Welcome to Latam Insights Encore, a deep dive into the most relevant Latin American economic and crypto news of the past week. In this edition, we discuss how Brazil is becoming an example of how countries should enforce crypto compliance by fighting tax evasion and pursuing money laundering groups instead of targeting crypto innovators.

Latam Insights Encore: Brazil is Becoming a Model for Cryptocurrency Enforcement

While cryptocurrency offers users many advantages, it also empowers them to carry out illegal activities due to its characteristics. Brazil is becoming a hotbed for cryptocurrency adoption, including the use of cryptocurrencies in ways that go against national laws.

However, the Brazilian state has increasingly used its various tools and the power of its institutions to enforce compliance, even using AI tools to enforce compliance in crypto criminal cases. Two cases came to light this week: the first involved several confiscation orders in an operation against three groups that used cryptocurrencies to launder drug and smuggling proceeds and transfer them abroad to other countries. These groups have laundered more than $9 billion since 2021.

Another example is leveraging an artificial intelligence (AI) tool from the Federal Revenue Service, Brazil’s equivalent of the Internal Revenue Service (IRS), to detect illicit transactions related to cryptocurrency tax fraud and money laundering. The tool, an in-house development by the organization, has already served to identify $180 million in this type of activity in two different cases.

With these actions, Brazil shows that it is not only one of the most innovative jurisdictions for cryptocurrencies, having enacted several laws regarding the use of cryptocurrencies, with an ongoing CBDC pilot program, but also has institutions that can step in when investigating and researching the use of cryptocurrencies for crime.

While other countries clash with cryptocurrency creators and innovators over token classification and jail developers who created security tools, Brazilian authorities have decided to take on the real criminals, setting an example for others to follow.

What do you think about Brazil's role in fighting cryptocurrency crime? Let us know in the comments below.
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