In August 2026, Normative Instruction No. 1/2026 of the Council for Financial Activities Control (COAF) took effect, strengthening due diligence measures for transactions and relationships involving individuals, legal entities, financial institutions, corporate structures, beneficial owners, or representatives linked to jurisdictions identified by the Financial Action Task Force (FATF) as high-risk or as having strategic deficiencies in their anti-money laundering, countering terrorist financing, and countering proliferation financing (AML/CFT/CPF) frameworks. 

The measures include:

• Obtaining additional information on beneficial owners and the source of funds
• Conducting enhanced transaction monitoring
• Documenting the analyses conducted
• In certain circumstances, submitting the business relationship or transaction for approval by a higher level of management

The new requirements may have significant implications for foreign companies with existing or planned commercial, corporate, or financial relationships in Brazil. Foreign investments, capital contributions, intragroup payments, contracts with international suppliers, funds received from abroad, and corporate structures with beneficial owners located in certain jurisdictions may require more extensive information and documentation. This includes information on the source and destination of funds, the economic purpose of the transaction, and the individuals or entities actually involved in or benefiting from the structure.

The significance of these measures, however, extends beyond regulatory compliance and stronger internal compliance controls. 

Enhanced due diligence is part of Brazil’s system for preventing and detecting transactions potentially linked to money laundering and terrorist financing. Accordingly, inconsistencies involving the source of funds, the identity of beneficial owners, or the economic purpose of a transaction may trigger alerts, further scrutiny, and, where appropriate, the reporting of suspicious transactions to the competent authorities.

Depending on the specific circumstances and the source of the funds involved, these transactions may also have criminal implications, particularly under Law No. 9,613/1998, which governs the offense of money laundering and the mechanisms designed to prevent it.

Against this backdrop, foreign companies operating or investing in Brazil should be prepared to provide a consistent account of:

• The source and purpose of the funds transferred
• The economic rationale for the transactions
• The identities of the parties and beneficial owners involved

Properly organizing this information not only facilitates responses to due diligence inquiries from institutions and other entities subject to Brazil’s AML/CFT/CPF requirements but also helps prevent and mitigate regulatory, reputational, and criminal risks associated with international transactions.

Glossary

Council for Financial Activities Control (COAF): Brazil’s financial intelligence unit, responsible for receiving, analyzing, and disseminating financial intelligence concerning suspected money laundering and related offenses. It also regulates and supervises certain sectors subject to anti-money laundering obligations.

Beneficial Owner: The natural person who ultimately owns or controls a legal entity or arrangement, or on whose behalf a transaction is conducted, as determined under applicable identification and due diligence rules.

Financial Action Task Force (FATF): An international standard-setting body that develops recommendations to combat money laundering, terrorist financing, and proliferation financing. It also identifies jurisdictions with strategic deficiencies in their AML/CFT/CPF frameworks.

High-Risk Jurisdictions: Jurisdictions identified by the FATF as having serious strategic deficiencies in their AML/CFT/CPF frameworks. The FATF calls for enhanced due diligence and, in the most serious cases, countermeasures to protect the international financial system.

Jurisdictions Under Increased Monitoring: Jurisdictions identified by the FATF as having strategic deficiencies in their AML/CFT/CPF frameworks that have committed to addressing them within agreed timeframes. Commonly referred to as the FATF grey list.

Anti-Money Laundering, Countering Terrorist Financing, and Countering Proliferation Financing (AML/CFT/CPF): The regulatory framework of preventive measures designed to detect and mitigate money laundering, terrorist financing, and the financing of weapons of mass destruction proliferation.

Enhanced Due Diligence: Additional verification, monitoring, and risk-management measures applied to higher-risk customers, transactions, or business relationships under applicable AML/CFT/CPF requirements.

Law No. 9,613/1998: Brazil’s principal anti-money laundering statute. It criminalizes money laundering and establishes preventive obligations, including customer identification, recordkeeping, and suspicious transaction reporting.