The Global War on Crypto Laundering Heats up Across Mexico and Brazil

Key Takeaways

• Under Instruction 739, Brazil mandates CVM-registered independent audits to grant crypto licenses.
• Claudia Sheinbaum inked a €5B EU deal, allowing Mexico to coordinate global anti-laundering rules.
• Marco Rubio labeled CV and PCC as global terrorists, with FTO compliance penalties starting on June 5.

New Rules for Crypto in Brazil: Central Bank Demands Strict Independent Audits for VASPs

The Central Bank of Brazil has introduced yet another requirement to approve the operation of virtual asset service providers (VASPs) in the country.

Under Normative Instruction No. 739, issued on Friday, the bank now requires VASPs to present an independent audit from an entity registered with the Brazilian Securities and Exchange Commission (CVM) to issue operational licenses.

The audits, referred to as “reasonable assurance reports,” must contain data assessing the VASP’s legal compliance in different aspects, including institutional policy, organizational structure, and employee training; internal risk assessment regarding the use of the company’s products and services in the commission of money laundering and terrorism financing crimes; and procedures designed to get to know your customers.

Mexico and the EU Join Forces to Target Global Crypto Money Laundering

Roberto Velasco Álvarez, Mexico’s Foreign Minister, and Kaja Kallas, Vice-President of the European Commission, revealed that the two countries are examining ways to collaborate to curb crypto money laundering activities across both jurisdictions.

The announcement was made during a press conference at the 8th Mexico-EU Summit, where Mexico’s President, Claudia Sheinbaum, and Ursula von der Leyen, President of the European Commission, signed a trade agreement that encompasses a €5 billion investment in Mexico.

“Concerning security cooperation between Mexico and the European Union, we have discussed today how criminal organizations are conducting activities on a global scale—such as money laundering—and, of course, matters related to the use of cryptocurrencies for these types of illicit activities,” Álvarez stated.

Trump Administration Labels Brazil’s Deadliest Gangs as Specially Designated Global Terrorists

On Wednesday, Secretary of State Marco Rubio announced the designation of two of the largest Brazilian criminal groups, Comando Vermelho (CV) and Primeiro Comando da Capital (PCC), as Specially Designated Global Terrorists (SDGTs), and revealed his intention to designate them also as Foreign Terrorist Organizations (FTOs) from June 5.

According to Rubio, these two groups “command thousands of members and have orchestrated brutal attacks against Brazilian police officers, public officials, and civilians,” and have expanded their activities beyond Brazil’s borders. The move comes after Senator Flavio Bolsonaro, President Lula’s opponent in the upcoming elections, lobbied for this measure.

These two organizations have been singled out as using cryptocurrency for money laundering purposes and as an extension of their primary activities, adding a crypto element to this move.