PCC and CV terrorists: Country will face challenges with investments and risk premium
The classification of the PCC (Primeiro Comando da Capital) and CV (Comando Vermelho) as terrorist organizations by the United States could have serious economic consequences for Brazil.
The analysis is by Priscila Caneparo, PhD in International Law and professor at the Federal University of Paraná, who points out three major dimensions of impact: national sovereignty, international cooperation and economic effects.
According to Priscila Caneparo, the designation opens space for the blocking of factions' financial assets in both Brazilian and North American institutions.
"Financial companies, fintechs, banks will be afraid of dealing with any suspicious movement", he stated, highlighting that non-compliance with the rules associated with terrorist classification can generate millionaire fines applied within the United States.
Robson Gonçalves, economist at FGV (Fundação Getulio Vargas), highlighted the main risks that the decision brings to the SFN (National Financial System).
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According to Gonçalves, the classification opens up a set of possibilities in terms of restrictions on operations by Brazilian financial institutions abroad, especially those denominated in dollars and which go through North American intermediaries.
"Investors hate uncertainty. Uncertainty in the economy is always restrictive of economic activity", stated the economist, adding that the mere suspicion - even if not proven afterwards - is enough to impose risk premiums on the part of investors and halt significant financial transactions abroad.
Corporate governance specialist Fabio Coimbra highlights that the perception of risk changes, "because the American government itself now has legal instruments to have stronger action in relation to these designated groups and in relation to people related to it".
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The expert highlighted that financial institutions - whether banks operating directly in the United States or those that operate through international correspondents - will need to reevaluate their exposure.
"These entities will have to, in some way, reassess their risk appetite, their exposure, the whole issue of final beneficiaries and controls to prevent money laundering", explained Coimbra.
Gonçalves warned that the decision tends to make financial system processes even slower. In his opinion, professionals responsible for signing documents and authorizing operations will now require additional reviews before validating any transaction or new client.
"Compliance imposes slowness that is healthy, but all slowness has costs", he highlighted, pointing to increased costs as a third relevant consequence, alongside risk and uncertainty.
However, the effects go beyond the banking sector. Caneparo points out that Brazil tends to become a less attractive destination for foreign investment, since North American companies may find themselves prevented from contributing capital to businesses suspected of having any involvement with transnational organized crime.
In addition, companies from other countries may also avoid operations in Brazil for fear of being penalized by the United States due to possible indirect links with illicit resources. "Brazil will become a less attractive country for foreign investment", warned the expert.
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Source: CNN