Brazil eyes revisiting fintech reporting rules amid money laundering concerns

BRASILIA (Reuters) – Brazil will eventually need to resume discussions on requiring financial technology companies to report transaction values to the tax revenue service, the agency’s head said on Tuesday.

Speaking at a Senate hearing, Robinson Barreirinhas cited strong indications that lesser-known payment institutions are being used for money laundering.

Barreirinhas said the tax revenue service has intelligence capabilities for tracking transactions that the government still intends to extend to fintechs. It suspended such plans announced last year following a strong public backlash.

“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,” he said, noting that stricter controls should be required to open accounts.

In September, Brazil’s tax revenue service issued a rule requiring fintechs to report transactions, including those made through the widely used Pix instant payment system, to tax authorities starting in January, aligning them with banks.

Opposition to President Luiz Inacio Lula da Silva’s government framed the measure as a deliberate attempt to tax workers, prompting the administration to suspend the rule in mid-January amid a sharp decline in the leftist leader’s popularity in opinion polls.

Barreirinhas said the revenue service is concerned about the financing of organized crime in Latin America’s largest economy through smuggled cigarettes and e-cigarettes, cryptocurrencies and online betting.

(Reporting by Marcela Ayres; Editing by Richard Chang)