How to prevent money laundering in times of Bets and Cryptos?

With every news story about a scam involving cryptocurrencies or a new scandal involving celebrities associated with sports betting companies, the popular Bets, the feeling one gets is that the criminal underworld is many steps ahead of the civilized world in its strategies for transforming illegally obtained resources into assets that appear legitimate, known as money laundering.

After all, given the clamor from the business world for innovations that lead to the emergence and dissemination of mechanisms such as cryptocurrencies and the popular clamor for the possibility of combining the useful (making money) with the pleasant (trusting your favorite team) in betting, how can we monitor the occurrence of thousands of transactions every minute to prevent all this goodwill from being used to finance criminal activities and terrorism, for example?

In Brazil, Law No. 9.613 of 1998, known as the Money Laundering Law, is the legal framework that defines the crime and establishes severe penalties for those involved. It also created the Financial Activities Control Council (COAF), responsible for receiving reports of suspicious transactions and producing financial intelligence to combat this type of crime.

In turn, the Central Bank works directly with the Brazilian System to Prevent and Combat Money Laundering and Terrorist Financing (PLD/FT). It regulates the rules for financial institutions to implement AML/FT policies, monitoring and enforcing their adherence, and applying administrative sanctions when necessary. Furthermore, the Central Bank maintains the National Financial System Customer Registry (CCS) and reports suspicious activity to COAF (Brazilian Financial Control Agency) and the Public Prosecutor's Office.

But in practice, technology is key to preventing money laundering. Advanced data analysis tools allow financial institutions to detect patterns of suspicious activity and identify potential cases. The implementation and integration of specialized software is recommended to improve detection efficiency and strengthen compliance and internal audit processes.

One of the fundamental requirements in this regard is that financial institutions have a deep understanding of their customers. This involves fully identifying all parties involved in financial transactions, both individuals and legal entities. The KYC process is not limited to document collection; it also includes verifying the source of funds and continuously analyzing transactions to identify suspicious behavior.

Concerned about the issue, Febraban will hold the 14th edition of the event between October 15th and 16th in São Paulo. Money Laundering Prevention Congress and the Financing of Terrorism (PLDFT), considered the largest event on the subject in Brazil. It is no coincidence that this year's central theme will be "An Integrated Approach Across Control Areas."

The program will allow for reflection on sensitive and strategic topics not only for banks, but for the entire society that ends up, in one way or another, being threatened by this practice.

Some topics already defined are, for example: “Challenges in the interaction of Financial Intelligence Units”, “Strategic actions to combat and prevent illicit activities”, “Use of artificial intelligence in PLDFT”, “Sports betting and its impacts” and “Socio-environmental Crimes – slave labor, money laundering and corruption crimes”. 

As we can see from the breadth of discussions, it becomes completely utopian to imagine that a new law or a new technological solution alone will be able to meet the challenge.

In this scenario, sharing information and integrated technologies is the only way to strengthen the fight against financial crime and mitigate the risks associated with money laundering while ensuring compliance with current regulations.