On June 13, 2023, the President of Brazil submitted a Bill to the National Congress that “provides for the control of the origin, purchase, sale, and transportation of gold within the national territory and alters Law No. 7,766, of May 11, 1989”.
In a historical context, the bill is a result of the discussions that followed a recent humanitarian crisis caused by illegal mining in the indigenous Yanomami territory. This crisis prompted the Government to take effective action against the unlawful exploitation of natural resources, particularly gold extraction in indigenous territories.
Leading the change, several court decisions have mandated measures to curb illegal activities in indigenous lands. For instance, Supreme Court Justice Gilmar Mendes issued a decision requesting the Executive branch to implement legislation to control gold trade.
In general terms, the Bill sets out that:
- Under mining permit regimes (PLG), gold will be considered a financial asset or a foreign exchange instrument until its first acquisition, which can only be made by financial institutions authorized by the Central Bank of Brazil (BACEN).
- Financial institutions authorized by BACEN must register all gold acquisitions with the National Mining Agency (ANM) and provide all the information specified by the law.
- Starting from July 1, 2023, the use of electronic invoices for gold transactions becomes mandatory, as stipulated by the law.
- Bank transfers are required as the form of payment in transactions relating to the initial sale of gold extracted under the PLG regime.
- Gold traceability is established through a Gold Transport and Custody Guide, which the seller must electronically issue to the ANM for each transaction. In addition, the Guide must contain, at a minimum, certain information specified by the ANM.
- The issuer of the Guide will face civil and criminal liability for the information provided regarding the sold and transported gold.
- Transportation of gold extracted from the production area will only be allowed under the PLG regime to an institution duly authorized to make the first acquisition, provided that it occurs within the geographical limits of the gold-producing region, and it must be accompanied by the Gold Transport and Custody Guide.
- Gold can be seized or forfeited in favor of the Federal Government in situations where non-compliant documentation is presented.
- The presumption of good faith is abolished, making it mandatory to prove the origin of the traded gold.
- Certain individuals listed in the law are prohibited from engaging in corporate control, administration, or other positions in institutions authorized by BACEN that carry out the activity and the first acquisition of gold under PLGs.
The Bill was drafted by the Ministry of Justice and Public Security in collaboration with representatives from the Ministries of Finance, Mines and Energy, Environment, and Indigenous Peoples.
Cescon Barrieu’s Mining Law and Compliance teams are available to provide any clarification on the matter.
To access the complete text of the bill, please click here.
