Doing Business in Brazil

32.3. Corporate


Sharing of banking information between Brazil and United States of America

Banking and fiscal data became one of the most important sources of evidence for crimes as money launder, against the financial system and against tax evasion.

Bank records of individual and legal entities served as key-peace to unleash major police probes, and the Lavajato case fits as a good example of the relevance of such type of evidence, as much as it has been widely disclosed in the media.

With the advanced technology being used in the banking system, it has become easily to follow illegal money, unveil the crime and, eventually, ensure the damage reparation in the cases with prejudice to the State or to the individual.

This is exactly why the Brazilian Supreme Court, reasoning that the public interest to investigate and prevent crime overwhelms bank secrecy concerns, ruled that it is constitutional for law enforcement agencies as Brazilian IRS and Financial Intelligence Unit to share amongst Prosecutors’ Offices bank secrecy data pertaining to individuals who are target of an investigation.

In other words, Brazilian IRS and Financial Intelligence Unit, agencies that do not need judicial authorization to access bank and fiscal data in performing their tasks, can share information they understand suspicious with the Police and the Prosecutor’s Office. These law enforcement agencies shall respect the confidential nature of these evidence, proceed with investigation and eventually request for the Judge to the use the data.

Our article discusses the issues involving obtaining bank records held in foreign accounts and the Brazilian case law related to this topic. Recently, the Brazilian Superior Court innovated and ruled that Brazilian law enforcement may receive bank records from foreign authorities even if the legal procedures involving international sharing of evidence are not respected by the sending country.

The legal procedure necessary to send evidence from one country to other is considered a form of international legal cooperation. It occurs trough a National Central Authority in each country, which is responsible for request directly to the other country the sharing of evidence or any other measures, as much as it is responsible for receiving evidence from another State. In Brazil, this Authority is the Justice and Public Security Minister which is responsible for request the measures, like testimony inquiry, defendant subpoena, secrecy breach, etc.

To criminal law matters, there is an intern department inside the Justice Minister office that is responsible for these requests named DRCI, Department of Legal International Cooperation and Actives Recovery of the Nacional Justice Secretary. Through this agency it is possible to ensure celerity and promote the follow up of the measures requested.

In this sense, in the cases that the bank data is essential for an investigation or to produce evidence, the Brazilian judicial authority requests for DRCI the international legal cooperation with other country. The DRCI translates the judicial request and forwards for the Central Authority of the recipient country responsible to accomplish the measure, which has 180 days to that.

International legal cooperation has been progressively advancing in the last years to give effectiveness to justice. This is the reason why Brazil signed several Treaty’s and Conventions as the United Nations Convention against Transnational Organized Crime, United Nations Convention against Corruption and Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.

A particular form of international legal cooperation in criminal matters is the signing of a specific treaty of legal cooperation, known as Mutual Legal Assistance Treaty or MLAT. It is what happened in the relationship between Brazil and USA that celebrated this bilateral treaty. Inside Brazil, the treaty was internalized trough the Decree n. 3810/2001, which set that the countries obligate themselves to provide mutual assistance, under the terms of the treaty, in investigations, prosecutions, prevention of crimes and proceedings related to criminal nature.

According to the decree, the assistance between Brazil and USA includes testimony, provide documents and assets, location or identification of people or assets, delivery of documents, transference of people under custody to testify, execution of search and seizure requests, assistance in procedures related to asset’s forfeiture, restitution, etc. and any other form of assistance not forbidden by the laws in the requested country.

In this way, considering the treaty signed between the two countries referred, to obtain secrecy bank data of a person it would be necessary the formal legal cooperation request, which means that the Brazilian Central Authority requests the American Central Authority information about a person, individual or legal entity, or about a bank account.

However, the Superior Court ruled that MLAT does not make restriction to the sovereignty of the signatory State that, in the possession of information’s legally obtained and documented, capable of, in theory, reveal a relevant crime activity, decides to submit them to the knowledge of authorities from other country, competent to persecute the crime conduct (AREsp nº. 547.028).

In this precedent, the Superior Court validated that if a State finds evidences of a crime it can share these evidence with the authorities from other country, independently if there is a formal request in this sense from the receiving country.

Recently, the Superior Court decided that the sharing of bank data obtained in other country, without judicial order, when the local legislation don’t demand that, does not violate the Brazilian public legal system.

In the AREsp 701.833 judgement, the appellee alleged that the proof obtained violated the MLAT (because it was requested directly between judicial authorities and not trough central authorities). The Superior Court rejected this claim and declared that the failure to comply with the international legal cooperation is not reason enough to considered null the proof brought about the cooperation. According to the Court, it is necessary to interpretate the article 4 of the decree mentioned with other MLAT rules in order that the isolated lecture not lead to non-contemplated results from the treaty.

Still according to the Court, what matter is that each State obeys their own rules, which means, if the USA obtained the bank data complying with its own national rules and sent to Brazil, it doesn’t matter how the information sharing happened, if by MLAT or directly between judicial authorities.

The Superior Court understands that the treaty aim between Brazil and USA is to reduce the bureaucracy of the international legal cooperation, because each country has independence to establish which investigative measures submit to judicial determinations and respect the intimacy of their citizens. It is not possible to demand uniformity of the rules from almost 200 countries and derail the international cooperation.

This new ruling is rather advantageous to the investigative authorities, as American law is less formal and more practice about the obtaining proof to assist foreign countries, even if the proof is the bank secrecy of an individual.

One concrete example of such statement comes from title 28 of USC, § 1782, which provides assistance to foreign and international tribunals and to litigants before such tribunals, allowing the interested person of a civil or criminal procedure to request directly in American justice a determinate proof. In other words, the title is an useful tool to the parties that need documents that can only be produce in United States of America and are needed in foreign law suits.

Considering this legal provision, the party in a criminal suit (and, in this case, it can be the prosecutor) can request directly in American justice the bank data of a defendant and bring the proof to Brazil without the international cooperation’s bureaucracy.

In this sense, it has been verified that Brazilian case law dismisses fundamental rights violation claims, as it is not possible to follow up the custody’s chain of proof and not even what kind of procedure was used to obtain it in the foreign country. However, the Brazilian’s Courts, adherents to technology advanced and to the facility of information sharing, understand that the kind of proof described is valid and increasingly infer itself from the excessive formality that it was demanded.

Authors: Pedro Luiz Cunha Alves de Oliveira and Julia Mariz

Firm: Alves de Oliveira e Salles Vanni

Address: Bela Cintra Street, 772, 9th floor, Consolação.

Zip Code: 01415-002

São Paulo/ SP

Tel.: +55 (11) 3736-6100

[email protected]

Practice: Business Criminal Law (white collar crimes)