A new ordinance from the Secretariat of Prizes and Bets of the Ministry of Finance published on July 12th in the Official Gazette of the Union obliges online betting platforms, known as ‘bets’, to report suspicious transactions to the Financial Activities Control Council (Coaf).
The new requirement is a well-known practice in the world of compliance, known as “due diligence”, which assesses the economic capacity of the bettor in relation to the bets made by him, that is, if in fact the bettor is a politically exposed person and if he has relationship with any person who may be linked to illicit activities and is on a possible “black list.”
It is important to highlight that the new ordinance emphasizes that the bettor's qualification must be analyzed according to the compatibility between the player's economic and financial capacity and the bets placed, in addition to checking whether he is a politically exposed person or close to one.
‘Bets’ that show signs of a lack of economic or legal basis, that are incompatible with market practices or that have signs of money laundering or financing or the proliferation of weapons of mass destruction will also be investigated.
This new requirement encourages betting platforms to detect and combat money laundering and other criminal practices, such as corruption, drug trafficking, weapons financing and other typical facts.
It also encourages the monitoring of atypical movements in values, with the aim of combating automated tools, such as, for example, the use of artificial intelligence in sports betting.
‘Bets’ were regulated by Law 13,756/2018, which provides for how sports betting should be carried out, as well as by Law 14,790/2024, which expanded the scope of legislation, requiring companies to have an address in Brazil (thus enabling auditing and accountability faster and more effective judicial system), defining taxation and including online games.
This legislation is in a transition period, including a regulatory process led by the Ministry of Finance that ends at the end of 2024 and will establish technical and legal criteria for the release of online games.
The recent ordinance means a necessary update and evolution of the legislation. It should be noted that if there are expenditures and sports bets that are incompatible with the bettor's profession and income, these movements will be communicated to Coaf and, thus, a police inquiry may be initiated to investigate the authorship and materiality of the crime and even unavailability and blocking of assets of the suspected bettor occurs.
It is also worth noting that the information collected by bets may be preserved and stored for a period of 5 years, with the aim of combating money laundering and terrorist financing. This is a significant advance in a scenario with the increase in sports betting on online platforms. In addition to bettors, bets will have to carry out a risk classification of employees and suppliers.
The rules will come into force on January 1, 2025, when the regulated betting market begins to operate in Brazil.
It is essential to apply and maintain the life cycle and structure compliance in the world of betting and sports betting, namely: risk assessment; senior management support; internal policies and controls (code of conduct); communication and training; monitoring and auditing; investigation and reporting (helpline); due diligence and periodic review of the program.
The advancement of the rules is part of a series of important standards for regulation and security for the sports betting and online gaming market in Brazil. It is necessary to further evolve the legal framework and civil and criminal responsibilities of online gaming in the country and establish clear rules for online slot machines, such as Fortune Tiger, popularly known as Jogo do Tigrinho, which has been gaining attention on the police pages for a series of alleged crimes and victimizing thousands of gamblers.
The world of bets cannot be a land without laws.
Eduardo Maurício
Lawyer in Brazil, Portugal, Hungary and Spain. PhD student in Law – Estado de Derecho y Governanza Global (Justice, penal system and criminology), from Universidad D Salamanca – Spain.
