Sanctions, SWIFT, and Diplomatic Tension: The Moraes Case and the Magnitsky Act

By J. Rubens Scharlack

Introduction

The recent sanctions imposed by the United States (U.S.) against members of the Brazilian Judiciary—most notably Minister Alexandre de Moraes—have reignited debates over sovereignty, international jurisdiction, freedom of expression, and the limits of legal cooperation between sovereign states. The U.S. government argues that such sanctions are based on its domestic legislation, particularly the Magnitsky Act and Executive Order 13818. In Brazil, the controversy took a new turn with the decision of Minister Flávio Dino, establishing that foreign orders, including sanctions, do not produce automatic effects in Brazilian territory without prior recognition (homologation) by the Federal Supreme Court (STF).

In this article, we examine the legal basis of the American measures, Brazil’s legal framework, the diplomatic and economic developments of the crisis, a relevant historical parallel (FATCA), and practical conclusions for Brazilians with interests in the U.S. and Americans with interests in Brazil.

The Magnitsky Act and Executive Order 13818

The original Magnitsky Act (Sergei Magnitsky Rule of Law Accountability Act of 2012, Public Law 112-208) was enacted to punish Russian officials involved in the death of lawyer Sergei Magnitsky by freezing assets and imposing visa restrictions. Later, the U.S. Congress approved the Global Magnitsky Human Rights Accountability Act, allowing the imposition of sanctions on foreign individuals accused of human rights violations or significant corruption, regardless of their country of origin.

Executive Order (EO) 13818, signed by Donald Trump in 2017, expanded and implemented the Global Magnitsky Act. It grants the State Department and the Treasury Department broad authority to freeze assets and deny entry to the U.S. for foreigners deemed responsible for such violations. Sanctions may be triggered by internal reports, U.S. intelligence, or even political pressure.

EO 13818 establishes criteria such as:

• Serious human rights abuses;

• Significant corruption;

• Actions that threaten the political or economic stability of countries or regions.

In Brazil's case, the U.S. Department of State claimed that Minister Alexandre de Moraes violated fundamental rights by issuing secret orders to suspend social media accounts of U.S. citizens and by authorizing pre-trial detentions without due process.

Brazil’s Response: Jurisdiction, Sovereignty, and Recognition

In response to the sanctions' repercussions, Minister Flávio Dino issued a decision reaffirming national sovereignty by requiring judicial recognition (homologation) for foreign acts—including sanctions—to have legal effect in Brazil. Although the full decision is not yet available on the STF’s website, our analysis is based on excerpts reported by the national press.

According to established STF jurisprudence, foreign judgments, including arbitral awards, only take effect in Brazil after homologation (Federal Constitution, art. 102, I, “h” and Brazilian Code of Civil Procedure, arts. 960–965). However, this case does not concern judicial rulings but administrative acts from a foreign Executive Branch (executive orders), raising debate over the applicability of the homologation requirement to such measures.

Still, Dino’s decision signals that for foreign unilateral measures to have legal effects domestically, some form of formal internalization is required, thus safeguarding due process and Brazilian jurisdictional sovereignty.

The Mais Médicos Case and the Expansion of Sanctions

Recently, other former Brazilian government officials were sanctioned by the U.S. State Department for their involvement in the Mais Médicos program, in which Cuban doctors worked in Brazil under conditions the U.S. deemed akin to forced labor. The American criticism focused on the role of the Pan-American Health Organization (PAHO) as an intermediary and on the alleged circumvention of U.S. sanctions on Cuba.

This case shows that Magnitsky sanctions may target not only individuals involved in civil and political rights violations, but also public officials whose conduct is interpreted as complicit with labor abuses or sanctioned regimes.

SWIFT “Cancellation”: Real Risk or Political Noise?

Recent news articles suggested the possibility of Brazil being disconnected from the SWIFT system (Society for Worldwide Interbank Financial Telecommunication), the primary global messaging network for financial institutions. While this scenario sparked alarm, there is no concrete evidence such a measure is underway. SWIFT itself told the press it does not impose sanctions unilaterally and only complies with official instructions from its central regulators, located in the European Union (and Belgium), where the organization is headquartered.

SWIFT is a global, private, not-for-profit cooperative composed of thousands of financial institutions. Its role is technical—facilitating standardized messaging between banks—and not normative or punitive. Its governance is exercised by collegiate bodies under EU legal frameworks. Therefore, any potential exclusion of Brazil would require a significant multilateral diplomatic effort.

Nonetheless, even the perceived risk of exclusion may undermine international confidence in the country and impact investment flows and sovereign risk pricing.

U.S. Contradictions and the FATCA Precedent

In a previous article, we explored the contradictions in U.S. foreign policy when it condemns extraterritorial overreach by other countries while maintaining unilateral instruments of its own.

One such example is FATCA (Foreign Account Tax Compliance Act), which imposes strict obligations on foreign banks to identify U.S. account holders, under penalty of tax withholding on remittances from the U.S. to such banks. In the case of FATCA, Brazil chose a diplomatic approach, signing an Intergovernmental Agreement (IGA) with the U.S. to internalize and coordinate the application of the U.S. rule domestically (specifically within the Brazilian IRS), thereby shielding its banks from direct sanctions.

This precedent demonstrates that legal and commercial confrontations between sovereigns can be avoided through institutional solutions, while unilateral sanctions tend to generate resistan

ce, hinder international cooperation, and undermine the credibility of the democracies that impose them.

Final Considerations

The impasse between Brazil and the United States, though heavily politicized, reveals important legal dilemmas: the balance between national sovereignty and extraterritorial jurisdiction, the validity of unilateral international sanctions, and the protection of due process in contexts of diplomatic tension.

While the U.S. government adopts retaliatory measures based on domestic laws, Brazil reaffirms its Constitution by requiring formal procedures for the internalization of sanctions. From a legal standpoint, this tension calls for caution, institutional restraint, and—above all—dialogue between sovereign nations.

For Brazilian individuals and businesses operating or present in the U.S., and for Americans with investments in Brazil, this moment demands heightened awareness, risk strategy reassessment, and qualified legal guidance. The consolidation of a safe and predictable environment depends now, more than ever, on building legal bridges—not geopolitical walls.