The Senate Economic Affairs Committee (CAE) approved, on August 24, the bill 3.951/2019, from Senator Flávio Arns (Podemos party-PR), which prohibits cash transactions in four different categories: operations over R$ 10 thousand reais, payment of bills over R$ 5 thousand (and over R$ 10 thousand for non-residents in the country); circulation over R$ 100 thousand (except for transportation by cash-in-transit companies), and possession over R$ 300 thousand, except in specific situations.
According to the Senate Agency, the proposal received a favorable opinion from the rapporteur, Senator Alessandro Vieira (Cidadania party-SE), with an amendment from Senator Oriovisto Guimarães (Podemos party-PR), which also prohibits the use of cash in real estate transactions. According to Guimarães, this type of operation is often a strategy to hide assets without declaring the origin or launder money obtained illegally.
Blockchain is an alternative to ensuring security
Unlike cash, in blockchain applications there is no risk of not having money traceability.
A recent survey by Deloitte showed that 76% of finance professionals think digital assets will be a strong alternative or definitive replacement for fiat currencies in the next five to ten years. The reason, cited by 81% of respondents, is that the technology is “widely scalable and has reached the level of mainstream adoption.”
While there are still obstacles, such as ongoing regulatory issues, a large portion of Deloitte respondents sees blockchain as an alternative for their business. The study considered more than 1.000 responses from finance professionals based in Brazil, China, Hong Kong, Japan, Singapore, South Africa, UAE, the UK, and the US. The interviews were conducted between March 24 and April 10, when the crypto market showed strong growth, with highs among the major crypto assets.
Prevention and traceability
While blockchain technology is not decisively adopted to ensure security, alternatives such as the bill that restricts cash values try to control market irregularities.
The bill text was formulated based on the New Measures against Corruption, authored by the Law Professor of the Getúlio Vargas Foundation (FGV), Michael Mohallem. According to the author, the objective is to prevent crimes of laundering or concealment of assets and values and the use of economic systems for illicit acts.
In justifying the project, Arns explains that the transit of cash “facilitates the laundering of resources in corrupt activities, facilitates tax evasion and provides an opportunity to commit crimes, such as bank robberies and the burglary of ATMs, among others.
In the view of the bill’s rapporteur, Brazil already has legislation that allows for the traceability of money. Federal Revenue Normative Instruction 1.761, of 2017, requires that operations in cash be reported in transactions over R$ 30.000,00 including donations.
In addition, according to him, Circular nº 3.839 of the Central Bank from 2017 already provides that customers who wish to deposit in cash, cash out, or withdrawal through a prepaid card, in the amount of R$ 50.000,00 or more, must communicate their intention and report data to their banks, that must pass on such information to the Financial Intelligence Unit.
The bill now goes to the Constitution, Justice and Citizenship Commission (CCJ) for final decision – and then it can be forwarded for analysis by the House of Representatives.