On March 19, 2025, the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) launched Operation Caixa-Forte to inspect and penalize financial institutions in the country that granted rural credit to properties embargoed for illegal deforestation in the Cerrado biome. Up to this point, Brazil has fined three banks in the states of Maranhão, Tocantins, and Piauí, totaling more than R$ 3.63 million in fines. In addition to financial penalties, these institutions may face suspension or prohibition of new financing and even the cancellation of environmental licenses.
IBAMA uses various databases for inspection purposes, including rural property records, vegetation suppression authorizations, and information on rural credit operations.
The Rural Credit Manual, which consolidates the norms approved by the National Monetary Council (CMN) and those disclosed by the Central Bank of Brazil, prohibits granting financing to properties embargoed for illegal deforestation. Item 10 of the section on social, environmental, and climatic impediments states:
“Rural credit will not be granted for business located on rural properties where there is an embargo by a competent environmental authority, federal or state, according to the competencies addressed in Articles 7 and 8 of Complementary Law No. 140, of December 8, 2011, resulting from the economic use of illegally deforested areas on the rural property and provided that it is registered in the list of embargoes of the Environmental Infractions and Embargoes Register of the Brazilian Institute of Environment and Renewable Natural Resources (Ibama).”
In addition to the penalties applied by IBAMA, financial institutions may also be sanctioned by the Central Bank of Brazil for non-compliance with financial rules. The areas embargoed by IBAMA are available for consultation on the agency’s website, allowing financial institutions to verify the regularity of properties before granting credit.
The prohibition of financing does not apply when: (i) the credit is exclusively aimed at the recovery of native vegetation in the embargoed area of the rural property, subject to the presentation of applicable documents (item 12 of CVM Resolution No. 5,193/2024) and (ii) until June 30, 2027, cumulatively meeting the requirements provided in item 12 of CVM Resolution No. 5,193/2024.
It is worth noting that, in addition to regulatory risks, financing embargoed properties can cause reputational damage to financial institutions, affecting their credibility with investors, clients, and civil society. Given this scenario, adopting effective monitoring tools, frequent audits, and greater transparency in credit granting are fundamental measures to mitigate risks and ensure that rural credit in Brazil promotes sustainable development rather than encouraging environmental degradation.
