Brazilian Banks Caught Between U.S. Sanctions and Supreme Court Rulings

Brazilian Supreme Court Justice Alexandre de Moraes has warned against Brazilian banks seizing or blocking domestic assets in response to U.S. orders. The standoff, fueled by U.S. sanctions on Moraes, puts Brazilian financial institutions in a bind, risking repercussions from both the U.S. and Brazil's judiciary.

Brazilian Supreme Court Justice Alexandre de Moraes recently warned that Brazilian financial institutions could face penalties for complying with U.S. sanctions that require seizing or blocking domestic assets. His comments intensify a standoff impacting Brazilian banks, caught between U.S. demands and orders from Brazil's highest court.

In an interview from Brasilia, Moraes acknowledged the jurisdiction of U.S. law over Brazilian banks operating in the United States, but insisted such laws should not be applied domestically without Brazilian legal validation, warning of potential penalties under Brazilian law. His remarks follow a court ruling by Justice Flavio Dino emphasizing the non-automatic application of foreign laws in Brazil.

The U.S. imposed sanctions on Moraes, citing human rights abuses, leading to a diplomatic and legal clash that complicates operations for Brazilian financial institutions globally. The sanctions stem from allegations of suppressing freedom of expression, with broader implications for Brazil-U.S. relations, according to authorities involved.

(With inputs from agencies.)