The recent anti-money laundering operation conducted by police in São Paulo has shed light on the increasing use of cryptocurrency by Brazil’s most powerful prison gang, the First Capital Command (PCC). The investigation began with the arrest of Fabiana Manzini in October 2023, who was found guarding a drug stash in the metropolitan region of São Paulo. Manzini, the wife of PCC leader Anderson Manzini, was suspected of facilitating communication between criminals on the streets and in prison.
Following Manzini’s arrest, Operation Decurio was launched on August 6, resulting in the arrest of 13 suspects and the seizure of 25,000 reais (US$4,600) and luxury watches. However, the most significant blow to the organization came when authorities froze over 8 billion reais ($1.4 billion) from the accounts of individuals under investigation.
The police operation uncovered a sophisticated money laundering scheme orchestrated by the PCC, which involved a company functioning as a cryptocurrency broker and virtual bank to conceal profits from drug trafficking. It is estimated that the company facilitated transactions of around 500 million reais ($89.7 million) in criminal proceeds. FabrÃcio Intelizano, a police chief from the São Paulo state Civil Police, revealed that the criminal group had established a banking structure that operated as a broker without authorization from the Central Bank, with the intention of transforming it into a real bank to evade financial transaction reporting requirements.
This case is not an isolated incident, as Brazilian authorities have dismantled several major money laundering schemes involving cryptocurrencies this year. One operation exposed the cryptocurrency activities of Ronald Roland, who led a scheme that laundered over 5 billion reais (approximately $1 billion) in criminal profits. Another operation in January targeted an individual suspected of laundering gains from drug trafficking and other crimes using crypto investments, with transactions exceeding 13 billion reais ($2.3 billion) in five years.
The PCC’s use of cryptocurrency for money laundering reflects a broader trend in Brazil, where criminals are increasingly turning to digital assets to conceal illicit proceeds. The Federal Police have seen a significant increase in investigations related to crypto-based money laundering, with eight cases already reported in the first six months of 2024, compared to nine cases in the entire year of 2021. Despite the rise in enforcement actions, the inherent difficulty of tracing virtual assets poses challenges for law enforcement agencies.
Pierpaolo Cruz Bottini, a lawyer and criminology expert, highlighted the challenges of linking virtual assets to their owners, making it easier for criminals to exploit the anonymity of cryptocurrencies for money laundering. The use of crypto tumblers, which mix and redistribute virtual assets to obscure ownership, further complicates efforts to identify perpetrators.
Moreover, the widespread adoption of cryptocurrencies in Brazil, with 17.5% of the population owning digital assets in 2024, has created a fertile ground for criminal groups to blend in with legitimate transactions. The lack of clear regulations governing cryptocurrencies in Brazil has exacerbated the situation, with the Central Bank working on new regulations to enhance oversight and prevent money laundering through the crypto market.
In conclusion, the recent anti-money laundering operation in São Paulo has exposed the growing use of cryptocurrency by criminal organizations in Brazil, highlighting the challenges faced by law enforcement in combating digital asset-based money laundering. As the country grapples with regulating the crypto market and enhancing supervision, the fight against financial crime in the digital age remains a complex and evolving challenge.
