On March 11, 2021, the Financial Activities Control Council (COAF) published two new regulations: (i) Resolution No. 36/2021 and (ii) Normative Ordinance No. 6/2021.
Resolution No. 36/2021 regulates the adoption of policies, procedures and internal controls to prevent money laundering, terrorist financing, and the financing of weapons of mass destruction (AML/CFT/WMD) to assist supervised companies to comply with the provisions of Federal Law No. 9,613/1998 (Money Laundering Prevention Law). The new Resolution incorporates the concern with the financing of weapons of mass destruction, in line with the guidelines of the FATF/GAFI (Financial Action Task Force) and the Actions of ENCCLA (Brazil’s National Strategy to Fight Corruption and Money Laundering).
Divided into seven chapters, the Resolution expands on what is established by Articles 10 and 11 of the Money Laundering Prevention Law on (i) the AML/CFT/WMD policy, (ii) the appropriate governance structure to implement and monitor compliance with the AML/CFT/WMD policy, (iii) internal risk assessment every two years, with selected disclosure to employees, (iv) procedures for getting to know customers (Know Your Client – KYC), and (v) procedures for getting to know employees, outsourced service providers and other partners (Know Your Employee – KYE). In addition, the new standard requires greater attention to new technologies and products and the potential impact of its introduction on AML/CFT/WMD activities.
In summary, according to the new Resolution, supervised entities must carry out periodic internal assessments to identify and understand the risks related to their commercial activities that may eventually be used for money laundering, terrorist financing, or other related illicit practices. Consequently, the results of this assessment will be used for the adoption of policies, procedures and internal controls appropriate to the size and volume of operations of the company, and may even justify the recognition of situations of exemption from specific obligations.
Failure to comply with the requirements of Resolution No. 36/2021 will be considered a violation of the Money Laundering Prevention Law, and will subject the regulated company to the sanctions therein provided.
Normative Ordinance No. 6/2021 by its turn set the criteria for smaller operations to obtain a waiver to comply with the requirements provided under the new Resolution.
Both new regulations will come into force on June 1, 2021. More information can be obtained here and on this link.
Authors: partner Bernardo Viana and trainee Matheus Leone.