Brazil: Action Of Unavailability Of Goods, Values And Rights As A Result Of The United Nations Security Council's Resolutions

Last Updated: 3 February 2016
Article by Walter Stuber

Law No. 13,170, of October 16, 2015 (Law 13,170/2015) regulates the action of unavailability of goods, values and rights to possession or ownership and all other real or personal rights directly or indirectly held by individuals or legal entities subject to this kind of sanction for resolutions of the United Nations Security Council (UNSC). The Brazilian Civil Procedure Code is subsidiary applicable to this matter. This law is already in full force and effect[1].

I. General Provisions

The action of unavailability of goods, values and rights arises from the act that incorporates the UNSC resolution to the Brazilian legal system. The declaration of unavailability will lead to the invalidity of any acts of disposition of such goods, values and rights, except the rights of any third party in good faith.

The resources declared unavailable may be partially released for the payment of personal expenses necessary for the livelihood of the person concerned and his/her family, to guarantee individual rights contemplated by the Brazilian Federal Constitution or for compliance with provisions laid down in UNSC resolutions.

The provisions of Law 13,170/2015 may be used to meet the demands of international legal cooperation coming from other jurisdictions, in accordance with the Brazilian legislation in force.

The supervisory or regulatory entities and bodies will adopt immediately the necessary measures to comply with the court orders relating to the unavailability of goods, values and rights which deal with Law 13,170/2015 before institutions and individuals subject to its regulation and supervision. They also may, within the framework of their competences, edit the rules necessary for compliance with the provisions of Law 13,170/2015.

Institutions subject to regulation and supervision[2] are the individuals and legal entities which have, on a permanent basis or, as main or ancillary activity, cumulatively or not: (i) raising, intermediation and application of third-party funding, in Brazilian or foreign currency; (ii) purchase and sale of foreign currency or gold as a financial asset or exchange currency instrument; and (iii) custody, issuance, distribution, settlement, negotiation, brokerage or management of securities.

The following entities are subject to the same obligations[3]: (i) stock exchanges, commodities or futures exchanges and trading systems of the organized over-the-counter market; (ii) insurance companies, insurance brokers and pension entities or savings bonds; (iii) accreditation card companies or credit card companies, as well as  administrators of consortia for purchase of goods or services; (iv) administrators or companies that use card or any other electronic, magnetic or equivalent means, which permits the transfer of funds; (v) leasing  and factoring companies; (vi) companies that  distribute money or any movable assets, real estate, merchandise, services, or give discounts on purchase, through sweepstakes or similar method; (vii) branches or representative offices of foreign entities engaged in Brazil any of the activities listed herein, sporadically or not; (viii) other entities whose operation depends on authorization of regulators of the financial, exchange, capital and insurance markets; (ix)  any individual or legal entity, domestic or foreign, operating in Brazil as agent, manager, attorney-in-fact, commissioner or representing in any way interests of a foreign entity that carries out any of the activities referred to herein; (x) individuals or legal entities that carry out activities of promotion or purchase and sale of real estate; (xi) individuals or legal entities that trade jewelry, precious stones and metals, objects of art and antiques; (xii) individuals or legal entities that trade luxury or high value goods, intermediate its trading or are engaged in activities involving large volume of cash resources; (xiii) commercial and public registries; (xiv) individuals or legal entities that provide, even if eventually, advisory services, consulting, accounting, auditing, advice or assistance of any kind, in operations: (a) for the purchase and sale of immovable property, commercial or industrial establishments or equity interests of any kind; (b) management of funds, securities or other assets; (c) opening or management of bank accounts, savings, investment or securities; (d) creation, operation or management of companies, foundations, trusts or similar structures (e) corporate, finance or real estate; and (f) transfer or acquisition of rights to contracts related to sports or artistic activities; (xv) individuals or legal entities that act in the promotion, intermediation, trading, agency or negotiation of transfer rights of athletes, artists or fairs, exhibitions or similar events; (xvi) transport and custody services companies; (xvii) individuals or companies that trade rural or animal origin high value goods or intermediate its trading; and (xviii) offshore dependencies of the entities referred to herein, through their parent companies in Brazil, regarding Brazilian residents.

The measures provided for in Law 13,170/2015, in which they fit, will also be adopted by the Corrective Magistrates of Justice of the States and the Federal District (Corregedorias de Justiça dos Estados e do Distrito Federal), by the Brazilian Agency of Civil Aviation (Agência Nacional de Aviação Civil – ANAC), by the Brazilian Department of Transit (Departamento Nacional de Trânsito – DENATRAN), by the Port Authorities (Capitanias dos Portos), the Brazilian Telecommunications Agency (Agência Nacional de Telecomunicações - ANATEL) and by other competent public registry organs.

The Ministry of Justice shall notify the Ministry of Foreign Affairs about the arrangements adopted in Brazil to comply with the sanctions imposed by resolutions of the UNSC. The Ministry of Foreign Affairs in turn will report such arrangements to the UNSC.

II. Procedure and Administration of Blocking

When the UNSC resolution is incorporated to the Brazilian legal system, the Ministry of Justice will notify the Office of the Solicitor General (Advocacia Geral da União – AGU) to propose within 24 hours an action of unavailability of goods, values and rights. This action will be notified by the AGU to the Ministry of Justice as soon as it is proposed and will be processed under judicial secrecy.

The judge will decide the interim protection (tutela provisória) within 24 hours after receiving the complaint and will determine the subpoena of the interested party that will have 10 days to present factual and legal reasons which may lead to the belief that the blockade was irregularly made. Then the judge will inform immediately the supervisory or regulatory entities and bodies so that they may proceed with the prompt blockade of the goods, values and rights identified by them. Once the blockade occurs, the institutions and individuals responsible will have to report the fact immediately to the supervisory or regulatory agency or entity of their activity, the judge who determined the measure, the AGU and the Ministry of Justice.

Early alienation of the goods declared unavailable will be made for preservation of their value whenever these goods are subject to any degree of deterioration or depreciation or when the maintenance of such goods is difficult. The interested party will be summoned of the evaluation of the goods, so that he/she may express himself/herself within ten days. After the evaluation is made and any disagreements on the value assigned to the goods are resolved, the sale of the goods will be determined by public auction or trading floor, preferably electronic, by an amount of not less than 75% of the value assigned by the evaluation. Once the public auction or trading floor is held, the amount so obtained shall be deposited in an interest bearing bank account. Taxes and fines levied on the disposed good will be deducted from the amount ascertained in the public auction or trading floor.

When necessary, a qualified person for the administration, guard or custody of the blocked goods, values and rights will be designated. The designated person will be subject to the legal provisions that apply to the judicial administrator. When the blocked goods are financial assets, the administration of these assets will be made by the institutions in which such property is held, and the blockage will focus also on interest and any other civil fruits and income arising from the contract.

The definitive confiscation of the goods, values and rights will be enacted by virtue of a final judgment (not subject to appeal), in any national or foreign process. A foreign final judgment that confiscates the goods must be duly ratified by the Brazilian Superior Court of Justice (Superior Tribunal de Justiça – STJ)[4] in order to be enforceable in Brazil.

In the event of expiration or revocation of the sanction by the UNSC, the Union shall request the judge immediately the lifting of the goods, values and rights. The official communication issued by the Ministry of Foreign Affairs that the name of the individual or legal entity has been deleted from the UNSC resolution is also considered a revocation of the sanction. The unblocking of the goods, values and rights shall be notified immediately to the competent judicial authority by the responsible institutions and individuals.

The judge shall ensure the immediate Union subpoena regarding the fulfillment of all the above-mentioned acts, as well as any sentence regarding terrorist acts. The Ministry of Justice will transmit this information to the Ministry of Foreign Affairs to be forwarded to the UNSC, when necessary.

III. Financial Institutions

The procedures to be adopted by the financial institutions and other entities authorized to operate by the Central Bank of Brazil (Banco Central do Brasil – Bacen) to comply with Law 13,170/2015 are governed by Bacen Circular No. 3,780, of January 21, 2016. These procedures apply to the enforcement of any court order regarding any action of unavailability of goods, values and rights, any demand of international legal cooperation coming from any foreign jurisdiction in accordance with the Brazilian legislation in force, as well as any sentence regarding terrorist acts and other legal provisions.

Once the blocking is made, the financial institutions and other similar entities must immediately communicate the blockade of goods, values and rights to: (i) the Department of Supervision of Conduct (Departamento de Supervisão de Conduta – Decon) of Bacen; (ii) the judge who ruled the measure; (iii) the AGU; (iv) the Ministry of Justice; and (v) the Council for Financial Activities Control (Conselho de Controle de Atividades Financeiras – Coaf).

This will also apply to business relations maintained by the institution or initiated thereafter with customers (individuals or legal entities) subject to sanctions from UNSC resolutions and actions of unavailability of goods, values and rights.

The following must be reported to Coaf, in the form determined by Bacen, until the working day following that on which any such events have happened[5]: (i) transactions or services whose value is equal to or greater than R$ 10 thousand and that can configure the existence of anti-money laundering crimes, considering the parties involved, the values, the ways of realization, the tools used or the lack of economic or legal basis; (ii) transactions made or services rendered which for their habit, value or form, configure evidence of action that objective to circumvent the mechanisms of identification, control and registration; (iii) transactions made or services rendered, regardless of their  value, involving persons who admittedly have perpetrated or intended to perpetrate terrorist acts or participated or facilitated the practice of such acts, as well as the existence of resources owned or controlled directly or indirectly by such persons; or (iv) suspected acts of financing of terrorism.

For the purpose of item (iii) of the preceding paragraph, the same restriction also applies to any entities owned or controlled directly or indirectly by the persons listed therein, as well as by persons and entities acting on their behalf or under their command.

It is also necessary to report to Coaf the proposals for carrying out any of the operations and actions described in items (i) to (iv) above.


[1] Law 13,170/2015 came into force 90 days after the date of its publication in the Official Gazette of the Union (Diário Oficial da União – DOU). It was published in the DOU on October 19, 2015.

[2] This list is contained in article 9 of Law No. 9,613, of March 3, 1998 (the Brazilian Anti-Money Laundering Law).

[3] These entities are mentioned in the sole paragraph of article 9 of the Brazilian Anti-Money Laundering Law.

[4] This ratification is required pursuant to sub item (i) of item I of article 105 of the Brazilian Federal Constitution.

[5] This obligation is contemplated in article 13 of Bacen Circular No. 3,461, of July 24, 2009, which consolidates the rules about the procedures to be adopted in preventing and combating activities provided for in the Brazilian Anti-money Laundering Law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Walter Stuber
 
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