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US sanctions target Justice Moraes under Global Magnitsky

Act

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Brazilian banks assess impact on domestic and

international

transactions

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Lula condemns sanctions as interference in judiciary

By Marcela Ayres

BRASILIA, July 31 (Reuters) - Brazilian banks are

scrambling to assess the domestic fallout from sweeping U.S.

sanctions against a Supreme Court justice who oversees a

criminal trial against an ally of President Donald Trump, as

legal teams weigh how the move to isolate the judge financially

could ripple through Brazil's financial system.

Justice Alexandre de Moraes is presiding over the trial of

former President Jair Bolsonaro, a far-right leader who is

accused of plotting a coup to overturn his 2022 electoral loss.

Bolsonaro has denied attempting to overthrow the government, but

said he attended meetings aimed at reversing the vote.

Trump, who has called the trial a "witch hunt" and revoked

Moraes' U.S. visa, on Wednesday sanctioned the justice under the

Global Magnitsky Act, accusing him of authorizing arbitrary

detentions and suppressing free speech.

The act allows the U.S. to impose economic penalties against

foreigners it considers to have a record of corruption or human

rights abuses. The U.S. sanctions were accompanied by an

executive order imposing steeper tariffs on Brazilian goods that

also cited the case against Bolsonaro.

Sanctions under the Magnitsky Act freeze assets under U.S.

jurisdiction and bar U.S. firms from doing business with

designated individuals.

While Moraes holds no assets in the United States, according

to Brazil's Supreme Court, the sanctions could prevent him from

using payment cards backed by U.S. financial companies such as

Visa and Mastercard ( MA ).

The global reach of the U.S. financial system often leads

foreign banks to restrict a wider range of transactions by

sanctioned individuals to avoid secondary sanctions, raising

questions of how far Brazilian financial institutions need to go

to comply with the new orders.

Bradesco CEO Marcelo Noronha told analysts on

Thursday the bank was awaiting legal opinions from law firms it

hired to assess the sanctions' reach.

A source at another top-five bank in Brazil said its initial

view is that domestic operations are unaffected, but

international and foreign exchange transactions could breach

U.S. rules.

"So far, the consensus is that the safest ground is limited

to transactions in local currency," the source said on condition

of anonymity because the bank's analysis is private.

Brazil's central bank did not immediately comment on whether

it had issued guidance to financial institutions on the matter.

Eduardo Bolsonaro, the former president's son and a lawmaker who

is in the U.S. lobbying for his father and for amnesty for

rioters who stormed government buildings following the election

loss, praised the sanctions online, saying the cost of

supporting Moraes "will be unbearable" and would be closely

monitored by U.S. authorities.

President Luiz Inacio Lula da Silva condemned the sanctions

as unacceptable interference in Brazil's judiciary, while Vice

President Geraldo Alckmin said that the Magnitsky Act should not

punish judges for doing their job.

In a statement on Wednesday, Brazil's Supreme Court said it

"will not deviate from its role of upholding the constitution

and the country's laws."

On Wednesday night, Moraes was seen waving and smiling to

fans at a soccer match. A picture of him making a rude gesture

during the match circulated widely on social media and the local

press.