Fintechs warned for handling illegal betting funds
Brazil’s Ministry of Finance has notified 37 fintech companies suspected of acting as intermediaries for funds from illegal bookmakers and ordered the institutions to sever all financial ties with these companies. The measure is one of the government’s actions to combat the underground betting market and calls for the freezing of the funds, which may be transferred to the public treasury if the new rules are violated.
The notices were sent by the Secretariat of Prizes and Betting (SPA) of the Ministry of Finance, in conjunction with the Federal Revenue Service. According to the government, the fintech organizations processed funds from approximately 160 bookmakers not authorized to operate in Brazil, as well as thousands of websites linked to these platforms.
The names of the institutions notified were not disclosed in order to protect the investigations.
Deadline for compliance
The companies will have until August 28 to comply with the new rules approved by the National Monetary Council (CMN).
By that date, the institutions must terminate their dealings with illegal betting companies. If they fail to comply, they may be held jointly liable for the transactions and face fines proportional to the amount transacted.
Once the resolution takes effect, the institutions will have 24 hours to freeze all accounts linked to the notified companies.
Frozen funds
The regulation stipulates that, following the freeze, the funds deposited in the accounts will be rendered inaccessible.
Any financial transactions intended, directly or indirectly, for the purpose of placing illegal bets will also be prohibited.
The frozen funds will be transferred to the National Public Safety Fund.
Legal basis
The measure is based on a decree issued by Brazilian President Luiz Inácio Lula da Silva in June, which established mechanisms to freeze the funds of illegal betting operators and hold institutions that facilitate such operations accountable.
The decree also authorized the Secretariat of Prizes and Betting to notify financial institutions involved in processing payments for unlicensed platforms.
Even though the notifications have already been sent, the government decided to grant a grace period before implementing the blocking measures and potentially initiating administrative proceedings.
Expanded enforcement
According to the Ministry of Finance, the 37 companies that received notices processed funds from approximately 160 illegal bookmakers, which operate over 40,000 websites.
In total, the government claims to have taken down more than 54,000 illegal websites involved in the underground betting market.
The takedown of these websites is being carried out in partnership with the National Telecommunications Agency (Anatel), at the request of the Secretariat of Prizes and Betting.
Illegal market
According to official estimates, 41 to 51 percent of the betting platforms accessed by Brazilians operate without authorization, reaching approximately 25.2 million users.
These companies fail to comply with requirements imposed on regulated operators, such as:
- payment of a BRL 30 million license fee;
- maintaining headquarters in Brazil;
- establishing a financial reserve for the payment of winnings;
- payment of taxes;
- adoption of mechanisms to protect bettors, such as self-exclusion;
- compliance with advertising and responsible gaming rules.
Regulation
Fixed-odds betting was authorized in 2018 but remained unregulated for several years.
Starting in 2023, the federal government began developing the sector’s regulatory framework, expanding oversight and establishing rules.
The new measure aims to curb the activities of illegal platforms and strengthen control over a market that generates billions of reais annually in the country.
