through smuggled goods, cryptocurrencies, and online gambling.
Reports indicate that Pix, launched by Brazil’s central bank in late 2020, processes transactions exceeding $338 billion monthly. A new feature for recurring payments is projected to contribute an extra $30 billion in eCommerce transactions to the system.
Brazil exhibits remarkable engagement in digital activities, as highlighted in the PYMNTS Intelligence report titled “How the World Does Digital.” Among the 215 million Brazilian citizens, approximately 75% possess debit cards, 77% utilize Pix, and around two-thirds engage with financial services through mobile platforms. Furthermore, digital wallets are increasingly used for bill payments and identity verification, diverging from their traditional role predominantly in eCommerce in other nations.
In summary, Brazil’s potential reintroduction of transaction reporting for FinTechs reflects ongoing concerns regarding financial transparency and crime. The nation’s digital economy, characterized by widespread adoption of systems such as Pix, showcases its engagement in modern financial practices. With consumers utilizing digital wallets beyond mere transactions, Brazil is positioned at the forefront of digital evolution in financial services.
Original Source: www.pymnts.com
