Brazil govt prepares heavy crack down on illegal betting payments

Ari Celia, Director of Pay4Fun, recently discussed pivotal developments regarding Brazil’s measures against illegal gambling operations. In a strategic move, Brazil’s Ministry of Finance has established a new department specifically aimed at curbing black market operators ahead of the anticipated launch of the legal betting environment on January 1, 2025.

With the burgeoning interest in a regulated betting market, the Brazilian government is enacting stringent policies to deter unlawful operators from processing payments. Central to this initiative is the formation of a dedicated team of eight civil servants tasked with overseeing the enforcement of these regulations.

This team will actively handle complaints from legitimate stakeholders in the gambling sector and will pursue punitive actions against both unlicensed payment processors and unauthorized gaming sites.

The Efficacy of Blocking Pix Payments

One of the cornerstone measures announced by the government is the prohibition of any payments to illegal operators via Pix, a widely used instant payment service regulated by the Central Bank of Brazil. This service is integral to the operations of the majority of betting establishments in the market.

In contrast to the challenges faced by regulators in markets such as Germany and other European nations—where blocking financial transactions to black market players is hindered by legal complexities—Celia expresses optimism about Brazil’s approach. He believes that the ability to ban transactions through Pix will prove effective due to its regulation by the Central Bank and, by extension, the government.

“Should any commercial bank be informed of a client’s involvement with illicit activities, they will promptly terminate that client’s banking services,” Celia explained. “The repercussions of failing to act on a warning from the Central Bank could lead to significant fines. Hence, no commercial bank in Brazil would risk continuing to process Pix transactions after being alerted.”

Pay4Fun, holding Central Bank authorization to provide payment services across various entertainment sectors—betting and gaming included—stands as a key player in the evolving legal marketplace.

“The Central Bank possesses both the authority and the systems necessary to intervene against any unlicensed entities. Their direct lines of communication with all commercial banks and licensed payment providers, like us, facilitate this regulatory oversight,” Celia asserted.

Challenges for Illegal Operators

As the ban on Pix payments is set to be enforced, Celia predicts that unlicensed operators will encounter severe restrictions on their payment methods. The use of cash is becoming increasingly obsolete in Brazil, creating obstacles for illegal online operations that typically rely on local intermediaries to manage transactions.

“Relying on cash is not viable, especially as many Brazilians transition away from it. Conducting online transactions necessitates local individuals, brokers, or affiliates, making it both complicated and nearly impossible to extract funds from Brazil through illegal channels,” Celia noted.

Furthermore, regulatory measures outlined in Normative Ordinance No. 615 stipulate that licensed operators are prohibited from accepting payments in cryptocurrencies. While this may limit options for illegal sites, Celia remains confident that the Central Bank will effectively track and identify crypto transactions associated with black market activities. “In Brazil, cryptocurrencies are primarily treated as investment assets rather than payment methods,” he added.

“The process of acquiring cryptocurrency necessitates an account with a cryptocurrency exchange, which includes disclosing personal information. The Central Bank monitors these transactions vigilantly,” Celia explained.

In conclusion, he emphasized, “While we await further developments, it is clear that operating unlicensed in Brazil will pose significant challenges.”