Brazil plans to revisit fintech reporting rules due to money laundering concerns, emphasizing the need for better oversight over lesser-known payment institutions. The tax revenue service previously mandated transaction reporting to align with banking regulations but suspended the rule following public backlash against perceived taxation of workers. Discussions suggest a focus on enhancing controls in the fintech sector.
Brazil is poised to revisit regulations that would compel financial technology (fintech) companies to report transaction values to its tax revenue service, according to agency chief Robinson Barreirinhas. During a Senate hearing, he expressed concerns that lesser-known payment institutions may be exploited for money laundering activities, emphasizing the need for enhanced oversight in the fintech sector.
Barreirinhas noted that the tax revenue service possesses the necessary intelligence capabilities to monitor transactions, which it plans to extend to fintechs. This initiative was previously suspended last year after facing significant public opposition. He remarked, “I don’t want to demonize fintechs … but the truth is that many end up being used (for illicit transactions) due to the ease of opening accounts.”
In September, the tax revenue service mandated that fintech companies report transactions carried out via the prevalent Pix instant payment system, effective from January, aligning their reporting requirements with those of traditional banks. However, the opposition to President Luiz Inacio Lula da Silva characterized this measure as an effort to unfairly tax workers, resulting in the suspension of the rule in mid-January, amidst a decline in the administration’s approval ratings.
In summary, Brazil is considering reinstating reporting obligations for fintech companies to curb money laundering concerns. The head of the tax revenue service highlighted the potential misuse of payment institutions for illicit activities, advocating for stricter account controls. Amid public backlash and political repercussions, the previous regulation requiring the reporting of transactions was suspended, but discussions may resume to enhance financial security.
Original Source: www.marketscreener.com
