BRASILIA (Reuters) -Banco do Brasil said on Tuesday it is prepared to deal with “complex, sensitive” issues involving global regulations after a top court justice ruled foreign laws cannot be automatically applied in Brazil.
The statement followed a Reuters query about the U.S. Magnitsky Act, which President Donald Trump used last month to sanction Supreme Court Justice Alexandre de Moraes, accusing him of authorizing arbitrary arrests and curbing freedom of speech.
Moraes oversees the case of far-right former President Jair Bolsonaro, a Trump ally, who is charged with plotting a coup after losing the 2022 election to leftist President Luiz Inacio Lula da Silva.
Justice Flavio Dino, ruling in a separate case on Monday without mentioning the sanctions on Moraes, suspended local enforcement of foreign judicial decisions, laws, and executive orders that lack approval from Brazil’s sovereign bodies.
The ruling sparked intense debate among Brazilian banks already grappling with how to comply with the Magnitsky Act, which freezes assets under its jurisdiction and bars American firms from dealing with sanctioned individuals.
Given the global reach of the U.S. financial system, foreign banks often restrict a wider range of transactions to avoid secondary sanctions.
The dilemma between following a Brazilian Supreme Court order or U.S. sanctions weighed on shares of top Brazilian lenders, all of which fell on Tuesday.
State-controlled Banco do Brasil led the losses, trading down 4% by midday, while private lenders Bradesco, Itau, Santander (BME:SAN) Brasil and BTG Pactual all dropped more than 3%.
Banco do Brasil said in its statement it operates “in full compliance with Brazilian law, the regulations of more than 20 countries where it is present, and international standards governing the financial system.”
“The bank always closely monitors such matters and relies on specialized legal advice to ensure its practices align with the highest standards of governance, integrity and financial security,” it added.
