PCC and CV terrorists: Decision increases the challenge for banks and fintechs, says ABBC

The classification of the PCC (Primeiro Comando da Capital) and Comando Vermelho as terrorist organizations by the United States could have relevant impacts on the Brazilian financial system.

The areas of compliance, prevention of money laundering and relationships with international institutions will be especially affected, according to a note from ABBC (Brazilian Banks Association) published this Friday (29).

The fight against organized crime and bank fraud is already a permanent concern for the financial sector in Brazil.

However, the entity assesses that the decision by the US authorities tends to increase the operational and regulatory challenges faced by banks, fintechs and other companies operating in the country, especially those that maintain financial relationships subject to US legislation and supervision.

In practice, the association assesses that the measure could increase companies' compliance costs, requiring greater rigor in due diligence processes.

In addition, Brazilian financial institutions may face additional questions from international partners and more frequent reviews of their compliance mechanisms.

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The effects may also affect legitimate operations carried out within the global financial system, with repercussions on foreign transactions and registration validations, "in addition to the potential increase in the perception of risk on the part of international investors", stated ABBC.

Despite this scenario, the entity representing the sector highlights that the Brazilian financial system already operates under robust rules to prevent money laundering and combat the financing of terrorism.

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Source: CNN