U.S. Sanctions on Brazil’s Justice Moraes Leave Banks Trapped Between Courts and Washington

The US Treasury Department announced on July 30, 2025, that it sanctioned Brazilian Supreme Court Justice Alexandre de Moraes under the Global Magnitsky Act.

Officials cited his alleged role in restricting political rights and targeting critics. The sanctions froze any US-based assets of Moraes and prohibited US individuals or entities from conducting business with him.

Any transaction involving dollars must now block his access. Even payments in other currencies may stop if eventually cleared in dollars, the main global settlement currency.

This means that bank accounts, cards, and contracts linked to Moraes face immediate restrictions. Financial institutions in Brazil, such as Banco do Brasil, face a sharp dilemma.

Banco do Brasil handles part of the payroll of the Supreme Court and operates in the US market. If OFAC orders it to cut ties with Moraes and the bank refuses, the bank risks fines and even exclusion from US operations.

That could jeopardize contracts, partnerships, and assets abroad. On the other hand, Brazil’s Supreme Court has not recognized the sanctions and Justice Flávio Dino has allowed Moraes to appeal within Brazil.

This exposes banks to contradictory obligations that they cannot easily resolve. Executives in Brazil described the situation as a crisis without precedent.

Compliance and legal teams restarted reviews from the ground up to determine what operations are legal. They warned that ignoring OFAC would threaten the stability of their businesses, but disobeying Brazilian judicial rulings would create conflicts at home.

The crisis escalated as Washington simultaneously raised tariffs on Brazilian exports by 50 percent and revoked visas for Moraes, his relatives, and other officials. These actions intensified diplomatic pressure.

Brazilian lawmakers visited Washington to argue against the sanctions and their side effects. However, US authorities maintain that the sanctions reflect human rights concerns, not trade disputes.

Justice Moraes has stated that he will challenge the measures in US courts. Yet experts note that no individual has ever succeeded in reversing Magnitsky sanctions through litigation. That leaves Brazilian banks and businesses in a prolonged state of uncertainty.

The case matters because it highlights how US sanctions extend far beyond America’s borders. Brazil’s banks must balance loyalty to domestic law with the reality of global financial interdependence.

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