Voices from the field – Leopoldo Pagotto

Leopoldo Pagotto

Freitas Leite e Avvad Advogados, São Paulo

In your professional experience, what is the most significant anti‑corruption risk or enforcement challenge currently affecting your country or region?

In Brazil, the most significant anti-corruption enforcement challenge is the current paradox of the decline of traditional enforcement, coupled with the rise of organised crime infiltrating corporate structures.

After the end of Operation Car Wash, there has been a noticeable decrease in state-led anti-corruption investigations and sanctions against corporations. This structural shift has created a perceived enforcement vacuum. Simultaneously, we are observing a concerning trend where organised crime is adopting highly sophisticated methods, leveraging legitimate corporate governance structures and creating complex fronts to launder money and fund illicit activities.

The intersection between organised crime and corporate corruption is now the most critical risk for compliance practitioners. While companies may feel less immediate pressure from regulatory authorities regarding traditional bribery, they are increasingly exposed to severe risks from criminal infiltration. Consequently, compliance programmes and internal investigations must evolve beyond traditional anti-bribery metrics to address the covert structural challenges posed by illicit organisations.

How is this issue being addressed in your organisation, sector or jurisdiction?

Our jurisdiction and legal sector are witnessing a gradual evolution toward risk-based resilience and public-private dialogue. While state-level enforcement fluctuates, regulators and practitioners are increasingly focusing on modernising compliance frameworks to detect non-traditional threats. In corporate practice, compliance programmes are being restructured beyond simple anti-bribery metrics, incorporating advanced data analytics, enhanced supply chain due diligence and deeper investigative protocols to identify illicit infiltration. Rather than relying solely on reactive enforcement, the legal sector is prioritising preventive capacity-building, helping organisations adapt to sophisticated risks.

Based on your experience, what is one practical lesson, implementation challenge or effective approach that may be relevant to practitioners in other jurisdictions?

A critical practical lesson for global practitioners is that traditional anti-bribery due diligence is no longer sufficient. We must integrate robust counter-terrorism financing and anti-money laundering frameworks into standard corporate compliance. A stark example of this shift is the US government's move to designate major Brazilian organised crime syndicates, such as the Primeiro Comando da Capital and Comando Vermelho, under severe sanctions regimes as terrorist and transnational criminal organisations. For practitioners globally, this transforms a localised security issue into a massive international compliance risk. The primary implementation challenge lies in third-party screening. These groups infiltrate legitimate supply chains, logistics and real estate. If a multinational company fails to vet its local partners and inadvertently contracts a front company tied to the PCC or CV, it faces not only local backlash but severe US sanctions. The effective approach is to completely overhaul KYC protocols, treating organised crime infiltration as a top-tier international sanctions risk.

Looking ahead, what emerging development, regulatory shift or risk area are you monitoring most closely?

Looking ahead, the development I am monitoring most closely is the long-overdue advancement of comprehensive whistleblower protection legislation in Brazil. For years, crucial bills aimed at establishing robust reporting channels, anti-retaliation guarantees and financial incentives have remained stalled in the legislature due to a lack of political will. This legislative inertia is a critical vulnerability. As corporate risks grow more complex, particularly with the infiltration of organised crime, the absence of state-sanctioned protections severely discourages insiders from exposing sophisticated illicit networks. I am watching for a much-needed political shift to finally prioritise this agenda. Without enacted and modernised whistleblower laws, corporate compliance programs are effectively handicapped. We need policymakers to move beyond rhetoric and provide companies and society with this essential tool for the early detection and mitigation of corporate misconduct.