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Eight brokers have already reported suspicious customer movements, says Coaf


Rochelle Pasiani, Coaf's General Financial Intelligence Coordinator.
(Photo: Reproduction)

Coaf's General Financial Intelligence Coordinator, Rochelle Pasiani, said that eight cryptocurrency brokers already voluntarily communicate to the board about their clients' transactions that may hide any wrongdoing.

According to data presented by Pasiani during an online seminar promoted by the Ministry of Economy on Wednesday (03), only in 2019 were 3,214 suspicious communications reported to Coaf by the exchanges themselves, against 1,512 the previous year. In 2020, there were 803 such occurrences. The names of these companies, however, have not been revealed.

According to the Coaf coordinator, there is an international understanding from the Gafi (Financial Action Group against Money Laundering) that digital assets must be incorporated into the system to prevent this crime. At the same time, she points out that companies in the sector must carry out risk analyzes of their customers.

This compliance practice, known as KYC (acronym in English for “Know Your Client), both lacks standardization in relation to exchanges and is even avoided by some. Others, however, already put in place measures that allow them to better understand who their customers are and to identify those that carry the greatest financial risk.

An organism considered essential in actions to combat money laundering, Coaf (Financial Activities Control Council) is also an actor that has been following activities related to the cryptocurrency market. And it also chooses other inspection entities for the regulation of the sector.

According to Pasiani, this monitoring happens even without the definition of parameters that allow a more adequate understanding of what is a suspicious activity or not – the so-called “red flags”.

“In the regulations of each economic sector, there are hypotheses that must be observed when a transaction takes place. As the exchange sector is not regulated, there is no regulation that says what these 'red flags' are, ”he explains.

Pasiani was one of the speakers at the webinar “Money laundering via cryptography”.

In addition to brokers

In addition to the information provided by the exchanges, Pasiani also stated that Coaf also receives information through two other channels: when exchanges are the holders of suspicious communications and when they are third parties in these occurrences

According to the coordinator, communications that cite virtual assets with Coaf (such as third parties or holders) total 4,275 in 2019, against 325 in 2017 and 1,397 in 2018. This year there are already 1,394 communications of this nature.

In the absence of greater market regulation, Pasiani says that Coaf used a simple method to be able to minimally identify such occurrences.

“We made a glossary of terms and managed to pull those communications that reference crypto (bitcoin, ethereum, among others)”, she says.

After the suspicious communication reaches Coaf, the council analyzes each one, based on the databases and crossings of information at its disposal.

When there are indications of illegal acts (either administrative or criminal), a financial intelligence report (RIF) is prepared. This, in turn, is referred to the competent authorities – such as the Judiciary, the Police, the Federal Revenue Service, among others.

Bitcoin eyeing authorities

These and other discussions took place during Wednesday's webinar. In addition to Coaf, members of the Federal Public Ministry, Banco do Brasil and Fazenda Nacional also spoke.

Brazilian authorities seem to be starting to look more closely at cryptocurrencies. Recently, Rede Lab, an initiative linked to the Ministry of Justice and Public Security, called an expert from the Federal Police for a live on the same subject.

The debate involving cryptocurrencies was part of a series of lives entitled “Talking to the Experts”.

On the occasion, expert Silvino Schilickmann said that the use of virtual currencies could become the preferred means of money laundering.

According to the Ministry of Justice, online debates represent “an opportunity to exchange ideas and knowledge on initiatives to combat corruption and money laundering”.

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