Major operation against Brazil’s largest drug cartel

The PCC is a criminal organization that emerged in 1993 inside Brazil’s prison system, concentrated in the state of São Paulo. Its core activities revolve around international drug trafficking, particularly cocaine, sourced from South American countries such as Bolivia and Venezuela and exported to overseas markets via Brazil. According to the São Paulo Public Prosecutor’s Office, by 2024 PCC had more than 40,000 members, mostly in Brazil, but also including over 2,000 members operating across 28 countries, such as Germany, Ireland, Turkey, Portugal, Japan, France, the United Kingdom, and the United States. In recent years, Brazilian authorities have intensified their crackdown on PCC and organized crime through relevant enforcement operations. For example, in April 2024, investigators targeted public transportation companies in São Paulo city accused of bid rigging and serving as money-laundering fronts for PCC.

Fabyola En Rodrigues, a Brazilian criminal lawyer and partner at Demarest Advogados who specializes in money laundering and corporate crime, shared her impressions of the investigations. She noted that the operation is unique in bringing together authorities at both the federal and state levels, with coordination across the criminal, administrative, and tax spheres. According to Ms. Rodrigues, previous investigative efforts in the fuel sector had been handled primarily through tax regulation, but this operation marks a significant expansion into criminal enforcement.

One of last week’s operations targeted São Paulo’s financial district, Avenida Faria Lima, the country’s main economic hub (Operação Quasar). Federal Police and Federal Revenue Office executed 42 search, seizure, and arrest warrants against companies and individuals allegedly involved in managing illicit funds for PCC. Investigators revealed that the criminal organization controlled approximately 40 investment funds with an estimated BRL 30 billion (USD 5.5 billion) in assets under management. These funds were allegedly used to disguise the proceeds from PCC’s criminal activities. According to the Federal Revenue Office, the money-laundering schemes relied on complex corporate structures, offshore fronts, and professional managers to blend illicit money with lawful investments. The media identified well-known financial institutions and fintechs reportedly involved in the scheme, including Reag Investimentos (a publicly-traded company), Trustee DTVM, Banco Genial, Buriti and BK Bank, which allegedly offered payment services, digital accounts, and investment products that facilitated the circulation and concealment of illicit funds.

The second and largest operation targeted the fuel sector (Operação Carbono Oculto), which was coordinated by the organized crime unit within the State Prosecutor’s Office of São Paulo and arose from an investigation initiated in 2023. Authorities uncovered a network of over 1,000 gas stations and distributors controlled by PCC across São Paulo, Espírito Santo, Goiás, Mato Grosso do Sul, Mato Grosso, Paraná, Rio de Janeiro, and Santa Catarina. Between 2020 and 2024, these businesses generated approximately BRL 52 billion (USD 9.6 billion).

The fuel sector scheme allegedly relied on the issuance of fraudulent invoices, underreporting fuel sales, and the creation of false accounting records to commit large-scale tax evasion and launder money. Shell companies acted as intermediaries, providing a facade of legitimacy to financial flows. The authorities found transactions between PCC-related gas stations and Grupo Aster/Copape, a conglomerate operating ethanol power plants and fuel distribution, identified as central to the scheme. The investigation uncovered that Grupo Aster/Copape allegedly operated on occasion through front companies, such as G8LOG Agro Ltda. and Moska Log.

Investigators also discovered how the PCC used the fuel supply chain as a source of revenue and a money-laundering tool. Criminal fronts imported chemical additives and solvents used in gasoline and diesel production, such as naphtha and hydrocarbons, which were distributed to cartel-controlled fuel distributors and resold through a network of gas stations. In this context, the operation also targeted companies Boxter (a gas station network held by the Cepeda Gonçalves family) and Sol Fuel (fuel distribution) for allegedly transacting with PCC-controlled entities. In addition, PCC also reportedly illegally imported methanol, which was improperly mixed into gasoline and diesel to increase production. 

This process allowed the PCC not only to generate massive profits but also to disguise criminal proceeds within wholesale and retail fuel transactions, according to Brazilian authorities. Part of the profits were also used to acquire four ethanol power plants, one port terminal, and 1,600 trucks, among other properties, which allowed PCC to incorporate an entire fuel business supply chain within its illicit operation. New information made available by the investigators in the following days indicated additional groups allegedly involved in the illicit scheme, including the refinery Refit (formerly known as Grupo Manguinhos).

In addition to its operations in the fuel sector, the investigation revealed that the PCC maintained a network of at least nine bakeries and convenience stores to launder money, all of which were managed through Dubai Administração de Bens Ltda. 

A third arm of the investigation was carried out in Paraná, where Federal Police targeted local gas stations and distributors tied to drug cartels (Operação Tank). These businesses were identified as key money-laundering hubs, responsible for moving an estimated BRL 23 billion (USD 4.3 billion) in illicit transactions. Similar to the São Paulo network, the Paraná scheme relied on fraudulent invoicing, shell companies, and fictitious operations to integrate criminal money into the formal economy.

Together, the three operations reveal the depth and sophistication of the PCC’s economic activities, with at least BRL 75 billion (USD 14 billion) allegedly laundered through overlapping schemes plus BRL 30 billion (USD 5.5 billion) worth of potential criminal proceeds under management by financial institutions and fintechs.

Demarest partner Rodrigues noted that investigators are now very likely to shift their focus to the importation of the chemical additives (i.e. naphtha, hydrocarbons and methanol), a line of investigation that could expose illicit operations extending into foreign countries, including jurisdictions subject to U.S. sanctions. She also noted that future investigative fronts may uncover the participation of public officials in the scheme.

According to the authorities leading these investigations, additional operations are expected in the coming weeks and months to target other branches of the PCC’s activities, particularly those connected to money laundering. Officials believe that evidence obtained during the August 28 searches and seizures will expose further groups and sectors tied to the cartel’s illicit schemes. At the same time, after only six of the 14 individuals subject to arrest warrants were located, the Federal Police reportedly opened a new inquiry into possible information leaks ahead of the operation on suspicion that the elusive eight others may have been tipped off. 

Ms. Rodrigues also highlighted the positive impacts of the operations, noting that they will certainly lead to stronger regulation and closer monitoring of both the fuel industry and the financial sector. She further observed that several member companies of the Instituto Combustível Legal (ICL) — an alliance of market players that promotes integrity and fair competition in the fuel sector — reported a surge in their stock prices following the operation.

In that sense, the Federal Revenue Office (Brazil’s tax authority) issued Ordinance No. 2,278 on August 29, which imposed on fintechs the same reporting obligations that had previously applied only to traditional banks, particularly regarding account information linked to payment services. The measure aims to prevent the use of general accounts maintained by fintechs that pool funds from multiple clients without individualized tracking of their sources, which reportedly was a regulatory gap exploited by PCC to launder money.

In addition, in the days following the operations, the Brazilian Congress began to advance the “Devedor Contumaz” bill (persistent debtor). The proposal aims to curb habitual tax delinquency by imposing stricter penalties on repeat offenders, including loss of benefits, bans on public procurement, and even dissolution of companies. It also expands the power of the Brazilian regulator for Oil, Gas and Biodiesel (ANP, Agência Nacional do Petróleo, Gás Natural e Biocombustíveis) to enforce additional requirements on fuel companies, such as proof of lawful capital source, disclosure of beneficial owners, and minimum corporate capital thresholds.

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This article was written by Heitor Araújo. Heitor is an Associate in the Corporate Investigations team at The Risk Advisory Group in Washington, D.C. He is a Brazilian-qualified lawyer and an LL.M. graduate from Georgetown University Law Center with over seven years of experience in corporate investigations, anti-corruption enforcement, and compliance. He has led and supported a range of high-profile investigations involving internal fraud, corruption, discrimination, harassment, and other misconduct. Heitor has also worked on major cross-border enforcement matters, including cases stemming from the Brazilian Operation Car Wash. Heitor has conducted anti-bribery and corruption due diligence for M&A transactions, as well as risk assessments for multinational and publicly traded companies, developing mitigation strategies aligned with regulatory, anti-corruption, and ESG standards.