Central Bank moves against fintechs’ controversial ‘umbrella accounts’

The Central Bank this week approved sweeping new regulations aimed at ending a financial structure known as contas-bolsão, or “umbrella accounts,” which officials say have been used to obscure the origins of money flowing through Brazil’s fast-growing fintech sector.

The new rules require banks, fintechs and payment institutions to close all irregular umbrella accounts by December 1. These accounts, often opened by fintechs in the name of a single company but holding money from thousands of clients, have become a focal point in Brazil’s effort to curb money laundering, financial fraud and tax evasion.