MercoPress. South Atlantic News Agency

De Moraes' canceled credit card poses dilemma to Brazilian banks

Not following US impositions could affect Brazilian banks' businesses abroad, but ignoring the STF could result in local penalties

After the Banco do Brasil (BB) canceled Supreme Federal Court Justice Alexandre De Moraes' Master Card following instructions stemming from the United States' sanctions under the Magnitsky Act against the magistrate, South America's largest country's institutions were gripped by controversy.

Fellow STF Justice Flávio Dino ruled earlier this week that decisions made by foreign countries or companies did not apply automatically within Brazil and that entities abiding by them would face consequences, with De Moraes concurring with that position. In the meantime, the BB offered De Moraes a national Elo card for domestic use. The Elo card belongs to Bradesco, Caixa Econômica Federal, and Banco do Brasil banks, and focuses on operations nationwide.

The measures include freezing De Moraes' assets in the US and banning his entry into the country, but the full scope of Republican President Donald Trump's steps is yet to be found out.

According to De Moraes, any financial institution applying US determinations would be in violation of national law. Hence, the dilemma, since not following US impositions could affect their business abroad, while ignoring the STF could result in local penalties.

This impasse caused significant volatility in Brazil's financial market. Shares of major Brazilian banks fell after the US measures were announced, reflecting investors' fears that institutions would be caught in a dispute between jurisdictions.

”Banco do Brasil is an institution that has the number 1 CNPJ (Corporate Taxpayer ID) in this country. It is very irresponsible when a Brazilian comes to question the solidity, security, and integrity of a company like Banco do Brasil,” said BB BB President Tarciana Medeiros.