Brazil plans to reconsider requiring fintechs to report transaction data due to money laundering concerns, as expressed by Robinson Barreirinhas at a Senate hearing. Previous rules mandated reporting using the Pix payment system but were suspended amid public backlash. The government continues to confront issues such as organized crime financing through various illicit channels.
Brazil is poised to revisit the requirement for financial technology companies to report transaction values to the tax revenue service, as stated by its head, Robinson Barreirinhas, during a Senate hearing. He noted concerns regarding lesser-known payment institutions potentially being exploited for money laundering activities. The agency possesses intelligence capabilities that are expected to be expanded to include fintechs, although earlier plans were halted due to public opposition.
Barreirinhas emphasized the necessity for implementing stricter controls regarding account openings, stating, “I do not want to demonize fintechs … but the truth is that many end up being used (for illicit transactions) due to the ease of opening accounts.” This concern is particularly significant as Brazil’s tax revenue service previously mandated fintechs to report transactions using the popular Pix payment system starting in January to align with traditional banks.
However, the administration faced backlash, with critics framing these measures as an attempt to impose undue taxes on workers, resulting in the suspension of the rule in January 2023. This decision came amid declining approval ratings for President Luiz Inacio Lula da Silva. Furthermore, Barreirinhas expressed alarm over the financing of organized crime facilitated through smuggling, cryptocurrencies, and online betting, highlighting the need for vigilance as Brazil grapples with these emerging threats.
The Brazilian tax revenue service’s consideration to require fintechs to report transaction values stems from increased concerns over money laundering activities. Despite earlier plans being suspended due to public backlash, there is an ongoing need for stricter controls within the fintech sector to combat illicit activities. The financial implications for the government’s initiatives and the impact on public perception remain critical as Brazil navigates these complex issues.
Original Source: www.usnews.com
