By Bernardo Caram and Marcela Ayres
BRASILIA, Feb 6 (Reuters) – Brazil’s Finance Ministry has urged the central bank to close regulatory gaps that let criminal and tax‑evasion suspects hide assets in certain bank accounts, avoiding court‑ordered freezes meant to recover public funds, two sources and a document seen by Reuters said.
The ministry argued that recent regulatory changes do not fully curb the problem associated with pooled and escrow accounts, which has surfaced in recent police operations targeting organized crime and fintech firms.
The Finance Ministry said it engages collaboratively with the central bank across a range of issues “whenever it identifies scope to improve financial instruments.”
The central bank declined to comment.
According to the Finance Ministry document, suspects have used pooled accounts – vehicles that combine funds from multiple beneficiaries – and escrow accounts originally designed as temporary pass‑through structures, to circumvent judicial systems used to locate and freeze assets belonging to individuals and companies under investigation.
MINISTRY SAYS MEASURE ONLY MITIGATES RISKS
The central bank in November strengthened rules for fintechs and virtual assets, requiring pooled accounts to be closed when clients use them to offer unauthorized financial services or conceal assets.
But the Finance Ministry said the measure only mitigates, rather than eliminates, the risks. In its submission to the central bank, it warned that pooled accounts still hamper the collection of public debt, limit fund traceability and weaken efforts to fight money laundering.
A third source familiar with the discussions said the central bank indicated at a meeting earlier this week that it now sees a higher level of security following the regulatory changes implemented in November.
During the talks, technical staff proposed maintaining dialogue with the Finance Ministry, the federal police and other agencies, acknowledging that further rule adjustments could be made if needed.
Sources said pooled accounts remain vulnerable because they do not reveal ultimate beneficiaries through the national financial registry nor can they be blocked via the judiciary’s asset‑freezing system.
Escrow accounts, increasingly offered by fintechs as regular current accounts, similarly fall outside freeze mechanisms, hindering proper tracing of funds.
One source said investigators also suspect asset concealment involving Refinaria de Petroleos de Manguinhos (Refit), under investigation for alleged multibillionaire tax fraud.
Authorities believe the company may hold more resources than the 1.2 billion reais ($229.4 million) already frozen, but the additional funds have not been located.
Refit did not immediately respond to a request for comment.
($1 = 5.2312 reais)
(Reporting by Bernardo Caram and Marcela Ayres; Editing by David Holmes)
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