Senator Flávio Bolsonaro. Photo: Roque de Sá/AS

On Thursday, Brazil’s Federal Supreme Court ruled that it is constitutional for financial control agencies—such as the Federal Revenue Service and Central Bank—to share confidential data of taxpayers with criminal authorities with a view to launching investigations.

The decision was made on the basis that this sharing of information does not violate confidentiality, as all the parties involved have an obligation to protect the privacy of the data analyzed and disclosed. This argument was first issued by Justice Alexandre de Moraes.

</p> <p>This opinion—agreed with by seven other members of the court—declares that corruption, organized crime and money laundering benefit from bureaucracy, and investigative agencies have the obligation to uphold the confidentiality of the data used in these probes.</p> <p>The rapporteur of the case, <a href="https://brazilian.report/power/2019/10/31/dias-toffoli-head-brazil-supreme-court-spotlight/">Chief Justice Dias Toffoli</a>, was overruled. His argument was that the sharing of data without a court order should be limited to more generic information that does not involve third parties. When issuing his opinion, he cited income tax returns and bank statements as examples of sensitive documents.</p> <p>Finally, there was a third alternative vote, backed by the two most senior justices of the Supreme Court: Celso de Mello and Marco Aurélio. Both claimed the sharing of detailed information requires a court order precisely to prevent the persecutory power of the state from falling into the hands of citizens.&nbsp;</p> <p>However, Celso de Mello said that the sending of more generic data is not prohibited, as this information would form the basis of requests for a court order. To avoid any violations, the justices said every access made to said data would have to be logged, to control any abuse or overreach.</p> <h2>Banks, tax authorities, the OECD and Flavio Bolsonaro</h2> <p>The latest Supreme Court decision follows court precedents from 2016, when it was understood that the sharing of confidential data between banks and the Federal Revenue Service was permissible. However, in this case, the sending of information had to have an entirely tax-related purpose, thereby aiding the state&#8217;s ability to collect taxes.</p> <p>Similar to Thursday’s trial, the prevailing argument in 2016 was that technology had made tax evasion more efficient and adaptable, meaning it was necessary to give the state more freedom to collect taxes.</p> <p>Trials such as this bring Brazil closer to adopting best practices against corruption, according to the Organization for Economic Cooperation and Development (OECD). Previously, the institution had <a href="https://brazilian.report/power/2019/11/18/oecd-brazil-anti-bribery-progress-problems-remain/">criticized the decision</a> of Chief Justice Dias Toffoli that suspended all investigations stemming from the sharing of confidential data without a court order. His injunction, granted in July, suspended all investigations until the Supreme Court issued its final decision on the matter.</p> <p>One of these investigations involves Senator Flávio Bolsonaro, son of Brazilian President Jair Bolsonaro. He is accused of receiving public money in his bank accounts by way of transfers made by his former advisor, <a href="https://tudo-sobre.estadao.com.br/fabricio-jose-carlos-de-queiroz">Fabrício Queiroz</a>—who in turn has close links to urban paramilitary groups in Rio de Janeiro.</p> <p>It was precisely by way of a request from Mr. Bolsonaro that Brazil’s money laundering enforcement agency (previously Coaf, now UIF) was included in the trial. The case that initially arrived at the Supreme Court did not concern the agency, being restricted to the Federal Revenue Service and Public Prosecution Service.</p> <p>But Senator Bolsonaro might have shot himself in the foot. </p> <p>Next week, justices will decide whether the same ruling goes for the money laundering enforcement agency—which could prevent any further contestation.</p> <hr class="wp-block-separator"/> <p><strong><em>Correction</em>:</strong><em> A previous version of the text didn&#8217;t mention that the Supreme Court will decide on whether the money laundering enforcement agency will be allowed to flag suspicious transactions to law enforcement. </em>

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BY Brenno Grillo

Brenno is a journalist specialized in covering the Brazilian legal and Justice system.