STF unanimously suspends ‘good faith’ in the gold market – 05/03/2023 – Market

The STF (Federal Supreme Court) unanimously confirmed, on the night of this Tuesday (2), the suspension of the legal provision that instituted the so-called “presumption of good faith” in the gold trade.

This instrument allows gold to be traded in Brazil only based on information from sellers about the origin of the product.

The court chose to follow the individual decision handed down by Gilmar Mendes on April 4, which suspended the application of the use of so-called good faith to attest to the legality of gold. The trial was held in a virtual plenary, where ministers can place their vote directly in the electronic system of the STF.

On Saturday (29), ministers Edson Fachin, Cármen Lúcia, Dias Toffoli, Rosa Weber (president of the court) and Alexandre de Moraes accompanied the rapporteur’s vote.

This Tuesday (2), ministers Luís Roberto Barroso, Luiz Fux, André Mendonça and Nunes Marques followed the same understanding.

By suspending this instrument, which is provided for in a 2013 law, Gilmar stated that “the legislative diploma in question made private monitoring unfeasible by removing responsibility from the buyer, which encouraged the illegal market, leading to the growth of environmental degradation and the increase of violence in the municipalities where mining is illegal”.

The minister also determined the adoption, within 90 days, by the Executive Power of the Union, of a new normative framework for the inspection of the gold trade.

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

The PSB and the Sustainability Network presented the first action of this type in November last year, and the Green Party ADI was filed in January 2023.

The rule exempted gold buyers, basically DTVMs (dealers of bonds and securities), from questioning the first seller about the origin of the product.

This measure is pointed out by specialists in the fight against environmental and financial crime as the main legal loophole for laundering gold extracted from indigenous lands and environmental reserves.

The government of Luiz Inácio Lula da Silva (PT) had been preparing to repeal the law of presumption of good faith. A version of the text obtained by Sheet established a series of requirements in transactions with the metal.

The provisional measure being elaborated by the government could also pave the way for the implementation of traceability, an old claim of those who combat illegal mining.

The minister of the Ministry of Justice and Public Security, Flávio Dino (PSB), has already criticized the instrument in an interview on the Voz do Brasil program, arguing that the norm served to legalize clandestine gold and should be considered unconstitutional.

Dino’s speech was made at the end of January, when the humanitarian crisis of the Yanomami had exploded.

At the end of March, the Federal Revenue Service published a normative instruction in which it adopts the electronic invoice for the sale of gold from mining, the first change in a package of legal amendments foreseen by the federal government for mining.

The Ministry of Indigenous Peoples, in a suggestion sent to help the AGU formulate its position in the STF, had been categorical in stating that good faith is one of the norms that increase the risk to life for indigenous communities.

In a vote given when suspending good faith, Minister Gilmar Mendes also stated that “this spurious consortium, formed between illegal mining and criminal organizations, needs to be paralyzed as soon as possible.”

“In addition to the obvious damage to the environment, compromising human health, including, in particular, the indigenous population, illegal mining activity paves the way for other crimes, contributing to the increase in crime and insecurity in the region”, wrote the reporter.