Senate Committee approves, in 1st vote, project that ends presumption of good faith in gold trading

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Text prohibits trade based solely on information from the seller – a rule already suspended by the STF. The project also prevents the sale of material taken from indigenous lands and environmental conservation areas. The Senate’s Economic Affairs Committee (CAE) approved this Tuesday (12) a project that creates rules to control gold trade in Brazil. The text also ends the presumption of good faith in proving the origin of the product (understand below). The proposal was approved by 16 votes to 0 in a first vote and will be submitted to a supplementary round at another meeting. After that, if there is no appeal for a vote in the main Senate plenary, it will go straight to the Chamber of Deputies for analysis. The text includes points from a project sent by President Luiz Inácio Lula da Silva (PT), in June 2023, after the Federal Supreme Court (STF) determined that the Executive adopt a new regulatory framework for the sector. Lula’s project has remained blocked in the Chamber since December. The central objective of the proposal analyzed by CAE is to expand measures to combat illegal mining. One of the provisions puts an end to the so-called presumption of good faith, created in 2013. Under the rule, which was suspended by the STF last April, the legality of gold purchased based only on information provided by sellers is presumed. In practice, it prevented proof of legal origin and served as a loophole for the negotiation of metals extracted from illegal mining. In addition to revoking the mechanism, the approved proposal establishes that the first sale of gold can only be carried out by the holder of the mining permit to a financial institution. The mining activity must be registered with the National Mining Agency (ANM), as must all metal purchase and sale operations. The proposal prohibits the trade of gold that originates on indigenous lands — regardless of the stage of demarcation — and in environmental conservation units. The text also provides for the obligation to issue an electronic invoice when purchasing and selling gold in the country. The Federal Revenue Service has already adopted digital issuance in March 2023. According to the project’s rapporteur, Senator Jorge Kajuru (PSB-GO), the requirement will “give greater control to these transactions” and will mitigate fraud in paper invoices. Failure to comply with marketing rules may lead to civil and criminal liability. You may also be punished, for example, with the suspension of your mining authorization and a fine that can reach R$1 billion. Tracking Another measure foreseen in the project to combat illegal trade is the creation of a Gold Transport and Custody Guide. The document will be issued by the seller to transport the metal to sale at a financial institution. Transport can only occur within the same gold mining region. The records will be individual, made by ANM, for each weight of gold to be sold by the seller. False information in the document may lead to civil and criminal penalties. Under the proposal, gold units sold without the guide or with untrue information could be seized. Metal that is transported, before the first sale, outside the producing region may also be seized. The project provides that financial institutions must maintain structures to identify and evaluate the information provided by sellers regarding the origin of gold. Irregularities or illegal sale attempts must be notified to public security bodies and the ANM. The text also prohibits mining owners or people related to those responsible for extracting minerals from exercising command or management functions in financial institutions for purchasing gold.

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