MP that changes gold law ends good faith and requires electronic invoice – 03/23/2023 – Market

The new regulations for controlling the origin, purchase, sale and transport of gold from mining throughout the country have entered the final stages of elaboration in the Civil House. The MP (Provisional Measure) on the subject has already been discussed and revised by the ministries involved in the discussion.

The text of the MP, which the Sheet had access, establishes a series of new requirements in transactions with the metal and paves the way for establishing traceability, an old claim of those who combat illegal mining. The MP also makes it clear that the gold seller is civilly and criminally responsible for the information provided about the metal during the sale and transportation.

Since the humanitarian crisis of the Yanomamis, the creation of a new law for mining has been identified as a priority by President Luiz Inácio Lula da Silva (PT).

“We hope that the minute now be forwarded to President Lula, so that he can give approval for it to go to Congress as quickly as possible”, says Larissa Rodrigues, manager of Instituto Escolhas, an entity that produced a series of studies in attempt to change the law in the sector.

According to Escolhas, 54% of the gold traded in Brazil has a suspicious origin.

The MP revokes one of the most controversial items in the current regulation, the presumption of good faith in the first sale of the metal. The norm, according to specialists involved in the fight against illegal mining, such as the PF (Federal Police) and the BC (Central Bank), is one of the main loopholes to ‘warm up’ gold taken from indigenous lands and environmental areas.

Good faith is part of a set of norms provided for in Articles 37 to 42 of Law No. 12,844 of 2013. The provisions were inserted by Deputy Odair Cunha (PT-MG) during the processing of an MP on agricultural insurance, and the text, sanctioned by Dilma Roussef. The new law under preparation revokes all these articles.

Today, two ADIs (direct actions of unconstitutionality) are being analyzed that question the presumption of good faith in the STF (Federal Supreme Court). The perspective is that the MP can bring regulatory support to the revocation of current rules if the court decides that they are unconstitutional.

The government’s proposal also makes it mandatory to issue an electronic invoice. Since 2001, an internal regulation of the Federal Revenue maintains the use of paper notes in the activity, although the tax authorities already require the digitalized document in most sectors.

Another important point of the text, considered vital for the fight against illegal gold, is the creation of the ore transport and custody document. This new document must be issued electronically.

The proposal also establishes a series of responsibilities for the institutions authorized by the Central Bank to make the first acquisition of the other, the DTVMs (Distribuidora de Títulos e Valores Mobiliários).

They are required to maintain risk management structures to identify, measure, evaluate, monitor, report, control the acquisition of gold, so that the legal origin of the metal they are trading is clear.

The DTVMs also become responsible for recording a series of information at the ANM (National Mining Agency), such as the service station, the agency or establishment responsible for the purchase, the number of the PLG (Mining Permission) of origin , as well as the amount purchased. The financial transaction needs to go through a bank account.

TM also does away with cross-participation in the activity. The owner of a DTVM and his relatives up to the second degree are prohibited from also being the owner of a mining mine, and vice versa. Cross-participation is pointed out as an alternative for criminal groups to act in the activity.

The MP also closes the gap for mining cooperatives to make the first sale. Only DTVMs will be able to do this transaction.

The starting point for discussion of the provisional measure was PL (bill) 2159/2022, authored by former deputy Joênia Wapichana (Rede-RR), with the support of other parliamentarians, such as Vivi Reis (PSOL/PA). The proposal, still pending in Congress, establishes mechanisms for tracking gold from mining.

Traceability is defended by NGOs, such as Escolhas, Instituto Ethos and Isa (Social and Environmental Institute), as well as by Ibram (Brazilian Mining Institute) —which represents large groups in the sector, such as Vale, Alcoa and Anglo American.