Operation Hidden Carbon: Unveiling the Massive Fraud in Brazil's Fuel Sector

Brazil's federal police and revenue service kicked off large-scale operations on Thursday targeting significant money laundering and fraud schemes related to organized crime within the fuel sector.

The aim is to dismantle schemes that allegedly diverted tens of billions of reais using financial services firms and investment funds to camouflage illicit gains, significantly impacting Brazil's fuel industry, according to authorities. Major multinational energy firms have been combating organized crime infiltration in their distribution networks in Brazil for years.

The 'Hidden Carbon Operation' raids, marked as the largest action against such crimes by the tax revenue service, involved approximately 350 search warrants across eight states, attempting to block over 1 billion reais ($184.46 million) in assets. Allegedly, over 10 billion reais were involved in fuel imports, 52 billion through gas stations, and 46 billion via fintechs from 2020 to 2024, the authorities reported. Asset manager REAG Investimentos was among those targeted and expressed full cooperation with authorities. Simultaneously, the 'Quasar' and 'Tank' operations were initiated to address 23 billion reais allegedly moved within the fuel sector. Key government figures plan to discuss these operations in an upcoming press conference.