São Paulo police have frozen bank accounts with more than US$1,000 amid an operation that highlights the rise in cryptocurrency use within the First Capital Command (Primeiro Comando da Capital – PCC), Brazil’s most powerful prison group.
The first clues in the investigation came after authorities stopped to Fabiana Manzini in October of 2023 for guarding a drug stash in the metropolitan region of São Paulo. Manzini is the wife of Anderson Manzini, a member of the PCC leadership, and appeared to serve as communication bridge between criminals on the streets and those in prison.
His arrest led to the launch of Operation Decurio on August 6, in which authorities arrested 13 suspects and seized 25,000 reais (US$4,600) as well as several luxury watches.
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However, the real blow to the organization came in the banks, after the authorities will freeze more than 8 billion reais (US$1.4 billion) from the accounts of those under investigation.
This allowed the discovery of a PCC money laundering scheme that used a cryptocurrency brokerage firm and virtual bank to conceal drug profits. The company is believed to have carried out transactions worth around 500 million reais (US$89.7 million) from criminal activities.
“We identified that the criminal group built a banking structure that was not authorized by the Central Bank and operated as a broker. The idea was to turn this company into a real bank,” Fabrício Intelizano, a delegate for the Civil Police of the state of São Paulo, told InSight Crime. In Brazil, banks are responsible for reporting any atypical transactions to inspection agencies. If the PCC had managed to consolidate this illicit banking structure, the group would not need to report these types of financial transactions, which would make its supervision more difficult, he explained.
This is at least the third major cryptocurrency money laundering scheme that Brazilian authorities have dismantled this year. Another recent operation revealed the cryptocurrency activities of Ronald Rolandarrested on July 2 for being the leader of a scheme who used cryptocurrency investments to launder criminal proceeds. The group he led is believed to have moved more than 5 billion reais (US$1 billion) in five years.
Prior to that, the Federal Police carried out an operation in January in which stopped an individual suspected of laundering proceeds from drug trafficking and other crimes with investments in cryptocurrencies in Brazil and other countries. One of the companies the suspect ran moved more than 13 billion reais (US$2.3 billion) in five years.
InSight Crime Analysis
The PCC’s money laundering methods reflect a trend in Brazil, where criminals are increasingly turning to cryptocurrencies to hide their illicit profits.
Before this year, the highest number of cryptocurrency money laundering cases that the Federal Police investigated in one year was nine in 2021, according to the facts reported on the official government website. But in 2024, in just six months, the Federal Police has already investigated eight cases. In addition to the Federal Police, regional police forces conduct their own investigations.
As the number of operations against the use of cryptocurrencies to launder criminal proceeds increases, the difficulty of tracing this method of money laundering continues to hamper investigations.
“It is very difficult to link a virtual asset to its owner, which makes it easier to use cryptoassets for money laundering,” Pierpaolo Cruz Bottini, a lawyer and criminology expert, told InSight Crime.
SEE ALSO: The digital Wild West: Latin America in trouble over cryptocrime
An individual can trade cryptoassets internationally very quickly, and criminals conduct these transactions using internet addresses that cannot be linked to them directly, Bottini explained. Some trading platforms, known as crypto tumblersThey also offer services that mix virtual assets and randomly redistribute them among owners, making it even more difficult to define who the owner is.
“Organized crime and those who commit virtual crimes take advantage of these characteristics to hide their resources,” says Bottini.
Cryptocurrency use has not only increased in Brazil’s criminal circles, but also among the entire population. Brazil is the sixth country in the world with the highest rate of cryptocurrency ownership in 2024, with 17.5% of Brazilians owning some form of cryptocurrency, according to a report from the Triple-A company. This represents a significant increase considering that, in 2020, only 4.9% of people in Brazil had some type of this product.
The sheer amount of virtual assets circulating in the economy makes it easier for criminal groups using the crypto market to hide among legitimate transactions. And as Brazil’s cryptocurrency market has grown, its regulations have struggled to keep pace.
The Central Bank is responsible for controlling operations, but there are no rules governing cryptocurrencies, making oversight poor. The country is at an intersection where the ley It exists, the activity is legal, people operate, but the market is not yet regulated.
“We are in a very uncertain situation for crime prevention,” Bottini told InSight Crime. The Central Bank is working on a regulation that would make it more difficult to launder money using the cryptocurrency market, which is expected to be launched in the second half of this year.
