Brazil Considers Reinstating FinTech Transaction Reporting Amid…

Brazil may reinstate requirements for FinTechs to report transaction values due to money laundering concerns. Previous discussions were paused due to public backlash. The government reported issues with organized crime financing, particularly related to lesser-known FinTechs. The Pix payment system has seen significant transaction volumes, reflecting Brazil’s digital engagement.

Robinson Barreirinhas, the head of Brazil’s tax revenue service, indicated on March 11 that the rise in evidence suggesting money laundering may prompt Brazil to reevaluate its stance on requiring FinTechs to report transaction values. Discussions on this proposal were previously halted last year due to public resistance reported by Reuters.

During a Senate hearing, Barreirinhas expressed concerns over the increasing use of lesser-known FinTechs for money laundering, attributed to the ease of account creation. In September, a rule was introduced mandating FinTechs to report transactions to tax authorities, including those made via the Pix instant payments system, but this rule was suspended mid-January amid declining popularity in public opinion.

Critics argued that the reporting requirements were primarily intended to impose taxation on workers. Barreirinhas also mentioned worries that smuggled goods, cryptocurrencies, and online betting are being utilized to finance organized crime operations within Brazil. Reports suggest that Pix, launched by the central bank in late 2020, processes over $338 billion in transactions each month.

An upcoming feature for recurring payments on Pix is projected to attract an additional $30 billion in eCommerce transactions. Brazil has shown significant engagement in digital activities, characterized by metrics indicating a high reliance on digital services for various purposes such as work and shopping, as outlined in the PYMNTS Intelligence report.

The report highlights that approximately 75% of Brazil’s 215 million citizens possess a debit card, while 77% utilize Pix, and nearly two-thirds access financial services through mobile platforms. Furthermore, Brazil is witnessing a unique adaptation of digital wallets, which are increasingly used for bill payments and identity verification, contrasting with their predominant role in eCommerce in other countries.

The impending discussions concerning FinTech transaction reporting in Brazil highlight the government’s proactive approach to combatting money laundering while balancing public sentiment. As digital payment platforms like Pix continue to thrive and evolve within the Brazilian financial landscape, the adoption and utilization of financial services among consumers are notably high. The challenges posed by illicit activities underscore the need for regulatory measures that safeguard the integrity of the digital economy without unfairly burdening the average worker.

Original Source: www.pymnts.com