Money Laundering Cases In Brazil Rise By 2,875 Percent

November 21, 2007 10:03 p.m. EST

Vittorio Hernandez - AHN News Writer

Sao Paolo, Brazil (AHN) - Following the launch of an intensified campaign against money laundering, Brazilian insurance regulator Susep said suspected money laundering cases among insurance companies have risen by 2,875 percent. From only 3,101 cases for the first 10 months in 2006, the number has ballooned to 92,258 cases as of October.

Susep passed regulations in February 2006 that imposed a reportorial system among insurance companies. The new requirement is responsible for the dramatic rise in suspected money laundering incidents uncovered.

Aside from insurance companies, banks are the target of anti-money laundering operations in Brazil. On November 6, Brazilian police arrested 19 people for connivance in a scheme that helped large Brazilian companies evade taxes by using Swiss banks UBS AG and Credit Suisse Group and the U.S.-based American International Group.

Raids on 44 locations in four Brazilian states led to the arrest of 19 people. On October the local office of American network provider Cisco Systems was raided by Brazilian police operatives.

The raids yielded two Swiss nationals, one of them was an employee of UBS AG. Over $4 million dollars were seized in the raids.

The scheme involved depositing by Brazilian companies of money in overseas accounts using blackmarket money changers with accounts in Brazil and other countries. The money is used to purchase items from the U.S. and China that were shipped to Brazil.

The tax evasion done through money laundering is estimated at $588 million (1 billion reais) in foregone taxes the past 18 months.