Brazil's Finance Ministry has formally asked the central bank to address regulatory loopholes that, officials say, enable criminal and tax-evasion suspects to conceal assets in certain types of bank accounts and thereby sidestep court-ordered freezes intended to recover public funds, according to two sources and a Finance Ministry document.
The ministry's submission contends that pooled accounts - which aggregate funds from multiple beneficiaries - and escrow accounts, originally intended as temporary pass-through mechanisms, have been used to frustrate judicial efforts to locate and seize assets from individuals and companies under investigation.
Both the central bank and the Finance Ministry declined to comment on the matter.
Regulatory change perceived as insufficient
In November, the central bank strengthened rules aimed at fintechs and virtual-asset operators, including a requirement that pooled accounts be closed when they are used to provide unauthorized financial services or to conceal assets. The Finance Ministry, however, argued in its submission that the November measures only mitigate the problem and do not remove the underlying risks.
The ministry warned that pooled accounts continue to hamper the recovery of public debt, reduce traceability of funds and weaken efforts to combat money laundering. Investigators and ministry officials said pooled accounts can obscure the identity of ultimate beneficiaries from the national financial registry and fall outside mechanisms that allow the judiciary to freeze assets.
Similarly, escrow accounts that fintechs increasingly offer as if they were regular current accounts appear to be outside standard freeze systems, complicating attempts to follow the movement of funds and to block resources linked to investigations.
Specific investigation highlighted
One source involved in the inquiries told officials they suspect concealment of assets related to Refinaria de Petroleos de Manguinhos (Refit), a company currently under investigation for alleged multibillionaire tax fraud. Authorities say Refit may hold amounts beyond the 1.2 billion reais already frozen, but the additional resources have not been located.
Refit did not immediately respond to a request for comment.
Implications for enforcement
The Finance Ministry document and the sources cited in the ministry's filing emphasize that the persistence of pooled and escrow account structures undermines judicial asset-freeze tools and poses challenges to efforts to recover public funds and enforce tax collection. The ministry urged the central bank to adopt further regulatory clarifications or controls to ensure these account types cannot be misused to hide assets from investigators.
Currency conversion noted in ministry filings places $1 at 5.2312 reais.