Money laundering is the process through which criminals execute a series of transactions in the financial market, in order to conceal/hide the nature, origin, location, disposition, movement or ownership of assets, rights or amounts directly or indirectly arising from criminal offenses, pursuant to Federal Law 9,613/98, in order to make them appear as having legitimate origin (simulation of lawfulness). The main objective of money laundering is justifying the origin of money or hide its ownership.
In order to comply with applicable Money Laundering Prevention legislation and standards, Banpará has policies, internal procedures, tools, organization and appropriate training which allow the effective monitoring and identification of atypical operations without plausible justifications and minimize the risks of the use of its products and services for practicing illicit activities.
Through its Compliance Department (Gecom), Banpará maintains a specific routine for monitoring situations that can indicate evidence of money laundering and terrorism financing crimes by monitoring atypical operations and cash transactions equal to or higher than R$100,000.00, sending the related information to the regulatory agency, in order to maintain the transparency, ethics and legality of its actions, as well as preserve its image vis-à-vis the society in general.
Banpará‘s Institutional Policy for the Prevention of Money Laundering is a set of global guidelines established by the Collegiate Body pursuant to Law 9,613/98, Law 12,683/12, Circular Letter 3,461/09, Circular Letter 3,517/10, Circular Letter 3,654/13 and Circular Letter 3,542/12 of the Central Bank of Brazil, and other rules in force, in order to maintain the TRANSPARENCY, ETHICS AND LEGALITY of its actions, as well as preserve its image vis-à-vis the society in general, with the adoption of preventive measures and internal control procedures, reducing risks of its products and services being used for legalizing funds from illicit activities.
Money laundering is the process through which criminals execute a series of transactions in the financial market, in order to conceal/hide the nature, origin, location, disposition, movement or ownership of assets, rights or amounts directly or indirectly arising from criminal offenses, in order to make them appear as having legitimate origin (simulation of lawfulness). The main objective of money laundering is justifying the origin of money or hide its ownership.
- Placement or Situation: Introducing cash from illicit acts into the financial system. The placement occurs through the use of products and services offered by the institution using cash, deposits, purchase of negotiable instruments or purchase of assets, usually in cash;
- Concealing, Layering or Diversification: The layering stage consists of making it more difficult to track illicit proceeds, through multiple operations. The goal is to break the chain of evidence in case of an eventual investigation into the origin of the proceeds;
- Integration: Occurs when the money is formally incorporated to the financial system. Criminal organizations seek to invest in ventures that facilitate their activities. These companies may provide services to each other. Once the chain is created, it becomes increasingly easier to legitimize illegal proceeds.
Criminal activities which generate proceeds used in “laundering” transactions to conceal or disguise the nature, origin, location, disposition, movement or ownership of assets, rights and amounts directly or indirectly arising from criminal offenses.
In Brazilian law, criminal offenses are divided into:
Crimes, on which prison or reclusion sentences are imposed; and Contraventions, which are punishable with simple imprisonment or fines.”
The penalties below are considered administrative and criminal sanctions:
- Variable pecuniary fine (up to R$20,000,000.00);
- Temporary impediment (for a period of up to 10 years from occupying managing positions);
- Revocation of the authorization for operating;
- Imprisonment of 3 to 10 years.
Administrators or employees involved in transactions with proceeds from the activities referred to above either due to omission, negligence or intentional action, will be subject to the administrative and/or criminal penalties provided for in the legislation, regardless of the applicable disciplinary measures.
If Banpará is imposed any administrative penalty due to non-compliance with this Policy and provided for in the applicable legislation, the Internal Audit Department (NUAUD) must ascertain the responsibilities in order to take the applicable administrative or disciplinary measures.
The “Get to Know Your Customer” policy is one of the most important pillars in the prevention of money laundering and terrorism financing. In compliance with the recommendations of the Basel Committee, a set of rules and procedures must be established to ascertain the origin and composition of clients’ estate and financial resources, registering the information in visit reports which must be kept together with the client’s record. The procedures are intended to provide guidance and standardize the establishing, maintenance and monitoring of the relationship with those who use or intend to use products and services offered by the Bank in order to prevent money laundering, protect the Bank‘s reputation and reduce the risks of undue use of the Bank‘s products and services.
In order to prevent being associated with risk, illegal or political activities, Banpará has defined sectors in which it does not want to operate and sectors and persons for whom it recommends the adoption of stricter procedures and continuous diligence:
Sectors in which Banpará doesn‘t want to operate
- Companies headquartered in border areas;
- Offshore companies (located in tax havens and seeking tax privileges);
- Non-resident individual clients;
- Clients registered on restricted lists: internal, national (CGU) and international (UN and OFAC) lists;
- Shell Banks;
- Commercial or Mercantile Development companies (Factorings);
- Lottery shops;
- Travel agencies;
- Churches, temples and religious congregations;
- Non-governmental organizations (NGOs);
- Gas stations;
- Politically exposed persons (PEP);
- People cited in negative media (money laundering and/or crime history);
- Customers who carry out foreign exchange transactions.
Clients classified as Politically Exposed Persons (PEP) are obliged to seek preliminary authorization from Banpará‘s top management for initiating a relationship with the Bank and, in case a client becomes a PEP, authorization is required for continuing said relationship, pursuant to Coaf Resolution 16/2007 and PML Normative SARB 011/2013, of Febraban.
The customer record is one of the main instruments of the “Get to Know Your Customer” policy and, therefore, a crucial tool for preventing and combating money laundering and terrorism financing, being adopted by banks for identifying, evaluating and recording information of natural persons and legal entities in the contracting of financial products and services.
The clients characterized as such are those indicated in Circular Letter 3,461/09 and Circular Letter 3,654/13. As a stricter procedure, Banpará characterizes as PEP the Secretaries of State or similar persons; of special nature or equivalent; the President, Vice President and Directors of government authorities, government foundations, government companies and mixed-capital companies of the state of Pará; executive officers, members of the Board of Directors and Fiscal Council of Banpará; as well as executive officers and members of the Fiscal Council of CAFBEP, city councilors of Belém, mayors, vice-mayors, secretaries of finance or treasurers of the municipalities of Pará state and presidents/treasurers of the city councils of Pará.
- Permanent client is anyone who uses the following services and/or carries out the following operations (BACEN Circular Letter 3,430/10):
- Eventual client is anyone who uses the following services and/or carries out the following operations (BACEN Circular Letter 3,430/10):
The Bank should adopt rules and procedures and internal controls to avoid any relationship with people involved with money laundering and inchoate offenses; as well as be aware of its employees’ behavior, standard of living and operating results, paying attention to unusual and significant changes in these variables.
The Bank should adopt rules and procedures and internal controls for identifying and accepting business partners, based on the risk of money laundering and terrorism financing, in order to avoid doing business with non-reputable counterparts or people suspected of involvement in illicit activities, as well as ensure that they adopt adequate procedures for preventing money laundering and terrorism financing, if applicable.
The “Get to Know Your Partner” procedures can be applied in accordance with the “Get to Know your Customer” and “Customer Acceptance” and “Customer Record” procedures.
The situations/operations that can be considered as evidence of money laundering should be detailed on the Standards and Procedures Manual for the Prevention of Money Laundering.
The monitoring of operations and situations that can be considered evidence of the occurrence of the crimes provided for in Law 9,613/98 involves several coordinated actions, of which the most important are:
- Tools for monitoring operations – In accordance with Law 9,613/98 and complementary regulations covering the parametric analysis rules by product/service and by client; a centralized database for managing evidences of money laundering; consolidated reports of financial transactions; inclusion of restricted lists for unwanted clients; history of clients investigated and record of opinions and communications made to COAF and other authorities;
- Clipping de notícias – Permite a identificação e análise de fatos que possam desabonar os clientes da Instituição; possibilita a criação de listas restritivas próprias, visando impedir a formação de vínculo ou promover o encerramento do relacionamento comercial com pessoas indesejadas;
- Clipping of news – Allows the identification and analysis of facts that may discredit the institution’s clients; enables the creation of its own restricted lists, in order to prevent establishing a relationship or end the business relationship with unwanted people;
- Restricted lists – Also known as Watch-Lists, they are global lists prepared by international entities involved in combating illicit activities; aimed at preventing the establishment of commercial relationships with suspicious persons and entities; enable the end of the commercial relationship with clients involved in illicit activities and the reporting of their operations to the authorities; include names of individuals and legal entities, countries, governments and their agents, criminal organizations, terrorists and drug dealers;
- Internal communications – Are those made by the institution’s employees, based on the identification of evidence of money laundering; usually made through the emails: Sucor-GECOM (Outlook Group) or firstname.lastname@example.org. When coming from the Bank’s business areas, the communication must be accompanied by the Visit Report;
- Authorities’ requirements – Usually from BACEN, COAF, CVM, CPI‘s. When the demand involves internal investigations, they must have top priority in order to meet the deadlines established. In case of evidence of money laundering, regular PML procedures should be adopted;
- Queries and complaints made by other institutions – Must be addressed upon prior approval by the top management, after analyzing the scope of the information requested and the history of reciprocity from the communicating party. In case of evidence of money laundering, regular PML procedures should be adopted.
All employees, from strategic to operational levels, are responsible for maintaining a permanent control environment, in order to allow the monitoring of all operations of permanent and eventual clients, individuals, politically exposed persons and legal entities, aiming to identify/prevent actions which may indicate a crime of money laundering or concealing of property, rights and proceeds.
All Banpará‘s employees must comply with the internal rules and procedures for Preventing Money Laundering Crimes, as well as ensure that Banpará‘s products and services are not used for illicit purposes.
- Federal Laws 9,613, of March 3, 1998 and 12,683, of July 9, 2012.
- Circular Letters 3,430, of February 11, 2010 and 3,542, of March 12, 2012, of Bacen (Central Bank of Brazil).
- Decree 2,799, of October 8, 1998.
- Supplementary Law 105, of January 10, 2001.
- Circular Letters 3,461, of July 24, 2009, 3,517, of December 07, 2010 and 3,654, of March 27, 2013, of Bacen.
- CVM Instruction 301, of April 16, 1999, amended by CVM Instructions 463, of January 8, 2008, 506 of September 27, 2011, 523, of May 28, 2012 and 534, of June 4, 2013.