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US Authorities Inquire with Brazilian Banks Regarding Magnitsky Sanctions
Following the United States’ request of the Magnitsky Act against Brazilian Supreme Court Justice Alexandre de Moraes on july 30th,US authorities have reportedly contacted several major Brazilian banks to discuss potential implications and compliance.
Sources indicate that Bradesco, Banco do Brasil, Itaú Unibanco, Santander, and BTG Pactual were notified regarding the sanctions. Banks have treated these communications with discretion. FEBRABAN, the federation representing the Brazilian banking sector, stated it has not received reports from its member banks concerning direct contact from the Office of Foreign Assets Control (OFAC).Responses to inquiries from GLOBO regarding the matter are pending from the banks themselves.
The Magnitsky Act, originally established in 2016 under the obama management, targets individuals and entities accused of human rights violations or significant corruption. The US President and departments like the Treasury and State Department determine the targets. Justice de Moraes is the first Brazilian directly sanctioned under this law, a move occurring amidst tensions between the US and the Brazilian government and judiciary.
US legislation prohibits financial transactions with US companies, possibly impacting foreign institutions operating within the United States. Brazilian banks with a US presence are evaluating the risk of secondary sanctions if they do not adhere to Treasury department directives.
In August, Banco do Brasil reportedly blocked the visa and Mastercard credit cards of a minister, offering a Brazilian-branded Lim card as an option, as it is not subject to the same restrictions.The Magnitsky Act carries significant penalties for non-compliance. Individuals and companies linked to sanctioned entities could face fines up to $250,000 and potential criminal investigations leading to prison sentences of up to 20 years. Furthermore, US-based technology companies – including Google, Meta, Amazon, and Apple - are legally obligated to monitor and report any financial, digital, or contractual activity involving sanctioned individuals, facing potential sanctions themselves for failing to do so.
