Brazil’s tax authority is reconsidering the requirement for FinTechs to report transactions based on money laundering evidence. Previously postponed amid public backlash, concerns arise regarding organized crime. Despite the suspension, Brazil’s digital payment systems like Pix showcase extensive consumer engagement, highlighting the country’s digital financial activity.
The head of Brazil’s tax revenue service, Robinson Barreirinhas, indicated on March 11 that the country may revisit the requirement for FinTechs to report transaction values due to concerns over money laundering. Discussions on this mandate were suspended last year following public opposition. However, recent indications suggest that certain lesser-known FinTechs may facilitate money laundering owing to their ease of account creation.
In September, Brazil’s tax authority required FinTechs to report transactions, including those via the Pix instant payments system, which were set to commence in January. Consequently, this mandate was put on hold in mid-January, partly due to decreasing public support. Critics of this proposal argued that it unfairly targeted workers, raising concerns about its implications.
During a Senate hearing, Barreirinhas noted the tax authority’s apprehension regarding the potential financing of organized crime through smuggled goods, cryptocurrencies, and online betting. Reports indicated that Pix managed over $338 billion in monthly transactions since its launch in late 2020, with an upcoming feature anticipated to generate an additional $30 billion in eCommerce payments.
Brazil has demonstrated significant engagement in digital activities across various aspects of life. According to a PYMNTS Intelligence report, 75% of the 215 million Brazilian consumers own a debit card, 77% utilize Pix, and approximately two-thirds engage with financial services through mobile devices. The country is also revolutionizing the utilization of digital wallets, with a noteworthy 47% of Brazilians employing them for bill payments in the past year.
Brazil’s tax revenue service is contemplating resuming discussions on requiring FinTechs to report transaction values due to growing evidence of money laundering. Although a previous mandate was suspended after public backlash, the ongoing concerns regarding organized crime financing prompt the government to consider stricter regulations. Brazil’s digital financial landscape remains robust, with significant consumer engagement in digital payment systems like Pix and an increasing reliance on digital wallets for various services.
Original Source: www.pymnts.com
