Those who follow our column are used to more technical issues focused on anti-money laundering (AML) measures in the betting sector. But today we interrupt our publication with a very important request for help.
Whether in my former role as General Coordinator of AML at the Secretariat of Prizes and Betting (SPA-MF) or now as AML Director at Legitimuz, I am always asked why, when drafting Ordinance SPA/MF 1.143/2024, we did not establish a minimum threshold for mandatory reporting of suspicious activity to the Financial Activities Control Council (COAF).
The answer has always been clear: the idea was not to automate this type of reporting. Anyone working in AML-CFT knows that when reporting becomes automated, it often ends up weak and lacking detail. The obliged entity acts as if washing its hands—it files the report, complies with the law, and leaves it to COAF to deal with the content.
It was precisely with this in mind that, when drafting the regulation, we concluded that betting operators had the obligation to provide broader and more detailed reports.
And why is that? Because no one knows their vulnerabilities better than the operator itself, and also because of another crucial point: COAF has long been facing a delicate situation, lacking both technological infrastructure and, above all, staff.
COAF: what it is and what it does
COAF is Brazil’s Financial Intelligence Unit, created by Law 9.613/1998. Its main role is to receive, analyze, and forward suspicious financial transactions related to money laundering to the competent authorities.
In theory, this body is essential to identify and disrupt illicit money flows. In practice, however, Coaf has become a key player in investigations of criminal organizations.
It is now considered the best tool to combat organized crime in Brazil, as security forces have realized that following the money is far more effective than simply confronting these organizations head-on.
COAF’s structural challenges
Although Coaf has gained importance over the years, it still faces serious structural challenges that directly affect its capacity to operate:
* Lack of investment: no government has properly invested in strengthening COAF since its creation.
* Shortage of dedicated staff: Coaf does not have its own employees; those who work there are seconded from bodies such as the Central Bank, Federal Revenue Service, National Treasury, and Federal Police.
These structural problems hinder the body’s effectiveness and, consequently, the fight against money laundering.
Alarming figures: the reality of COAF
Last week, at the traditional and historic USP Law School at Largo São Francisco in São Paulo, I attended an event hosted by GELD (Money Laundering Study Group), coordinated by the excellent professor Pierpaolo Bottini.
The central theme of the discussion was COAF’s role in combating organized crime. The Goffredo da Silva Telles Júnior auditorium was packed to hear the new president of COAF, the experienced Federal Police delegate Ricardo Saad.
Even though the panel included other relevant authorities from the judiciary, the Public Prosecutor’s Office, and Academia, the audience really wanted to hear from Coaf’s top official. And what he revealed was deeply concerning. Even with some knowledge of our FIU’s structure, I could not have imagined the scenario to be this serious.
Here are the facts:
* In 2024, COAF received around 7.5 million suspicious activity reports from obliged entities (banks, exchange houses, jewelry stores, betting companies).
* From this total, 18,000 resulted in Financial Intelligence Reports (RIFs), which were forwarded to national and international authorities.
* Reports are first processed by an IT system created in 1999, which obviously does not use artificial intelligence.
To this, we must add a factor that would sound unbelievable if it hadn’t been stated by Coaf’s own president: only nine staff members analyze the reports after they go through the initial data-crossing system.
Nine analysts is an absurdly small number given the scale of demand and the importance of Coaf in the fight against money laundering. This bottleneck means reports can take two or three years to be analyzed.
You may also be interested in: 5 good AML practices in the betting market: how operators can reduce risk and increase confidence
The role of betting operators in supporting COAF
Fixed-odds lottery operators, known as ‘Bets’, can be valuable allies of COAF. It’s worth remembering that lotteries are among the obliged entities under Law 9.613/1998 and must report suspicious transactions as well as the absence of money laundering or terrorist financing activity.
We live in a moment where such reporting goes beyond merely fulfilling a legal obligation. The more operators invest in technology, processes, and staff, the better the analysis will be, and consequently, the better the reporting to COAF. This strengthens the body and, ultimately, protects society.
Another way to contribute to improving our FIU would be to fund studies for the development of more modern systems. There are numerous tech startups behind betting platforms.
Today, in the betting market, there are robust AML technologies in place. Why not establish a technical cooperation agreement to share solutions that could enhance COAF’s capacity to receive, process, and share financial data?
Ah, but the operator doesn't have that obligation, they already pay so much tax... Surely someone reading this article thought along those lines. But don't we fight for a legalized and protected market?
Who benefits from a weak COAF?
Supporting COAF is more than necessary—it is the body capable of identifying suspicious activity and forwarding it to the competent authorities, who in turn can act against those operating outside the law.
At the end of the day, isn’t that our ultimate goal? Who benefits from a weak and understaffed COAF? It’s worth reflecting on.
Source: Legitimuz
