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Banco Bradesco says it is not aware of central bank's forex operation probe


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Banco Bradesco says it is not aware of central bank's forex operation probe

Banco Bradesco SA said it has no knowledge of any investigation by Banco Central do Brasil into an alleged fraudulent foreign exchange operation from 2010.

The bank made its comments in response to an O Estado de S. Paulo report saying that Brazil's federal revenue service has found indication that some financial institutions could have participated in crimes related to the Lava Jato corruption scandal.

One of the cases cited in a federal revenue service document reportedly involves front companies that allegedly conducted fraudulent foreign exchange contracts with several financial institutions. The front companies then were said to have laundered the money to tax havens abroad, according to the document.

The document did not name the financial entities involved, but according to financial statements cited by Estadão, the front companies allegedly conducted fraudulent transactions worth $200 million with Bradesco, Banco Sofisa SA, Citibank NA - Filial Brasileira and Banco Rendimento SA as well as brokerage firms Pionner and TOV.

The irregularities prompted banks to request the central bank's authorization of leniency agreements with financial institutions that confess to the violation of legal rules, Estadão added. The leniency program has been in effect since June 2017.

In a statement, Bradesco said it carried out a foreign exchange operation with one of the companies mentioned in the report, but clarified that it was of "a low economic value and in the normal course of its business, observing the legislation in force."

Brazilian authorities said, however, that the financial entities were not diligent in preventing the money laundering case and did not act in a manner "compatible with their size and volume of operations" to stop the crime.

Meanwhile, the central bank said it received a communication from the public prosecutor's office regarding the case. As a result, the central bank imposed 18 punitive administrative proceedings and ordered the extrajudicial liquidation of 10 financial institutions, among other actions.

Banco Sofisa said it had operations with two of the front companies in 2009, but immediately closed the accounts after learning of irregularities carried out by the companies, Estadão reported. Citibank said it keeps "high standards of controls and compliance" and coordinates with legal authorities.

Meanwhile, Banco Rendimento said the federal revenue service found its explanation regarding its operation with one of the companies satisfactory.