Brazil Law 7.492/1986 regulates crimes against the National Financial System

Law 7.492/1986 defines crimes against the Brazilian National Financial System. Under this legislation, financial institutions are defined as legal entities—either public or private—that engage in the collection, intermediation, or application of third-party resources, including the management of securities and virtual assets.

Article 20 of this law specifically criminalizes the diversion of funds. This occurs when financing obtained from official or accredited financial institutions is applied to a purpose different from what was stipulated by law or contract. Legal scholars note that this specific criminal figure was created because such actions do not fit the traditional definition of fraud or larceny, as the deception occurs after the funds have already been obtained.

Regarding legal interpretation, the Supreme Federal Court has held that it is not necessary to prove the exact final destination of the funds, provided there is robust evidence of the diversion of the obtained amount. More recently, in August 2025, the Superior Court of Justice established that indictments under Article 20 must describe the alleged diversion clearly.