Brazil is on the cusp of a significant transformation in its gaming industry, with the Ministry of Finance’s Secretaria de Prêmios e Apostas (SPA) introducing comprehensive regulations to establish a fully regulated sports betting and iGaming market. SPA has introduced these developments for the purpose of enhancing market integrity, protecting consumers and providing clear guidelines for operators.
These changes create opportunities for businesses to enter one of the most promising gaming markets globally, but they also bring stringent compliance requirements aligned with the Bank Secrecy Act (BSA) and other AML requirements.
The following article will overview requirements and best steps for ensuring compliance.
Key Takeaways:
Licensing: Operators must secure licenses within a 90-day window to enter the market.
Technical standards: New rules mandate geolocation tools and identity verification for fraud prevention.
AML compliance: Operators must create detailed anti-money laundering programs and report suspicious activity to meet reporting requirements.
Business impact: Aligning with the regulations opens doors to Brazil’s growing gaming market.
Securing Licenses to Operate
SPA had opened a 90-day licensing period for operators. Applying early secured a better position in the highly competitive market.
Holding a license requires meeting the SPA’s regulations and fulfilling customer due diligence (CDD) tasks. Complying with these standards not only meets legal needs but also improves a firm’s standing in the global financial community.
Companies that have applied, or will soon be applying, will have to wait for authorization to resume operations.
Meeting the Technical Benchmarks
The Ministry of Finance has raised the bar with Ordinance No. 722/2024, setting enhanced technical benchmarks and standards for operators.
Geolocation-Based Security for Compliance and Fraud Prevention
Operators must use geolocation tools to confirm players’ physical presence in Brazil. These actions block fraud and attempts to manipulate location data, ensuring adherence to guidelines set by the Financial Action Task Force (FATF). Operators must verify a player’s location before the first bet is placed and perform dynamic re-geolocation every 30 minutes thereafter.
Player Identity Verification and Security
Operators must confirm identities using Cadastro de Pessoas Fisicas (CPF) verification, beneficial ownership checks and facial recognition prior to account creation. They must also restrict access to players under 18 and implement multi-factor authentication for added security, safeguarding the financial system.
Any discrepancies between the provided information and official documents should result in registration denial. Operators must also ensure that bettors are not listed on any exclusion lists. Access to betting systems requires a username/password or biometric authentication, with re-authentication necessary after 30 minutes of inactivity. Multi-factor authentication, including facial recognition, is required for password recovery and account unlocking following suspicious activity.
Anti-Money Laundering (AML) Updates
The SPA has emphasized the importance of anti-money laundering measures, requiring operators to implement comprehensive AML protocols. This includes monitoring transactions for suspicious activities, conducting regular audits and ensuring compliance with international AML standards.
Strengthening Anti-Money Laundering Brazil Compliance Measures
The SPA’s AML Ordinance, effective January 1, 2025, outlines strict measures to combat terrorist financing and address money laundering. These efforts align with international standards, including the USA PATRIOT Act and aim to concentrate law enforcement efforts against organized crime and predicate offenses such as drug trafficking and tax evasion.
These are the new compliance requirements and their implications:
Key Compliance Requirements | What They Mean |
Operators must establish anti-money laundering programs to monitor and mitigate risks, leveraging risk-based procedures to manage potential threats. | Operators need to implement comprehensive programs that identify and address money laundering activities based on the level of risk. |
Risk assessments must be conducted regularly to flag suspicious transactions and activities. | Regular evaluations are required to identify and address unusual or suspicious financial transactions or behaviors. |
Reporting irregularities to Brazil’s Financial Intelligence Unit (FIU), known as the Financial Activities Control Council (COAF), is mandatory. | Any anomalies or suspicious activity must be promptly reported to COAF to comply with reporting requirements. |
Special protocols must be in place to monitor high-risk profiles, such as politically exposed persons (PEPs). | Specific measures should focus on monitoring and managing activities of individuals or entities considered high-risk, such as PEPs or those linked to organized crime. |
What These Changes Mean for Operators
Brazil’s new regulations introduce challenges that operators must address to stay compliant. However, they also present opportunities for businesses to establish themselves as trusted players in this expanding market. Aligning operations with these rules ensures access to Brazil’s gaming sector while demonstrating a commitment to combating money laundering and terrorist financing.
Operators that invest in compliance measures not only avoid penalties but also gain a competitive edge. Regulated entities that demonstrate adherence to these standards enhance trust with regulators and customers, strengthening customer relationships and ensuring sustainable growth.
How Alessa Can Help Businesses Stay Compliant
Alessa offers robust solutions tailored to help gaming operators comply with Brazil’s new anti-money laundering regulations. Request a free demo of our AML Compliance Software Solutions for Brazilian Gaming and Sports Betting.
Key Features:
Identity verification and KYC: Real-time checks ensure compliance with CDD requirements, including verification of beneficial owners.
Transaction monitoring: The platform flags suspicious activity and screens players against watchlists.
Risk scoring: Alessa assigns and updates risk scores to efficiently identify high-risk profiles.
Case management: Custom workflows simplify investigations, saving time and resources.
Regulatory reporting: Automated systems make it easier to handle and send required reports, like those for suspicious activities and large currency transactions.
If you’re ready to navigate this new landscape, contact us to explore how we can support your compliance journey and ensure your business thrives in Brazil’s evolving gaming sector.
FAQ
What industries are impacted by Brazil’s new AML regulations?
While focused primarily on the gaming sector, these regulations could affect other industries that need to follow AML guidelines.
What happens if a gaming operator fails to comply with the new regulations?
Failing to comply could lead to severe penalties, loss of license or being barred from Brazil’s regulated video gaming sector.
Why is geolocation compliance important in Brazil’s gaming market?
Geolocation ensures that players are physically in Brazil, helping operators meet AML compliance and reporting requirements.
How does Alessa simplify AML compliance for operators?
Alessa simplifies customer identification, transaction checks and compliance reporting into a single system, making processes less complicated and more effective.
What makes Brazil’s gaming market attractive to businesses?
Brazil’s expanding population and rising interest in video games create valuable opportunities for business owners, as long as they stick to anti-money laundering rules.
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