Ioannis Alexopoulos, Duncan Grieve, Pietro Grassi and Nikara Rangesh examine the Banco Master fallout in Thomson Reuters Regulatory Intelligence

The recent collapse of Brazilian challenger bank, Banco Master, has exposed a sophisticated fraud and money laundering network involving organised criminal groups operating within the mainstream financial ecosystem. The case represents a pivotal development for foreign investors and underscores the need to reassess assumptions about risk, oversight and exposure in cross-border investments. Foreign banks, fintechs and investors should:

• Expect regulatory scrutiny of clearing or brokerage relationships tied to Master’s instruments.
• Be alive to heightened exposure to money laundering, fraud and organised crime in high-growth and lightly regulated sectors.
• Implement robust due diligence processes that go beyond analysis of financial metrics to interrogate source-of-funds and beneficial ownership of proposed counterparties, as well as known links to criminal actors.
• Monitor incoming financial regulatory changes in Brazil that may require reassessment of current growth and investment strategies.  

The Rise and Fall of Banco Master

Banco Master was originally founded in 1970 as Banco Máxima, an institution which came close to bankruptcy in 2016. Around that time, Daniel Vorcaro, the son of a property developer from the state of Minas Gerais, led the group that bought the institution that went on to become Banco Master.

Master grew rapidly under Vorcaro's leadership, attributable to the well-above market returns it offered investors through high-yield savings instruments known as bank certificate deposits, or CDBs. Master's marketing framed CDBs as low risk by emphasising that they were insured by the Fundo Garantidor de Créditos (FGC) – an industry-backed scheme that guarantees up to R$250,000 (USD$47,500) compensation per investor in the case of bank failure.[1] Funds raised were invested in assets with low liquidity, debts owed by public-sector bodies and judicial payment orders. Master also backed distressed company turnarounds.[2]

The bank's success was reflected by Vorcaro's lavish lifestyle – in 2023, he bought a minority share in his hometown soccer club, Atlético Mineiro and reportedly spent over USD$3 million on his daughter's 15th birthday party.[3]

Master also planned to expand its operations beyond Brazil. In January 2022, Master acquired Portuguese bank, Banco BNI Europa, which Vorcaro described at the time as part of Master's plan to make it "the bank of Brazilians in Europe."[4] Master also rented out the last available office space in Miami's most exclusive skyscraper in 2024, but never moved in.[5] Similarly, Master leased a top-floor office in London in early 2025, but told the Financial Times in February that plans to open a UK branch had been suspended and it did not intend to occupy the space.[6]

Roughly 1.6 million creditors held deposits and investments with Master totalling R$41 billion before its collapse late last year.[7] As investigators would later discover, Master had been carrying out transactions with non-existent assets to create the impression of financial solidity.

As part of this scheme, between January and May 2025, Master sold fake credit portfolios to state-run bank Banco de Brasília (BRB) for over R$12 billion without proper valuation. This artificially propped up Master's accounts with a view to convincing regulators that it was safe for BRB to buy Master.[8]

In March 2025, Master agreed for 58% of the bank to be acquired by BRB at 75% of its book value. However, the acquisition was blocked by the Central Bank of Brazil (Banco Central do Brasil) (BCB) in September 2025 because of unresolved questions about Master's accounts.[9] This decision came despite significant political pressure to approve the deal, allegedly due to Vorcaro’s relationships with members of Brazil’s judiciary and political elite, in a misguided attempt to minimise external scrutiny of the transaction.

In November 2025, Master announced that it had commenced negotiations for acquisition by Fictor Holding Financiera. The following day, the BCB ordered Master’s liquidation citing a severe liquidity crisis and serious regulatory violations.[10] On the day of the liquidation order, the Federal Police arrested Vorcaro at São Paulo’s international airport as he was allegedly fleeing to Dubai.[11]

Whilst Vorcaro was later released (but ordered to wear an ankle monitor), he was arrested again on 4 March 2026 as a result of additional findings that go beyond financial misconduct. Prosecutors allege that messages found on Vorcaro's mobile phone in a group chat called "The Gang" evidence that he was planning violence against people whom he considered adversaries, including journalists.[12]

Operation Compliance Zero

Both of Vorcaro's arrests were carried out as part of an ongoing investigation of Master's activities by the Federal Police called Operation Compliance Zero. Prosecutors have secured court orders freezing R$5.7 billion in assets belonging to suspects under investigation for alleged crimes connected to Master such as racketeering, fraudulent management ⁠of a financial institution, ⁠market manipulation ​and money laundering.[13]

Prosecutors are now reviewing court-authorised access to bank and tax records of 101 parties as well as evidence seized from 42 locations – an exercise that Reuters reports will take up to four to six months.[14]

Potential Links to Organised Crime

Operation Compliance Zero is ongoing and the full extent of the conduct and affected parties will not be known for some time. However, investigators have identified links between Master and entities who are also being investigated for their role in the money laundering activities of the Primeiro Comando da Capital ("First Capital Command") (PCC).

The PCC is the largest criminal organisation in Brazil, with an estimated 40,000 members and operations across 28 countries. It is the most powerful player in Brazil's domestic cocaine market and a prominent supplier of cocaine moving through West Africa.[15] In 2021, OFAC designated the PCC pursuant to Executive Order 14059, a counter narcotics sanctions authority issued by President Biden.[16]

The PCC's operations have become increasingly sophisticated, culminating in the PCC's infiltration of São Paulo’s financial district through money-laundering and tax-fraud schemes targeting the energy sector and involving numerous financial institutions and fintechs.[17] These activities are subject to an ongoing investigation called Operation Hidden Carbon (Operação Carbono Oculto) launched in August 2025 by Federal and State authorities. One of the entities being investigated by Operation Hidden Carbon is the investment fund manager, Reag.

The BCB has identified six investment funds managed by Reag as being involved in Master's fraud. To present an appearance of financial robustness, Master issued fake loans which were invested in funds managed by Reag. Master and BRB further submitted requests to the BCB for capital injections, which proposed contributions sourced from the funds managed by Reag.[18]

Authorities are also investigating foreign exchange transactions worth R$2.8b between December 2018 and April 2021 involving Master (when it was still Banco Máxima) and One World Services, a crypto asset trader based in the US[19] and allegedly involved in money-laundering networks associated with the PCC and Hezbollah. Federal Police say that One World Services used Master accounts to acquire bitcoins for individuals convicted of money laundering, with Master deliberately ignoring red flags regarding the source of customer funds.[20]

Relatedly, crypto operator Dante Felipini (nicknamed “Criptoboy") is reported to have laundered billions via cryptocurrency for the PCC, Hezbollah, members of the Calabrian mafia 'Ndrangheta and other criminal actors, using Master accounts and One World Services' framework.[21] As part of Operation Colossus, a police investigation that began in 2022, Felipini was arrested in São Paulo in January. He was sentenced to 17 years imprisonment by a Federal Court last October.[22]

The above overlap indicates that funds originating from Master’s fraudulent loan structures may have been commingled with criminal proceeds attributed to the PCC and other criminal actors. The emerging picture points to a material risk of organised crime exposure extending beyond Master’s immediate counterparties to other participants embedded in the same network of transactions.

Implications for Fintech in Brazil

Fintechs and other non‑traditional financial institutions often operate under lighter regulatory requirements, a strategy used in many jurisdictions to encourage innovation and to reach consumers underserved by large banks. This approach has been particularly successful in Brazil, where fintechs have flourished and established a strong presence in São Paulo’s financial centre, Faria Lima.

Brazilian regulation classifies institutions into prudential segments based on their size relative to national GDP,[23] with higher segments subject to more demanding regulatory requirements.[24] This structure has allowed smaller and newly established financial institutions to enter the market with greater ease, but, as the Banco Master and PCC cases demonstrate, the leniency of the obligations imposed on certain segments can also create room for irregular or even criminal practices. As a result, a national debate has emerged on whether the regulatory framework should be strengthened,[25] and investors have been reminded that formal compliance alone may not be sufficient protection against risks associated with fraudulent or criminal activity.

Cross-Border Developments

Insolvency and asset-tracing efforts will require cooperation between Brazilian authorities and foreign jurisdictions hosting related assets. In this regard, a US bankruptcy court recognised the BCB's liquidation of Banco Master last December. The presiding judge made orders[26]:

• freezing Master's US assets;
• barring commencement and continuation of legal actions connected to Master's US assets, liabilities and rights whilst the liquidation is conducted; and
• giving the liquidator designated by the BCB, EFB Regimes Especiais de Empresas (EFB), strong powers to investigate, gather evidence and take control of assets in the US.

In January, the EFB requested that a Miami bankruptcy court subpoena 22 US entities including real estate brokers, a bank, art dealers and auction houses for information about assets tied to Vorcaro, his partners and Master entities.[27]

The recognition by a US bankruptcy court of the BCB's liquidation of Banco Master (including asset freezes and broad investigatory powers granted to the liquidator) illustrates how rapidly insolvency proceedings can internationalise.  Cross-border litigants should be alive to the increased risk of parallel proceedings, anti-suit or stay orders, and the suspension of enforcement actions in key jurisdictions.  Creditors pursuing standalone recovery strategies abroad may find themselves barred where foreign courts defer to the main insolvency forum, reshaping leverage dynamics in ongoing proceedings.

The intersection of insolvency, fraud and alleged organised crime links also means that asset tracing may evolve into a multi-jurisdictional, quasi-criminal exercise involving regulators and prosecutors.  Counterparties should be aware that asset recovery efforts may trigger disclosure orders against banks, brokers, crypto intermediaries and professional advisers, as well as exposure to clawback claims and fraudulent transfer actions.  Recovery prospects will depend not only on the merits of the dispute, but on strategic navigation of insolvency recognition regimes, regulatory cooperation and asset-freeze mechanisms across jurisdictions.

Key Takeaways

• The Master collapse demonstrates how high-yield banking and fintech sectors are exposed to heightened money laundering and organised crime risk, particularly in markets perceived as commercially attractive due to lighter regulation. Investors should reassess cross-border risk assumptions to take this into account.
• Foreign banks, asset managers and fintechs with clearing, brokerage, fund or crypto relationships linked to Master instruments may face increased attention — including scrutiny of historic transactions.
• Financial institutions and investors in fintech products would be prudent to implement due diligence processes that go beyond traditional balance sheet analysis. Robust anti-money laundering frameworks must interrogate source-of-funds, transaction patterns, political exposure and links to criminal actors.
• Investors should closely monitor the tightening of financial regulations in Brazil as authorities respond to the Master fallout. For example, the BCB has announced a review of the FGC framework following the unprecedented payout triggered by Master’s collapse, signalling potential tightening of oversight around deposit instruments and fund structures.[28]
• Beyond regulatory implications, foreign investors who fail to identify and avoid transacting with counterparties linked to money laundering networks may face asset freezes, subpoena exposure and limitations on recovery actions outside the jurisdiction of their original investment as asset-tracing efforts cross-borders. The recognition of Master's liquidation in the US has brought these implications into sharp focus for its US counterparties.
• The adoption by Brazil in 2020 of the UNCITRAL Model Law on Cross-Border Insolvency (1997) introduced into Brazil a modern legal framework to address tracing and enforcing of assets for the benefit of creditors in a multitude of jurisdictions, while allowing the Brazilian insolvency practitioners to retain strategic control.

[1] Magalhaes, "BRB weighs new bid for Master after Brazil central bank blocks deal, source says" (4 September 2025, Reuters).

[2] Pooler and Langella, "How the bank behind London's most expensive office lease unravelled" (8 December 2025, Financial Times).

[3] Ibid.

[4] "Banco Master aims to make Portugal’s BNI Europa the ‘bank of Brazilians in Europe’" (20 January 2022, The Macao News).

[5] Cancel and Kaiser, "Miami’s Most Expensive Office Abandoned by Failed Brazilian Bank" (20 November 2025, Bloomberg).

[6] Pooler and Langella (n 2).

[7] Gual, "The Banco Master case: The $2 billion fraud probe that is shaking Brazil" (21 January 2026, El País).

[8] Ibid; Brito, "Banco Master probe in Brazil may take up to six months, source says" (16 January 2026, Reuters).

[9] Pooler and Langella (n 2).

[10] Gual (n 7).

[11] Ibid.

[12] Teófilo, "Vorcaro é preso de novo pela PF por determinação de André Mendonça em investigação do Banco Master" (4 March 2026, O Globo).

[13] Brito (n 5).

[14] Ibid.

[15] Feltan, Vianna Pinho and Bird Ruiz-Benitez de Lugo, "Atlantic Connections: The PCC and the Brazil–West Africa Cocaine Trade" (August 2023, Global Initiative Against Transnational Organized Crime).

[16] U.S. Department of the Treasury, "Treasury Sanctions Primeiro Comando da Capital (PCC) Operative" (14 March 2024) https://home.treasury.gov/news/press-releases/jy2180?utm, accessed 2 March 2026.

[17] Receita Federal, "Operação Carbono Oculto: RFB e órgãos parceiros combatem organização responsável por sonegação e lavagem de dinheiro no setor de combustíveis" (28 August 2025) https://www.gov.br/receitafederal/pt-br/assuntos/noticias/2025/agosto/operacao-carbono-oculto-rrb-e-orgaos-parceiros-combatem-organizacao-responsavel-por-sonegacao-e-lavagem-de-dinheiro-no-setor-de-combustiveis, accessed 2 March 2026.

[18] Riberiro, "Central Bank links Banco Master fraud probes involving BRB and Reag" (6 January 2026, Valor International).

[19] According to its LinkedIn profile (www.linkedin.com/company/oneworldservices/) accessed 2 March 2026.

[20] Tolotti, "Banco Master movimentou R$ 2,8 bilhões com empresa de criptomoedas investigada" (2 February 2026, Portal do Bitcoin).

[21] Ibid; De Abreu, "As falcatruas de um criptoboy" (13 September 2025, Piaui).

[22] Tolotti, "Empresário pega 17 anos de prisão por esquema milionário de criptomoedas com PCC." (20 October 2025, Portal do Bitcoin).

[23] See Resolution No. 4.553/2017 of the Central Bank (Banco Central do Brasil), available at https://normativos.bcb.gov.br/Lists/Normativos/Attachments/50335/Res_4553_v2_L.pdf, accessed 2 March 2026.

[24] See Central Bank of Brasil (Banco Central do Brasil) information regarding the "prudential regulation" which establishes the requirements for financial institutions under Brazilian law, available at https://www.bcb.gov.br/estabilidadefinanceira/regprudencialsegmentacao, accessed 2 March 2026.

[25] Queiroz, "Como o caso Mater expõe limites do sistema regulatório brasileiro" (31 Janurary 2026, G1), available at https://g1.globo.com/economia/noticia/2026/01/31/como-o-caso-master-expoe-limites-do-sistema-regulatorio-brasileiro.ghtml, accessed 2 March 2026.

[26] Campos, "U.S. court recognizes Banco Master liquidation, freezes assets" (9 January 2026, Valor International).

[27] Smith, "Brazilians Scour Florida for Art, Mansion Tied to Fallen CEO" (18 February 2026, Bloomberg).

[28] Grandi, "Banco Central vai rever regras do FGC e propor recomposição após Master consumir R$ 50 bilhões" (10 February 2026, Gazeta do Povo).