White-Collar Crime 2020 Comparisons

Last Updated October 20, 2020

Contributed By FeldensMadruga

Law and Practice

Authors



FeldensMadruga advises and represents clients, particularly businesses, in matters of law enforcement, specialising in white-collar crimes. The firm goes beyond the traditional scope of criminal litigation, defending clients in all circumstances that may lead to state sanctions – criminal, civil and administrative. Respected among Brazilian and foreign authorities for its record in cross-border cases, FeldensMadruga has 15 attorneys with experience in both the public and private sectors in Brazil and abroad, including lawyers licensed to practise in the United States and the European Union. They work in criminal defence, multi-jurisdictional litigation, international law, anti-money laundering and anti-corruption, compliance programmes and internal investigations. Based in Brasilia, Porto Alegre, Rio de Janeiro and São Paulo, through their alliances they have the capacity to represent clients in 60 jurisdictions worldwide. They have defended clients from the construction, oil and gas, and energy sectors, among others, following major operations run by the federal police.

Criminal offences are divided into 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 No 3,688/41, an attempt to commit a misdemeanour is not criminally punishable.

For an act or omission to be considered a criminal offence (a crime or a misdemeanour) three elements must be present:

  • 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);
  • unlawfulness; and
  • culpability.

As a general rule, criminal offences are crimes of intent. 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:

  • 20 years if the maximum penalty is greater than 12 years;
  • 16 years if the maximum penalty is more than eight years but does not exceed 12;
  • 12 years if the maximum penalty is greater than four years but does not exceed eight;
  • eight years if the maximum penalty is more than two years but does not exceed four;
  • four years if the maximum penalty is one year or, if higher, does not exceed two; and
  • three years if the maximum penalty is less than one year.

The crimes of racism and the action of armed groups against 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 is 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 recently decided that the concealment 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.

"Operation Car Wash"

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 “Operation Car Wash”. It became the biggest anti-corruption investigation in Brazil and has resulted in 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 August 2019, the Second 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 their final arguments. This understanding was later confirmed by the full panel of the Supreme Court. 

In November 2019, the Supreme Court reversed a 2016 ruling and determined that, other than in pre-trial detentions, defendants can only be imprisoned after a final conviction not subject to appeal. This decision resulted in the release of several Car Wash defendants, including former president Lula, who was released from jail on the same day.

Also in November 2019, the Supreme Court decided that public bodies, such as the Federal Revenue Service and the Financial Intelligence Unit (UIF), are allowed to share tax proceedings and intelligence reports containing bank information on suspicious transactions with the prosecution in criminal cases, without prior judicial order.

Recent Legislative Developments

The Anti-crime Bill

Regarding recent legislative developments, the Brazilian Congress approved The Anti-crime Bill, presented by former federal judge and Minister of Justice, Sergio Moro, that substantially modified 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) introduces new crimes;
  • iii) increases the penalties for existent offences;
  • iv) 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;
  • v) determines that the judge who acted during the investigation proceedings may not act after charges are brought and that the judge who acknowledges the content of a piece of evidence declared inadmissible is prevented from delivering a judgment on the case. 

In January 2020, the changes reflected in (v) were suspended by an injunction from Supreme Court Justice Luiz Fux. This decision will likely be submitted to the full panel of the Supreme Court.

Federal Law No 13869/2019

In January 2020, Federal Law No 13869/2019 came into force to define crimes of abuse of authority, those committed by public agents who take advantage of their public positions to intentionally harm others or benefit themselves or third parties. 

Criminal Investigations

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 co-ordinate investigations with financial crime police squads. Specialised courts and judges deal with white-collar crime.

Civil Sanctions

Civil and administrative liability may also arise under Law No 8,429/1992 (Administrative Improbity Law) and Law No 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 Attorney 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. 

Leniency agreements

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 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 (MPF) does not have authority to negotiate leniency agreements. Therefore, companies have to negotiate separate agreements with the MPF, CGU and AGU. 

Recently, the CGU, AGU and the Brazilian audit court entered into an agreement to co-ordinate the negotiation of leniency agreements and prevent companies from having to negotiate separate agreements with different authorities. Although the MPF was invited to sign the agreement, it has not to date done so. 

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 the courts as valid grounds for initiating an investigation, but the police must first establish that the allegations are 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 the UIF and the Federal Revenue Service. 

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 (except for environmental crimes), in theory, companies do not 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 the lifting of secrecy on documents (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 of an individual called to testify (eg, as a 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 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 seven multilateral extradition agreements. 

Active and passive cross-border co-operation 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 co-operation 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 etc. 

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 in 1.4 Corporate Liability and Personal Liability, 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' imprisonment, Article 76 of Law No 9,099/95 provides for the possibility of an immediate imposition of fines or a restriction of rights, 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 No 9,099/95, in the case 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.

Federal Law No 13,964/19 introduced non-prosecution agreements for crimes subject to under four years of imprisonment that were not committed through violence or major threats. In order to obtain the agreement, the defendant must:

  • formally confess;
  • repair the damage caused or return the object to the victim;
  • renounce the goods and rights indicated by the prosecution as instruments, products or advantages of the crime;
  • provide service to the community;
  • pay a pecuniary charge to a public or social entity; or
  • comply with other conditions established by the prosecution.

In the prosecution of criminal organisations, an individual under investigation may voluntarily reach a plea agreement with the prosecution provided that such co-operation produces one or more of the following results:

  • the identification of the other co-participants in the criminal organisation or their criminal offences;
  • the revelation of the hierarchical structure and the distribution of tasks within the criminal organisation;
  • the prevention of criminal offences stemming from the criminal organisation's activities;
  • the complete or partial recovery of the product or the profit stemming from the criminal organisation's activities; and
  • the location of the victim, unharmed, if there is one.

The agreement must be approved by the competent judge, responsible for reviewing the legality and regularity of the terms, whether the individual co-operated voluntarily, as well as the adequacy of the benefits and results of the co-operation. 

According to Article 4, paragraph 4 of Law No 12,850/2013, the prosecution may decide not to bring charges against the co-operating individual if the proposal of the co-operation agreement refers to illicit acts that the prosecution was not aware of and if the co-operating individual:

  • is not the leader of the criminal organisation; and
  • 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 their participation in the criminal organisation and renounce the right to non-self-incrimination. The agreement entails that the co-operator ceases practising the crimes reported, otherwise, the prosecution may unilaterally terminate the deal. 

According to the law and recent court decisions, a judge is not bound by the terms of an agreement between the 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 trickery, 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 on 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:

  • where an officer, manager or auditor of a corporation who, in a prospectus, report, opinion, balance sheet, public statement or statement to shareholders, makes a false affirmation about the financial situation of the company or fraudulently conceals, in whole or in part, facts relating to it;
  • where an officer, manager or auditor promotes, by any means, false statements about the shares or other equity in the company;
  • where an officer or manager borrows from the company or uses company property for their own or another’s benefit, without prior authorisation; and
  • where an officer or manager buys or sells, on behalf of the company, shares issued by it, except when authorised to do so by law.

Under Federal Law No 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. 

Bribery

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) as: “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 12 years plus fines.

Corruption of Foreign Government Officials

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.” This is punishable by a term of imprisonment ranging from one to eight years, plus fines.

Influence Peddling

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 a 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 a term of imprisonment ranging from two to five years plus fines.

Private Corruption and Commercial Bribery

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 a different crime under Brazilian law, such as unfair competition, fraud or embezzlement.

Administrative Improbity Law and Clean Company Act

Acts of bribery and influence peddling may lead to administrative and civil sanctions under the Administrative Improbity Law (Law No 8,429/1992) and the Clean Company Act (Law No 12,846/2013).

As previously indicated, the Administrative Improbity Law punishes acts against the public administration that:

  • cause the illicit enrichment of government officials or damage to the public coffers;
  • arise from the undue concession or application of a financial or tax benefit; or
  • 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 peddling). 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 No 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 No 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 practised against Brazilian or foreign public administration.”

In this sense, an integrity programme will be evaluated according to the following parameters:

  • the commitment of the senior management of the legal entity, including the councils, to demonstrate their visible and unequivocal support for the programme;
  • the standards of conduct, code of ethics, integrity policies and procedures applicable to all employees and administrators regardless of their position or function;
  • the standards of conduct, code of ethics and integrity policies extended, where necessary, to third parties such as suppliers, service providers, intermediary agents and associates;
  • periodic training on the integrity programme;
  • periodic risk analysis to make necessary adaptations to the integrity programme;
  • accounting records that fully and accurately reflect the transactions of the legal entity;
  • internal controls to ensure the prompt preparation and reliability of reports and financial statements of the legal entity;
  • specific procedures to prevent fraud and unlawful acts in the context of bidding processes, in the execution of administrative contracts or in any interaction with the public sector, such as: payment of taxes, subjection to inspections or obtaining authorisations, licences, permits and certificates;
  • the independence, structure and authority of the internal body responsible for implementing the integrity programme and monitoring compliance;
  • channels for reporting irregularities openly and widely disseminated to officials and third parties, and mechanisms for the protection of good faith complainants;
  • disciplinary measures in case of a breach of integrity programme;
  • procedures that ensure the prompt interruption of irregularities or infractions detected and the timely remediation of the damages caused;
  • appropriate procedures for contracting and, as the case may require, supervision of third parties, such as suppliers, service providers, intermediary agents and associates;
  • during mergers, acquisitions and corporate restructuring, verification of the commission of irregularities or illegal acts or of potential vulnerabilities of the involved legal entities;
  • continuous monitoring of the integrity programme aimed at improving the prevention, detection and combat of harmful acts as foreseen in Article 5 of Law No 12,846 of 2013; and
  • transparency of the legal entity regarding donations to candidates and political parties.

However, it is not a criminal/administrative/civil offence not to implement such a compliance programme.

Federal Law No 7,492/86 (Crimes Against the National Financial System) and Federal Law No 6,385/76 (Regulations of the Capital Market) list several criminal offences against the banking system and the capital market. The main offences include:

  • Insider trading: To trade securities while in possession of material non-public information for the purpose of gaining undue advantage or profit (one to five years' imprisonment plus fines of up to three times the undue advantage gained).
  • Market manipulation: To carry out simulated or fraudulent transactions aiming to raise, maintain or lower a security’s trading price or negotiated volume for the purpose of gaining undue advantage or profit or causing harm to third parties (one to eight years' imprisonment plus fines of up to three times the undue advantage gained).
  • Reckless or fraudulent management of a financial institution: To manage a financial institution either fraudulently (three to 12 years' imprisonment plus fines) or recklessly (two to eight years' imprisonment plus fines).
  • Investor misleading: To mislead a shareholder, investor or competent public authority regarding a financial transaction or situation, concealing information or providing it falsely (two to six years' imprisonment plus fines).
  • Capital flight: To remit money abroad without authorisation or to keep undeclared deposits abroad (two to five years' imprisonment plus fines). 
  • Non-authorised conduction of a financial institution: To run a financial institution without due authorisation or with authorisation obtained from a forged document (one to four years' imprisonment plus fines).

Under Federal Law No 8,137 of 27 December 1990, (Law No 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): 

  • to omit information or make false declarations to the tax authorities; 
  • to adopt fraudulent actions by including inaccurate elements or omitting a transaction of any nature in a tax document or a book of account as required by law; 
  • to forge or alter an invoice, inserting inaccurate elements or concealing transactions of any nature in an official document or book required by the tax regulations;
  • to produce, distribute, supply, issue or use a document that one knows or should know to be forged or inaccurate; and
  • to deny or omit an invoice or equivalent document related to the sale of goods or the provision of services, or to provide it in a manner contrary to the legislation.

The payment of outstanding taxes and fines prior to a criminal conviction precludes criminal liability for a tax crime. The timing of the payment is still debatable under Brazilian case law, but it should be stressed that such payments of outstanding taxes and fines have no bearing on other offences, such as capital flight or money laundering.

Pursuant to Binding Precedent No 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 No 8,137, the Brazilian Criminal Code also makes it a crime:

  • to evade payment of taxes which fall due as a result of the importation, exportation or consumption of goods (one to four years' imprisonment); and
  • not to pass on the social contributions collected from employees (two to five years' imprisonment plus fines).

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 No 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 varies 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. 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 authorisation to conduct the activity and financial fines not exceeding:

  • twice the value of the operation;
  • twice the real profit obtained or that which could have been obtained from the operation; or
  • BRL20 million.

As previously discussed in 2.3 Powers of Investigation, 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 No 8,666/93 (bid proceedings and contracting with the Public Administration), Federal Law No 8,137/90, Federal Law No 12,529 (Brazilian Competition System) and the Brazilian Criminal Code all concern crimes against the economic order and competition. 

Crimes against the economic order are defined under Article 4 of Law No 8,137, and 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:

  • artificially fix prices or quantities sold or produced;
  • control to the detriment of the market the chain of distribution or of suppliers; or
  • 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 No 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 No 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.

The Brazilian Consumer Protection Code, the Brazilian Criminal Code and Federal Law No 8,137/90 list several criminal offences as being against consumers, for example: 

  • the omission of warnings concerning the hazards and dangers of the product and the packaging (six months' to two years' imprisonment plus fines);
  • failure to warn the competent authorities and consumers about the hazards or dangers connected to the product in question, knowledge of which comes after its placement in the market (six months' to two years' imprisonment plus fines);
  • providing a service with a high level of danger contrary to the determination of the competent authority (six months' to two years' imprisonment plus fines);
  • making a false or misleading affirmation or omitting relevant information concerning the nature, characteristic, quality, quantity, security, performance, durability, price or guarantee of products or services (three months' to one year’s imprisonment plus fines);
  • making or promoting advertising knowing that it could induce the consumer to behave in a manner that is prejudicial or dangerous to matters of health or safety (six months' to two years' imprisonment plus fines); and
  • favouring or preferring without just cause a buyer or a consumer, except for delivery systems through distributers or resellers (two to five years' imprisonment plus fines).

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 of the obtained data to a third party or if the victim is a high-ranked government official.

Additionally, under Article 195, XI of Law No 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 in 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 exportation 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 No 9,613/98) listed eight predicate offences that could give rise to the crime of money laundering:

  • illicit trafficking of narcotic substances or similar drugs;
  • terrorism and the financing thereof;
  • smuggling and trafficking of weapons and ammunition or materials used for their production;
  • extortion through kidnapping;
  • acts against the public administration, including corruption;
  • acts against the national financial system;
  • acts of criminal organisations; and
  • acts practised by an individual against a foreign public administration.

However, Law No 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, they 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, anyone who 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 No 9,613/1998) 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 in 3.11 Concealment, 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 the Financial Action Task Force (FATF), Brazil 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, in its Anti-money Laundering Law.

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 authorisation of the legal entity or individual to function or to conduct the specific activity, and financial fines not exceeding:

  • twice the value of the operation;
  • twice the real profit obtained or that could possibly be obtained from the operation; or
  • BRL20 million.

Anti-money laundering obligations may differ in respect of different markets, eg:

  • the Brazilian Central Bank, for the financial market;
  • the Brazilian Securities Commission (CVM) for the securities market; and
  • 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 UIF is responsible for receiving communications under the Anti-money Laundering Law. The UIF 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 criminal offences. 

As for de minimis exceptions specifically regarding tax crimes, the Brazilian Supreme Court has decided that if the amount of taxes owed together with related fines does not exceed BRL20,000 (approximately USD5,000), such tax evasion does not amount to a criminal offence.

As indicated in the discussion regarding plea agreements (see 2.8 Plea Agreements), where the defendant co-operates 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 No 12,846/2013.

Leniency agreements under the antitrust law (Law No 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 co-operates with the authorities, and the result of such co-operation 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 a reduction from one third to two thirds off 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 into 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 co-operation may also lead to a leniency agreement under the Clean Company Act if such co-operation results in:

  • the identification of others involved in the offence; and
  • 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 co-operation 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. 

Furthermore, Article 17, paragraph 1 of Law No 8,429/92, allows civil non-prosecution agreements, with the objective of preventing the commencement of an Administrative Improbity Action, upon the acceptance of certain conditions and the application of sanctions to the responsible agents.

As previously mentioned in 1.6 Recent Case Law and Latest Developments, due to the innovations brought by the Anti-crime Law, Federal Law No 13,608/2018 was modified to protect bona fide whistle-blowers and provide them with financial incentives to co-operate.

According to Article 4 of Law No 13,608/18, all public bodies must maintain ombudsman units to assure that any person has the right to report information regarding crimes against the public administration or illicit administrative acts. The informant’s identity will be kept private and they will be offered measures of protection, such as immunity, protection against retaliation and a reward of 5% of the recovered amount from the public coffers. Law No 12,846/2013 (Clean Company Act), also creates 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 the 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 the 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 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 here, and then decide upon the application of the benefits provided under Article 4 of Law No 12,850/2013. 

FeldensMadruga

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Law and Practice in Brazil

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FeldensMadruga advises and represents clients, particularly businesses, in matters of law enforcement, specialising in white-collar crimes. The firm goes beyond the traditional scope of criminal litigation, defending clients in all circumstances that may lead to state sanctions – criminal, civil and administrative. Respected among Brazilian and foreign authorities for its record in cross-border cases, FeldensMadruga has 15 attorneys with experience in both the public and private sectors in Brazil and abroad, including lawyers licensed to practise in the United States and the European Union. They work in criminal defence, multi-jurisdictional litigation, international law, anti-money laundering and anti-corruption, compliance programmes and internal investigations. Based in Brasilia, Porto Alegre, Rio de Janeiro and São Paulo, through their alliances they have the capacity to represent clients in 60 jurisdictions worldwide. They have defended clients from the construction, oil and gas, and energy sectors, among others, following major operations run by the federal police.