Jeremy Paner Explains What Recent US Terrorism Designations Mean for Brazilian Banks
Terrorism designations force banks to strengthen their compliance programs.
Highlights
Brazilian banks are seeking guidance after U.S. terrorism designations of major crime groups.
Bankers fear U.S. actions similar to last year’s targeting of Mexican financial institutions.
New designations will require due diligence beyond sanctions list screening.
Jeremy Paner discussed with Bloomberg how Brazilian banks should respond to the recent U.S. terrorism designations of that country’s largest organized crime groups.
Representatives from Brazil’s banking industry have contacted consultants and institutions operating in Mexico in recent weeks as lenders seek best practices for managing such risks, including how to identify clients potentially tied to the groups.
Bankers are concerned the U.S. could target Brazilian lenders with similar authorities used last year in Mexico to effectively shutter three financial institutions accused of laundering proceeds from illicit drug trafficking. Those firms were ultimately broken up and sold, prompting a broader push across the financial sector to strengthen monitoring of potentially illicit funds.
The terrorist designations will require Brazilian banks to overhaul their compliance programs, Paner said.
“Simple screening against US sanctions lists is no longer adequate,” Paner said. “Banks must conduct relatively rigorous due diligence reviews, because these new sanctions are not strictly list-based.”
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