Contributed By FeldensMadruga
Criminal offences are divided in two main categories according to the seriousness of the conduct: crimes and misdemeanours. In general, misdemeanours are punished with less severe sanctions. An important difference between the two categories is that, according to Article 4 of Federal Decree-Law n. 3,688/41, an attempt to commit a misdemeanour is not criminally punishable.
In any case, for an act or omission to be considered a criminal offence (a crime or a misdemeanour) three elements must be present: i) "tipicidade" (ie a criminal statute explicitly and definitely states what conducts are prohibited and defines all the objective and subjective elements for such conducts to be considered crimes); ii) unlawfulness; and iii) culpability.
As a general rule, criminal offenses are intent crimes. Reckless offences are not as common and must be expressly provided for in the criminal offence. In general, attempts to commit a crime are punishable under the original criminal offence, although specific statutes may provide exceptions to this rule.
As provided for by Article 109 of the Criminal Code, the limitation periods for crimes range according to the applicable penalty: I – twenty years if the maximum penalty is greater than twelve years; II – sixteen years if the maximum penalty is more than eight years and does not exceed twelve; III – twelve years if the maximum penalty is greater than four years but does not exceed eight; IV – eight years if the maximum penalty is more than two years and does not exceed four; V – four years if the maximum penalty is one year or, if higher, does not exceed two; VI – 3 years if the maximum penalty is less than one year.
The crimes of racism and the action of armed groups against the constitutional order and the democratic state are exceptions to this rule and are not subject to any statute of limitation.
Aside from certain exceptions, the limitation period runs from the day the crime was committed to the time when the charges are confirmed by a judge. After the charges are confirmed, the limitation period is only interrupted when a sentence has been handed down by a criminal judge or by a court of appeals.
In the case of continuing offences, the limitation period starts to run when that course of conduct ceases. For example, the Supreme Court has recently decided that the concealing element of a money laundering offence is a continuing crime and the limitation period only starts when the concealment ends.
Brazil can claim jurisdiction if either the criminal conduct/omission or the result of the crime took place in Brazil (ubiquity theory).
Jurisdiction can also be claimed if the crime was committed to the detriment of Brazil’s public assets and in certain cases where Brazil undertook to repress the specific crime committed, either by treaty or convention.
The rules regarding extraterritorial jurisdiction are regulated by Article 7 of the Brazilian Criminal Code and are applicable to white-collar offences on the same grounds.
Legal entities are only subject to criminal liability for environmental crimes; therefore, a legal entity will generally not be criminally liable for white-collar offences. Legal entities may, however, face civil and administrative sanctions for acts conducted by its employees or representatives depending on their conduct.
In the case of environmental crimes, both individuals and companies may be held criminally liable for the same offence. In some cases, prosecutors have decided only to pursue the legal entity since it is sometimes difficult to identify the natural person responsible for the conduct. The Brazilian Supreme Court has ruled that this strategy is legal.
Managers and directors may not be subject to criminal liability by virtue of their position in the company. The prosecution must demonstrate actual participation in the criminal conduct to establish criminal liability.
Victims of a white-collar offence may claim compensation for their losses in both the criminal and civil courts.
A criminal sentence may stipulate the minimum compensation amount to be paid to the victim and may determine the forfeiture of goods and assets in favour of the victim.
The victim may also claim compensation before a civil court regardless of the criminal procedure. In general, if the offence involves public officials, it is also possible to commence a public civil action seeking restitution and civil sanctions.
In March 2014 the federal police initiated a criminal investigation in the southern state of Paraná (city of Curitiba). This was originally based on contracts with the state-owned oil company, Petrobras – which came to be known as the “Car Wash Operation”. It became the biggest anti-corruption investigation in Brazil and has caused several developments both in terms of the legal framework and enforcement.
Operation Car Wash set the background for many of the recent cases and developments regarding white-collar prosecution in Brazil.
In 2016, the Supreme Court overturned its previous understanding that a prison sentence could only be executed upon a final non-appealable decision. The court determined that a prison sentence could be executed upon a ruling by a court of appeals confirming the conviction, even if there were pending appeals. The Supreme Court is currently reviewing this understanding.
In July 2019, the president of the Supreme Court, Justice Dias Toffoli, issued an injunction suspending all investigations based on reports from Brazil’s Financial Intelligence Unit and the Federal Revenue Services which were shared with the police or the prosecution service without a prior judicial order. This suspension affects several investigations and shall remain in force until the full panel of the Supreme Court rules on the matter, which is scheduled for November 2019.
In August 2019, the 2nd Chamber of the Supreme Court vacated the conviction of former Petrobras president, Aldemir Bendine. The court understood that the statements of a co-defendant who entered into a plea agreement could be considered an accusation against the other defendants, which the other defendants should have knowledge of before presenting his final arguments. This decision potentially affects several other sentences related to Operation Car Wash and will likely be submitted to the full panel of the Supreme Court for a final decision.
Regarding recent legislative developments, the former judge responsible for Operation Car Wash and current Minister of Justice, Sérgio Moro, presented Bill n. 882/2019, “The Anti-crime Bill”, to Congress to substantially modify several criminal and procedural laws. Among other provisions it: i) presents measures to introduce negotiated solutions in the Code of Criminal Procedure and in the Improbity Law, substantially expanding the possibility of non-prosecution agreements for crimes subject to penalties of up to four years of imprisonment, ii) changes the rules relating to the statute of limitations; iii) introduces new crimes; iv) increases the penalties for existent offences; v) introduces the concept of bona fide whistle-blowers and presents measures of protection, such as immunity, protection against retaliation and reward of 5% of the recovered amount from public coffers.
The Bill remains before Congress and there is currently no indication as to when it will be voted on.
Criminal Investigations are conducted by the state or federal police and/or state and federal prosecutors. Prosecutors oversee investigations conducted by the police and have the prerogative to file criminal actions against individuals for white-collar offences. In general, white-collar offences are investigated by specialised police departments and prosecutors. In the scope of Operation Car Wash and other operations, teams of specialised prosecutors (“task forces”) were assigned to coordinate investigations with financial crime police squads. Specialised courts and judges deal with white-collar crime.
Civil and administrative liability may also arise under Law n. 8,429/1992 (Administrative Improbity Law) and Law n. 12,846/2013 (Clean Company Act). Civil sanctions under these laws may be imposed through Public Civil Actions, usually brought by state and federal prosecutions (depending on the specific conduct) and by the Solicitor General’s Office (“AGU”).
Administrative sanctions may be imposed by the highest authority of the interested government agency, but the Controller General (CGU) may invoke these administrative proceedings with respect to acts against the federal administration.
Under the Clean Company Act, the CGU is the competent authority to negotiate leniency agreements on behalf of the federal government. Since 2016, through the implementation of a joint regulation, the CGU has worked together with the Solicitor General’s Office (AGU) in the negotiation of leniency agreements regarding cases of corruption involving legal entities and bodies from the executive branch.
Although some companies have signed leniency agreements with federal prosecutors, the position of the CGU is that the federal prosecution service does not have authority to negotiate leniency agreements. Therefore, companies have to negotiate separate agreements with the federal prosecution service, the CGU and the AGU. In recent statements, both the CGU and the federal prosecution service have indicated a willingness to work together in the negotiation of agreements, which may result in changes to the current environment.
In general, white-collar investigations are initiated by the federal police upon suspicion of criminal conduct or upon receipt of a request from the prosecution service. For the initiation of an investigation, the police or the prosecution must have obtained information about criminal conduct from a legal source. Anonymous tips have been accepted by courts as valid grounds for initiating an investigation, but the police must first establish that the allegations were based on solid grounds before starting a formal investigation.
Several investigations were initiated after both the police and prosecution received a suspicious transactions report from Brazil’s Financial Intelligence Unit (COAF) and the Federal Revenue Service. In the recent Supreme Court decision mentioned above, however, Chief Justice Dias Toffoli suspended all investigations initiated on the basis that the reports from COAF and the Federal Revenue Service were shared without a prior judicial order. This suspension will last at least until the full panel of the Supreme Court rules on the matter. The hearing is scheduled for November 2019.
The police and the prosecution may request information and documents from individuals and legal entities. However, individuals have a constitutional right not to self-incriminate and may refuse to provide information or documents.
Since legal entities cannot be held criminally liable (with the exception of environmental crimes), in theory companies do not generally have a constitutional right to refuse to provide information to the police or to the prosecution. However, this discussion is incipient in Brazil and in some cases the privilege against self-incrimination has been recognised in administrative and civil proceedings that have criminal implications. In general, a company has a legal obligation to maintain and provide the authorities with official documents, such as accounting books, ledgers and invoices. Internal communications and confidential documents, such as emails, internal reports and communications must, in general, be provided if ordered to do so by a judge.
In the course of their investigations, both the federal police and the federal prosecution may request coercive measures before the competent federal court, such as pre-trial detentions, searches and seizures, and lifting of secrecy (such as telephone and bank records).
A search and seizure warrant must be issued by a competent court and must specify the scope of the investigation. Additionally, all documents seized must be related to the investigation. The court order may also determine whether money, vehicles and other objects are to be seized to guarantee future compensation for the victim.
Investigative authorities may also subpoena employees, officers, directors and third parties to be questioned during an investigation. The status by which an individual is called to testify (eg witness or target of the investigation) affects the rights of the said individual (eg the right to remain silent).
Brazilian law does not impose any obligation on a company to conduct internal investigations or even to have a compliance programme. However, the existence of an effective compliance programme and internal investigations may mitigate the issuance of fines and penalties as well as support leniency and plea negotiations.
It should be noted that an obligation to conduct internal investigations has been included as a condition in several plea and leniency agreements negotiated with federal prosecutors.
Brazil is a party to several multilateral and bilateral mutual legal assistance agreements.
To date, according to the Ministry of Justice, Brazil has entered into bilateral mutual legal assistance agreements in criminal matters with over 20 jurisdictions and is a party to 14 multilateral mutual legal assistance agreements in criminal matters, including the United Nations Convention Against Transnational Organized Crime and the United Nations Convention Against Corruption.
According to the Ministry of Justice, Brazil has also entered into 30 bilateral and 7 multilateral extradition agreements.
Active and passive cross-border cooperation in Brazil takes place through INTERPOL and the exchange of financial intelligence information through the Egmont Group.
In general, the exchange of information and the enforcement of foreign decisions must be conducted through the formal channels of mutual legal assistance. Although it is possible to conduct cross-border cooperation by means of reciprocity, the effectiveness and potential limitations of such reciprocity will depend on the terms of the agreement and on applicable statutes and judicial precedents.
Extradition is also regulated by way of agreement or reciprocity. There are no limitations on extraditions for white-collar offences per se. Limitations for extraditions are more general, such as a prohibition on the extradition of Brazilian nationals, with the exception of naturalised citizens where the extradition relates to offences conducted prior to their naturalisation and a prohibition on extradition based on political crimes and the like.
White-collar prosecutions are initiated after formal charges have been brought by a state or federal prosecutor and are confirmed by a criminal judge. For the charges to be confirmed by the judge, the prosecution must present sufficient evidence to demonstrate the participation of the individuals and the existence of a crime (probable cause). According to article 41 of the Code of Criminal Procedure, the complaint must specify the conduct of each of the individuals. As explained above, legal entities cannot be held criminally liable save for environmental crimes, therefore criminal complaints are, in general, directed against individuals.
After criminal charges have been confirmed by the judge, the defendants are summoned to present preliminary defences that could give cause to reject the complaint or to a summary acquittal.
In the case of minor offences which carry up to two years of imprisonment, article 76 of Law 9,099/95 provides for the possibility of immediate imposition of a restriction of rights or fines to avoid prosecution. After the payment of the fines or after the period of restriction of rights, the defendant’s criminal liability is expunged. Such a decision has the same effect as an acquittal.
According to article 89 of Law n. 9,099/95, in cases of offences that carry a minimum penalty of up to one year's imprisonment and provided that the defendant does not have a criminal record, the prosecution may offer an agreement to suspend the prosecution for between two and four years. During this period the defendant must comply with certain obligations, such as monthly court reporting, restitution of damages and other court imposed conditions. After this period, the defendant’s criminal liability is expunged.
In the prosecution of criminal organisations, an individual under investigation may voluntarily reach a plea agreement with the prosecution provided that such cooperation produces one or more of the following results: I – the identification of the other co-participants in the criminal organisation or their criminal offences; II – the revelation of the hierarchical structure and the distribution of tasks within the criminal organisation; III – the prevention of criminal offences stemming from the criminal organisation's activities; IV – the complete or partial recovery of the product or the profit stemming from the criminal organisation's activities; V – the location of the victim, unharmed, if there is one.
According to article 4, 4th paragraph of Law n. 12,850/2013, the prosecution may decide not to bring charges against the cooperating individual if he or she: I – is not the leader of the criminal organisation and II – is the first member of the criminal organisation to make a plea agreement with the authorities. In such cases the judge may grant a judicial pardon, reduce the term of imprisonment by up to two-thirds or substitute imprisonment with a restriction of rights. However, the accused must acknowledge his or her participation in the criminal organisation and renounce the right to non-self-incrimination.
According to the law and recent court decisions, a judge is not bound by the terms of an agreement between prosecution and the defendant and may choose not to grant the benefits agreed by the parties.
In all other cases, if there is just cause for a criminal action, the prosecution must press charges against the individual.
Under the Brazilian Criminal Code it is unlawful to mislead someone through trick, elusion or fraud to obtain undue advantage, which is punishable by a term of imprisonment ranging from one to five years plus fines.
Article 177 of the Brazilian Criminal Code establishes that it is a crime for a company to be founded through misleading statements about its constitution or by fraudulently concealing facts, which carries a term of imprisonment from one to four years plus fines.
Article 177 further determines that the following actions are also subject to the same penalty:
Under Federal Law n. 7,492/1986, specific crimes regarding the management of financial institutions, such as fraudulent and negligent administration, may lead to penalties of imprisonment and fines for individuals.
The offence of bribery is described under article 333 (active corruption) of the Brazilian Criminal Code as: “Promising, offering or paying undue advantages to government officials to cause them to conduct, omit or delay an official act”, and in article 317 (passive corruption): “To request or receive, for themselves or others, directly or indirectly, even outside the office or before holding the office, but by reason of it, improper advantage, or accepting promise of such advantage”. Both crimes are punishable by a term of imprisonment ranging from two to twelve years plus fines.
Article 337-B of the Brazilian Criminal Code punishes the corruption of foreign government officials (an offence of active corruption in an international commercial transaction): ie “To promise, offer or give, directly or indirectly, an undue advantage to a foreign government official, or to a third-party, to cause him to conduct, moot or delay an official act.”, which is punishable by term of imprisonment ranging from one to eight years, plus fines.
Influence peddling is defined under article 332 of the Brazilian Criminal Code as "to demand, charge or obtain, for oneself or others, advantage or promise of advantage, under the pretext of influencing an act performed by a government official in the exercise of his or her function" (trafficking of influence), which is punishable by term of imprisonment ranging from two to five years plus fines.
The Brazilian Criminal Code defines influence peddling in international commercial transactions under article 337-C as: “to request, demand, charge or obtain, directly or indirectly, an advantage or promise of advantage under the pretext of influencing an act of a foreign public official in the performance of his duties related to an international business transaction”, which is also punishable by term of imprisonment ranging from two to five years plus fines.
Private corruption and commercial bribery are not specifically punishable under Brazilian law. Depending on the specific conduct and acts, private corruption may be interpreted as different crime under Brazilian law, such as unfair competition, fraud or embezzlement.
Acts of bribery and influence peddling may lead to administrative and civil sanctions under the Administrative Improbity Law (Law n. 8,429/1992) and the Clean Company Act (Law n. 12,846/2013).
As previously indicated, the Administrative Improbity Law punishes acts against the public administration that: (i) cause the illicit enrichment of government officials or damage to the public coffers; (ii) arise from the undue concession or application of a financial or tax benefit; or (iii) are against the principles of public administration. The civil sanctions provided under this law may include disgorgement of profits and debarment from participating in contracts with government entities for up to ten years.
The Clean Company Act imposes strict civil and administrative liability against legal entities involved in acts against national and foreign government administrations, including corruption. This law applies only to offences committed after February 2014.
Brazilian law does not provide for a specific obligation to prevent bribery or influence peddling. As previously indicated, both bribery and influence peddling are criminal offences under the Brazilian Criminal Code (articles 317 and 333, passive and active corruption, and article 332 (influence trafficking). Individuals involved in such acts may be subject to imprisonment and fines if found guilty. Legal entities may also be subject to strict liability (civil or administrative) for similar conduct under the Clean Company Act (Law n. 12,846/2013).
Under the Clean Company Act, “the existence of internal mechanisms and procedures for integrity, auditing and encouraging the reporting of irregularities and the effective application of codes of ethics and conduct within the legal entity” will be considered when calculating the sanctions to be applied.
Federal Decree n. 8420 sets the parameters for an effective compliance programme indicating that: “An Integrity Programme, within the context of a legal entity, consists of the set of internal mechanisms and procedures concerning integrity, audits and incentivised reporting of irregularities as well as the effective enforcement of codes of ethics and conduct, policies and guidelines aimed at detecting and tackling embezzlement, fraud, irregularities and illegal acts practiced against Brazilian or foreign public administration.”
In that sense, an integrity programme will be evaluated according to the following parameters:
However, it is not a criminal/administrative/civil offence not to implement such a compliance programme.
Federal Law n. 7,492/86 (Crimes Against the National Financial System) and Federal Law n. 6,385/76 (Regulations of the Capital Market) lists several criminal offences against the banking system and the capital market. The main offences include:
Under Federal Law n. 8,137, of 27 December 1990, (“Law n. 8, 137”), the non-payment of taxes through one of the following conducts may constitute the crime of tax evasion (two to five years imprisonment plus fines):
The payment of outstanding taxes and fines prior to a criminal conviction precludes criminal liability for a tax crime. The timing for the payment is still debatable under Brazilian case law, but it should be stressed that such payments of outstanding taxes and fines has no bearing on other offences, such as capital flight or money laundering.
Pursuant to Binding Precedent N. 24 of the Brazilian Supreme Court (“STF”), these crimes are only committed upon the effective constitution of a tax obligation, ie on the date of the final tax assessment by the administrative authority.
In addition to the crimes established by Law n. 8,137, the Brazilian Criminal Code also makes it a crime to:
There is no specific criminal offence for failure to prevent tax evasion.
Financial record keeping obligations have been established under anti-money laundering laws, eg Law n. 9,613/1998.
Article 10, III of the anti-money laundering law establishes that legal entities and individuals subject to its terms must “keep a record of every transaction in local or foreign currency, titles and securities, credits, metals, or any asset that can be converted into money, that exceed the limit fixed by the competent authority and in the terms of its issued instructions”.
The specific obligation of compliance with the above general terms vary according to the activities of the legal entity and the individual. Companies and individuals conducting business in the financial, insurance, securities exchange, luxury goods and jewellery markets, for instance, may be subject to different compliance obligations.
Records must be maintained for a period of five years starting from the date the transaction was concluded. A failure to comply with record keeping obligations may lead to administrative sanctions but such failure does not constitute a criminal offence.
Under the anti-money laundering law, administrative penalties may include a warning, the withdrawal or suspension of the authorisation to conduct the activity and financial fines not exceeding: (i) twice the value of the operation; (ii) twice the real profit obtained or that which could have been obtained from the operation; or (iii) BRL20 million.
As previously discussed, entities may also be required to disclose financial records upon receipt of a judicial order in a criminal proceeding. Failure to disclose such records may lead to sanctions.
Federal Law n. 8,666/93 (bid proceedings and contracting with the Public Administration), Federal Law n. 8,137/90, Federal Law n. 12,529 (Brazilian Competition System) and the Brazilian Criminal Code concern crimes against the economic order and competition.
Crimes against the economic order are defined under article 4 of Law n. 8,137, all of which are punishable by two to five years imprisonment plus fines. Article 4, I criminalises the abuse of economic power by dominating the market or eliminating, wholly or in part, market competitiveness by means of any kind of adjustment or agreement between companies.
Article 4 also determines that agreements, covenants, adjustments or alliances between suppliers are crimes if they aim to: (i) artificially fix prices or quantities sold or produced; (ii) control to the detriment of the market the chain of distribution or of suppliers; or (iii) regionalise control of the market by a company or a group of companies.
As regards government bid proceedings and contracting with the public administration, article 90 of Law n. 8666 makes it a crime to frustrate or defraud through an adjustment agreement or any other act the competitive character of the procurement procedure with the intent of obtaining an advantage (two to four years imprisonment plus fines).
Article 87 of Law n. 12,529 determines that in the occurrence of crimes against the economic order and other crimes directly related to cartels, legal or natural persons may seek leniency agreements. In the event of an agreement, the limitation period count is suspended and the federal prosecution may not press charges against the individuals concerned. Upon the fulfilment of the terms of the leniency agreement, criminal liability is expunged.
Brazilian Consumer Protection Code: the Brazilian Criminal Code and Federal Law n. 8,137/90 list several criminal offences as against consumers, eg:
Under Article 154-A of the Brazilian Criminal Code, it is a crime to unlawfully gain access to a computer device, whether or not connected to the computer network, by improper breach of a security mechanism for the purpose of obtaining, tampering with or destroying data or information without the express or tacit authorisation of the device holder or to install vulnerabilities to obtain unlawful advantage (three months to one year of imprisonment plus fines).
If the invasion results in the obtaining of private electronic communications content, trade or industrial secrets or confidential information as defined by law, or if unauthorised remote access was used to control the hacked device, the penalties will range from six months to two years imprisonment plus fines. Harsher penalties apply if there is disclosure, marketing or transmission to a third party of the obtained data or if the victim is a high-ranked government official.
Additionally, under article 195, XI of Law n. 9,279/96, it is a crime for a person to disclose, exploit or otherwise use without authorisation confidential knowledge, information or data usable in industry, commerce or at the provision of services (excluding information that is already in the public domain or evident to a skilled person) if this knowledge, information or data was obtained through a contractual or employment relationship, even after the termination of that contract. Penalties for this crime range from three months to one year of imprisonment or fines.
Under Brazilian Law, there are no specific criminal offences related to financial, trade or customs sanctions.
Companies that operate internationally must comply with the sanctions imposed by other countries. Also, Brazil may adopt resolutions of international bodies (eg the UN Security Council) as internal regulations, thus restricting the importation/exportation of goods to and from certain countries.
Under the Brazilian Criminal Code, the importation or export of forbidden goods is a crime punishable by two to five years imprisonment plus fines.
Concealment is an offence related to the crime of money laundering. According to article 1 of Law 9,613/98 it is a crime to conceal or disguise the true nature, origin, location, disposition, movement or ownership of assets, rights and valuables that result directly or indirectly from a criminal offence. Penalties for this crime range from three to ten years' imprisonment plus fines.
For concealment to be considered a crime, the existence of a predicate offence is mandatory. Up until 2012, the Brazilian Money Laundering Law (Law 9,613/98) listed eight predicate offences that could give rise to the crime of money laundering: i) illicit trafficking of narcotic substances or similar drugs; ii) terrorism and the financing thereof; iii) smuggling and trafficking of weapons and ammunition or materials used for their production; iv) extortion through kidnapping; v) acts against the public administration, including corruption; vi) acts against the national financial system; vii) acts of criminal organisations; and viii) acts practiced by an individual against a foreign public administration. However, Law n. 12,683/2012 established that any criminal offence (including misdemeanours) could be a predicate offence to the crime of money laundering.
Aside from the regular criminal information that must be demonstrated by the prosecution at the time formal charges are brought, the criminal complaint must also establish the existence of a predicate offence prior to the concealment/money laundering offences. If the defendant is also accused of the predicate offence, he or she may be held liable for both criminal acts.
In some cases, acts of concealment are hard to identify and by the time charges are brought the statute of limitations of the predicate offence may have already expired. According to several court decisions based on article 2, II of the Money Laundering Law, the prosecution of the predicate offence and the money laundering offence are independent, therefore the statute of limitations for the primary offence is not relevant for the prosecution of the secondary offence.
According to article 29 of the Brazilian Criminal Code, whoever aids or abets another to commit a crime is culpable. If the participation is less relevant, there may be a reduction of up to one-third of the penalty.
In some cases, the conspiracy to commit crimes may be considered as a crime of criminal association in itself.
The crime of money laundering is defined under the anti-money laundering Law (Law n. 9,613/98) as the concealment or disguise of the true nature, origin, location, disposition, movement or ownership of assets, rights and values that result directly or indirectly from a criminal offence.
As indicated in the discussion on concealment above, although the crime of money laundering requires a predicate offence, any criminal offence (including misdemeanours) can be a predicate offence.
Furthermore, the prosecution of the predicate offence and of the money laundering offence are independent, therefore the statute of limitations for the predicate offence is not relevant. Penalties for the crime of money laundering range from three to ten years' imprisonment plus a fine.
The anti-money laundering law also establishes an administrative obligation to implement specific anti-money laundering measures.
As a member of FATF, the Brazilian anti-money laundering law follows international standards and imposes obligations of client identification, record keeping and communication of financial operations to competent authorities, both under objective and subjective standards.
Failure to comply with the prevention of money-laundering obligations may subject legal entities and individuals to administrative sanctions that include a warning, the withdrawal or suspension of the authorisation of the legal entity or individual to function or to conduct the specific activity, and financial fines not exceeding: (i) twice the value of the operation; (ii) twice the real profit obtained or that could possibly be obtained from the operation; or (iii) R$20 million.
Anti-money laundering obligations may differ in respect of different markets, eg: (i) the Brazilian Central Bank, for the financial market, (ii) the Brazilian Securities Commission (CVM) for the securities market and (iii) the Superintendence of Private Insurance (SUSEP) for the insurance market, among others. The competent regulating authorities are also responsible for enforcement and oversight of anti-money laundering rules.
The Brazilian financial intelligence unit – Counsel for Control of Financial Activities (COAF) – is responsible for receiving communications under the anti-money laundering law.
COAF is also responsible for regulating and overseeing individuals and legal entities that are subject to the terms of the anti-money laundering law but which do not have a specific regulator.
Defences for white-collar offences are assessed on a case-by-case basis. According to the Clean Companies Act, the existence of an effective compliance programme may mitigate a final penalty in an administrative proceeding. However, corporations are not in general subject to criminal liability, therefore a compliance programme is not relevant.
There are no exempt industries or sectors for white-collar crimes offences.
As for de minimis exceptions specifically regarding tax crimes, the Brazilian Supreme Court understands that if the amount of taxes owed together with related fines does not exceed R$20,000.00 (approximately US$5,000) such tax evasion does not amount to a criminal offence.
As indicated in the discussion regarding plea agreements, where the defendant cooperates with the prosecution in cases involving criminal organisations and meets the necessary standards a judge may grant a judicial pardon, reduce the prison sentence by up to two-thirds or substitute imprisonment with a restriction of rights punishment.
Aside from the possibility of plea agreements, this may also lead to leniency agreements. Leniency agreements under Brazilian law are available both for antitrust violations and for bribery-related conduct under the Clean Company Act, Law n. 12,846/2013.
Leniency agreements under the antitrust law (Law n. 12,529/2011) are negotiated with the Brazilian antitrust authority (Economic Defence Council – CADE) and, for criminal purposes, with the federal prosecution.
If the entity self-discloses and cooperates with the authorities and the result of such cooperation leads to the identification of others involved in the offences and to documents that prove such illicit conduct, the entity may enter into a leniency agreement that may result in the termination of the administrative action (if CADE was not previously aware of the illicit conduct) or to the reduction from one-third to two-thirds of the applicable administrative fine. Leniency agreements and their benefits will depend on whether the company or individual is the first to come forward, although other benefits are also available for those who do not fall in this category. For criminal purposes, a leniency agreement under the antitrust law may result in non-prosecution of the criminal conduct.
Similarly, self-disclosure and cooperation may also lead to a leniency agreement under the Clean Company Act if such cooperation results in: (i) the identification of others involved in the offence and (ii) the timely submission of information and documents that prove the illicit conduct.
Even if a leniency agreement is not reached under the Clean Company Act, self-disclosure and cooperation may be considered as mitigating factors.
In situations where leniency agreements are neither possible nor applicable, the authorities have used alternative types of agreements, eg conduct adjustment agreements (TACs), to settle cases with less formality. A TAC is a settlement intended as a quick means to end a particular conduct and impose a financial penalty in respect of the said conduct. A TAC does not require an admission of guilt.
Brazilian law does not provide any protection for whistle-blowers. As previously mentioned, a bill has recently been presented to Congress to protect bona fide whistle-blowers and provide them with financial incentives to cooperate.
Law No. 12,846/2013 (Clean Company Act) does, however, create incentives for entities to implement effective compliance programmes which, under the terms of article 42 of Federal Decree No. 8,240/2015, should include whistle-blowing channels and internal procedures to protect bona fide whistle-blowers.
Article 156 of Brazilian Code of Criminal Procedure provides that the burden of proof lies with the person who made the allegation. In the case of charges brought by the prosecution, the burden of proof lies with the accuser. This rule applies to all criminal proceedings, including white-collar proceedings.
According to article 155 of Brazilian Code of Criminal Procedure, the judge will make a decision based on the free analysis of the evidence adduced in court and, in general, is not allowed to base a conviction only on elements of the investigation. Although there is no specific rule regarding the standard of proof the prosecution must satisfy, the courts have found that the standard in criminal proceedings should be proof “beyond a reasonable doubt”.
The assessment of penalties is regulated by article 68 of the Brazilian Criminal Code which provides for a three-step process. First, the judge must determine an initial penalty within the limits provided by the sanctions of each crime taking into consideration the culpability, background, social conduct and the personality of the offender; the motives, circumstances and consequences of the crime; and the victim's behaviour. After the initial phase, attenuating and aggravating factors will be considered. Finally, the judge will consider whether there are any reasons to reduce or increase the penalty.
A judge may not consider the same circumstances in more than one phase of the sentencing process so as to increase the penalty imposed on the individual.
In the event of a plea agreement, the judge must follow the guidelines established by article 68, mentioned above, and then decide upon the application of the benefits provided under article 4th of Law n. 12,850/2013.