Attorney General’s Office ensures stricter supervision of gold trade in Brazil

The Brazilian Attorney General’s Office (Advocacia-Geral da União/AGU) has won a court case in the Supreme Federal Court (Supremo Tribunal Federal/STF) referring to two direct unconstitutionality actions — ADI 7273 and ADI 7345 — which questioned the presumption of legality and good faith for purchasing gold based on archived information. The provision is contained in § 4 of Article 39 of Law 12.844/2013. The actions were filed by the Brazilian Socialist Party (Partido Socialista Brasileiro/PSB), the Sustainability Network (Rede Sustentabilidade), and the Green Party (Partido Verde/PV).

Accepting the arguments of the Attorney General’s Office —and following the vote of the rapporteur Minister Gilmar Mendes— the court formed a majority in the virtual plenary session that ended on Friday (March 19) to declare the unconstitutionality of the provision. In a statement sent to the Court, AGU argued that “the rule creates vulnerabilities in oversight, allowing illegal gold to be inserted into the market with an appearance of legality, particularly in areas of authorized mining.”

AGU also noted the risks posed by the presumption of good faith established by the law. “Control weakness fosters social and environmental damage, intensifies related crimes such as trafficking and deforestation, and threatens Indigenous communities, all of which underscore the need for caution.”

The Attorney General’s Office also requested partial admissibility of the ADIs, attributing an interpretation under Article 39, § 4, of Law 12.844/2013, establishing that the record of the gold trade transaction be maintained “but without removing the duty of diligence, accountability, and implementation of regulatory and control measures by the Public Authorities.”

MERIT —  When assessing the merits of the two actions, rapporteur Gilmar Mendes highlighted that, in the case of the changes introduced by Law 12.844/2013, “the simplification of the gold purchasing process clearly allowed for the expansion of illegal trade, strengthened illegal mining activities, deforestation, river contamination, violence in mining regions, and even affected Indigenous peoples in the affected areas”.

“This spurious consortium formed by illegal mining and criminal organizations must be halted as soon as possible — justifying not only the declaration of unconstitutionality of article 39, § 4, of Law 12.844/2010 but also the determination of administrative measures towards increasing supervision,” he added.

The rapporteur fully acknowledged ADI 7273/DF and, in part, ADI 7.345/DF, confirming the admissibility of the requests to declare the unconstitutionality of the contested provision. In the decision, Justice Gilmar Mendes ordered the Federal Executive Power, especially the National Mining Agency (Agência Nacional de Mineração/ANM), Banco Central do Brasil (BACEN), the Chico Mendes Institute for Biodiversity Conservation (Instituto Chico Mendes de Conservação da Biodiversidade/ICMBio), and the Brazilian Mint (Casa da Moeda do Brasil/CMB) to adopt regulatory and/or administrative measures to prevent the extraction and acquisition of gold mined in environmentally protected areas and Indigenous lands. The decision also establishes normative guidelines for gold trade oversight, particularly concerning the verification of the legal origin of gold acquired by Securities and Exchange Distributors (Distribuidoras de Títulos e Valores Mobiliários/DTVMs), without prejudice to the actions of other agencies within their respective areas of jurisdiction.

OVERSIGHT —  A precautionary measure ratified by the Supreme Court, in a virtual session that began on April 21, 2023, issued Normative Instruction No. 406/23 of Brazil’s Banco Central regarding procedures for purchasing gold. Bill 3,025/2023 —which deals with rules for controlling the origin, purchase, sale, and transportation of gold within the national territory— was also sent to the National Congress. Furthermore, operations against illegal mining were intensified, and the Action Plan for the Prevention and Control of Deforestation in the Legal Amazon (Plano de Ação para Prevenção e Controle do Desmatamento na Amazônia Legal) was established.

Other measures had already been adopted by the government to monitor gold trade in Brazil, including the Electronic Invoice (Nota Fiscal Eletrônica), geochemical tracking, and integration among agencies such as the Federal Revenue Service (Receita Federal) and the Federal Police (Polícia Federal), in addition to the implementation of technologies, with emphasis on the Ouro Alvo program.