Brazil Tests Europe’s Formula to Guard Its Banks From American Sanctions

Brazil is studying a law modeled on Europe’s “Blocking Statute” to protect its citizens and companies from foreign sanctions.

The move gained urgency after the U.S. Treasury, using the Global Magnitsky Act, sanctioned Supreme Court Justice Alexandre de Moraes on July 30, 2025, blocking his assets under U.S. jurisdiction and restricting any dealings involving U.S. persons.

Europe created its statute in 1996 and updated it in 2018 when Washington re-imposed sanctions on Iran. The regulation forbids European companies from complying with certain U.S. measures and gives them legal tools to recover damages.

Its purpose is to defend sovereignty and shield domestic commerce from decisions taken abroad. Brazil now considers adapting that model. The Brazilian case shows why.

After Moraes’s listing, some banks with U.S. ties restricted his accounts and blocked transactions inside Brazil. The restrictions happened because global banks often follow U.S. rules automatically to avoid penalties.

Yet Brazil’s Supreme Court insists that no foreign law or executive order has automatic force in the country. On August 18, 2025, Minister Flávio Dino ruled that only Brazilian courts can validate such measures, with the exception of judgments from recognized international tribunals.

This legal standoff places companies in a difficult position. On one side, OFAC regulations apply to any transaction with a U.S. nexus, especially those routed through dollar clearing.

On the other, Brazilian law forbids enforcing sanctions that lack judicial approval. Firms must navigate both systems without breaking either, which creates heavy compliance risks.

The business implications are significant. Dollar access underpins international trade and finance, and U.S. enforcement is strict. At the same time, Brazil needs to guarantee legal certainty at home to maintain investment and financial stability.

Without clear rules, institutions may over-comply with U.S. restrictions, undermining domestic law and sovereignty. For Brazil, copying Europe’s statute could mark a decisive step.

It would signal that foreign measures cannot override national courts and would provide companies with a legal shield against outside pressure.

At the same time, the measure would test how far Brazil can protect its market without provoking deeper friction with Washington.

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