Brazilian authorities have arrested former police officer Cyllas Salerno Elia Júnior, who also owned a fintech allegedly used to launder money for the notorious criminal group First Capital Command (PCC). His arrest has exposed a deeply embedded financial crime network and highlighted alarming regulatory weaknesses in Brazil’s fintech sector.
On Tuesday, Brazil’s Federal Police, in collaboration with the Special Action Group for Combating Organized Crime (GAECO) of the São Paulo Public Prosecutor’s Office, launched Operation Hydra. The investigation targeted fintechs believed to be laundering vast sums of money for the PCC, one of South America’s most powerful criminal organizations.
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How a Former Cop Facilitated Money Laundering
Authorities discovered that 2GO Bank and Invbank, both linked to Elia Júnior, were being used to move illicit funds. These fintechs allegedly set up shell accounts and used individuals with no financial capacity to conduct large transactions, effectively concealing the origins of criminal proceeds.
“Shell accounts were opened, and individuals with no financial capacity were used to carry out large transactions,” prosecutor Fábio Bechara of GAECO told OCCRP.
The investigation was propelled by a plea bargain testimony from businessman Antônio Vinicius Lopes Gritzbach, who detailed how fintechs were exploited to launder money. However, Gritzbach was assassinated at Guarulhos International Airport last November before he could testify further. Authorities suspect that corrupt police officers were involved in his murder, intensifying concerns about law enforcement collusion with organized crime.
The operation against Elia Júnior included ten search and seizure warrants, further exposing his deep entanglement with illicit financial activities.
A Criminal Syndicate’s Infiltration into State Institutions
The arrest of a former police officer running a fintech suspected of laundering billions has intensified fears about organized crime’s penetration into Brazil’s state institutions. Prosecutor Lincoln Gakiya addressed these concerns at a press conference.
“What really troubles us, and caused a lot of concern, is the infiltration of organized crime into state structures. Without this infiltration, the PCC would not have reached the level it has today,” Gakiya said.
Authorities had already investigated Elia Júnior in November under Operation Tai-Pan, which examined financial crimes linked to billions of dollars. He is also suspected of laundering money for Tao Li, a Chinese businessman accused of large-scale tax evasion in Brazil.
Despite mounting evidence, Elia Júnior’s attorney, Márcio Sayeg, defended his client. “The case is under absolute secrecy, and in due time, we will prove his innocence,” Sayeg told reporters.
Meanwhile, São Paulo’s Civil Police issued a statement reiterating their commitment to combating internal corruption.
“We are investigating the conduct of the officer mentioned in the report and emphasize that we do not condone misconduct by our agents. Those who violate the law will be held accountable,” the department stated.
How Fintech Loopholes Enabled Criminal Activity
Brazil’s booming fintech sector has created opportunities for financial inclusion but has also introduced significant vulnerabilities. The country now hosts more than 1,500 fintech firms, making up nearly 58% of all such companies in Latin America. This rapid expansion, combined with weak regulations, has allowed criminals to exploit digital banking platforms for illicit financial activities.
Kleber Cabral, a tax auditor with Brazil’s Federal Revenue Service and vice president of the National Association of Tax Auditors (Unafisco), pointed out the critical regulatory gaps.
“Unlike traditional banks, fintechs are not required by the Central Bank to report their financial activities to the Federal Revenue Service,” Cabral explained. “So, the country is blind to those who want to exploit this legal and regulatory loophole to commit crimes.”
Brazil’s failure to implement stringent fintech oversight has drawn international criticism. The country has been a signatory to the United Nations Convention Against Corruption (Merida Convention) since 2003, but its regulatory weaknesses continue to undermine compliance with global anti-money laundering standards.
Public Backlash Halts Critical Financial Oversight
In January, Brazil’s Federal Revenue Service attempted to introduce stricter monitoring of financial transactions exceeding BRL 5,000 (approximately $900), covering digital banks and fintechs. However, the measure was swiftly revoked after a viral social media campaign fueled public outrage.
Opposition congressman Nikolas Ferreira posted a video claiming the government was attempting to scrutinize informal workers as if they were “major tax evaders.” The post received over 327 million views on Instagram alone, prompting the government to abandon the regulation amid intense criticism.
Cabral criticized the decision, arguing that poor communication led to unnecessary controversy. “The Federal Revenue Service itself communicated very poorly. There was all that controversy surrounding the idea that this was meant to tax the poor, but in reality, it wasn’t. But, well, that’s another issue,” he said.
Conclusion: A Call for Urgent Reforms
The arrest of a former police officer turned fintech owner linked to money laundering for one of Brazil’s most powerful criminal organizations highlights a major crisis in the country’s financial regulatory system. While fintechs offer innovative financial solutions, the absence of robust oversight has allowed criminal networks to exploit digital banking services on a massive scale.
Authorities must act swiftly to strengthen financial crime regulations, close loopholes in the fintech sector, and ensure that law enforcement agencies remain free from criminal influence. Without decisive action, Brazil risks further erosion of its financial integrity and international reputation.
Related Links
- Brazilian Federal Police Official Website
- Financial Action Task Force (FATF) Reports
- Central Bank of Brazil Regulatory Guidelines
- GAECO – Special Action Group for Combating Organized Crime
- National Association of Tax Auditors (Unafisco)
Other FinCrime Central News Stories about Criminals With Insider Knowledge
- Ex-Mauritius PM Pravind Jugnauth Arrested: Shocking Money-Laundering Scandal
- Spanish Police Chief Arrested with €20 Million in Cash
- Novo Banco Fires Chief Risk Officer Over Suspicious Transactions
Source: OCCRP
