Brazil targets fintechs linked to illegal betting in regulatory crackdown

The Brazilian government is preparing a series of regulatory measures aimed at fintech companies suspected of enabling illegal betting activity, as it continues its crackdown on financial operations tied to organized crime and money laundering. 

Finance Minister Fernando Haddad confirmed that the Central Bank has been receiving intelligence on fintechs believed to be acting as conduits for unauthorized gambling transactions.

In an interview with economist Eduardo Moreira, Haddad said the government’s focus is to dismantle the use of financial platforms in illicit operations. “We are already informing the Central Bank about fintechs that are possibly serving as vehicles for organized crime, money laundering, or even worse. There are many things that need to be addressed,” he said.

According to Haddad, the Federal Police will be involved in the enforcement efforts. A full package of recommendations is expected to be presented to President Luiz Inácio Lula da Silva once an initial six-month data collection period concludes. These measures will aim to address gaps in oversight and enforcement that have allowed certain betting operations to proliferate without regulatory supervision.

The finance ministry is also considering implementing tighter restrictions on betting advertisements, potentially aligning them with existing standards for alcohol and tobacco marketing. 

“After the six months in which the State gathered this information, we’ll take the data to the president and treat this as a serious public health issue. (…) We’ll need to address the advertising aspect — you know that alcohol and cigarettes have extremely strict advertising restrictions,” Haddad noted.

The renewed push comes after years of regulatory inaction. Haddad criticized the failure of the previous administration to implement betting laws or enforce taxation, which he said contributed to capital flight and lost revenue.

“For four years, no one regulated advertising, no one collected taxes on bets. More than R$40 billion (US$7.2bn) in subsidies went abroad — they bought crypto, bought dollars through fintechs. That money disappeared from Brazil,” he said.

A key measure under evaluation is the potential regulatory separation of sports betting from online casino gaming. “Another point is this issue of gambling and sports betting — we’ll study whether or not to differentiate between them,” Haddad added.