Brazil goes after payment processors in a push against offshore betting operators

• Brazil has passed new rules that will now require payment processors and financial institutions to ensure they are not processing money to offshore gambling operators not licensed in the country
• Companies will be sent joint notices and asked to comply within a 24-hour window
• Brazil is also tightening the rules around promoting illegal gambling businesses, which could see more people disincentivized to try

Brazil has issued new rules for payment processors in the country, affecting financial institutions, payment institutions, and payment providers, all of which will now be closely scrutinized to determine if they are processing transactions for offshore sports betting platforms.

Payment providers on the hook for illegal betting transactions in Brazil

The Ministry of Finance published Ordinance No. 17.66 on Wednesday, June 17, detailing what the new enforcement action would look like and the penalties that the targeted companies may face for non-compliance.

Essentially, Brazil is trying to ensure that local payment providers that are popular and used by the public are not also used to fund illegal gambling transactions.

Any company that has processed a transaction for a company that accepts bets on sports event outcomes and that is not licensed in Brazil will make the processor liable for further regulatory action.

The new rules plan for a grace period, with the Secretariat of Prizes and Betting and the Special Secretariat of the Federal Revenue of Brazil issuing notifications to companies and providers that may have breached the law, and giving a 24-hour compliance window.

The onus is still on regulators to discover such transactions and specifically point out which payments would fall foul of local gambling regulation, which might give payment providers a better idea of what to do rather than face penalties over honest mistakes.

Promoting illegal gambling may get you in further trouble now

As per the same ordinance, individuals and legal entities may face tax liability if they advertise or commercially promote betting operators that are not regulated in the country.

While there is a lack of specifics about what the penalties would look like, Brazil is following a global trend with companies going after individuals who are promoting products that are not licensed in the country.

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