Brazil Prepares for Possible Additional U.S. Sanctions Ahead of Bolsonaro Verdict
The trial of former Brazilian President Jair Bolsonaro, accused of a failed coup attempt following his defeat in the 2022 election, is set to end this Friday, September 12, 2025. With a conviction widely anticipated and calls from Bolsonaro allies for expanded U.S. action, Brazil is bracing for potential new sanctions targeting individuals and institutions connected to the case.
On July 30, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Alexandre de Moraes, a Brazilian Supreme Court justice currently overseeing the trial. In recent days, OFAC has reportedly sent inquiries to some of Brazil’s largest financial institutions asking what actions they have taken in response to the sanctions. Other Supreme Court justices are also reportedly preparing for additional U.S. actions in case they vote for a conviction. Further expansion, by designating other Brazilian justices for example, would increase the strain between the United States and the largest economy in South America.
The Bolsonaro Trial
At the heart of the trial are allegations that Bolsonaro and seven co-defendants conspired to overturn the 2022 election results after his failed re-election bid. They are alleged to have staged a coup in the weeks between the election and the insurrection in Brasília on January 8, 2023, which took place one week after President Luiz Inácio Lula da Silva took office. The conspiracy allegedly involved spreading doubt about the election results, attempting to hand over special powers to the military, and even a plot to assassinate President Lula and Justice Moraes.
Justice Moraes has long been the lead justice in proceedings investigating threats against Brazil’s democratic institutions, a role that has made him a polarizing figure among conservatives. Critics argue that his actions suppress political opposition, while supporters maintain he is safeguarding democratic norms. This role has placed him under additional scrutiny in the months following the attempted coup, since he is also the lead judge in the prosecution against Bolsonaro and his co-conspirators.
Current Sanctions
President Donald Trump, a political ally of Bolsonaro, has used a number of policies to attempt to intervene in the trial, demanding Brazil end what Mr. Trump called a “witch hunt.” In the past weeks, 50 percent tariffs were imposed against Brazil, and the U.S. visas of seven Supreme Court justices were revoked. On July 30, 2025, OFAC imposed sanctions against Moraes under the Global Magnitsky Human Rights Accountability Act, citing alleged abuses of power and suppression of political opposition.
The Magnitsky Act is among the most severe human rights sanctions that may be used by the U.S. government. It authorizes the president to impose economic sanctions and deny entry into the United States to foreign persons identified as engaging in serious human rights violations or corruption. As a result of a designation:
- All property and interests in property of the designated person that are in the United States are blocked and must be reported to OFAC;
- Any entities that are owned by the blocked person are also blocked;
- Transactions by U.S. persons or within the United States that involve property of blocked persons are forbidden unless authorized by a license issued by OFAC.
Financial institutions and other persons risk exposure to additional sanctions, as well as civil or criminal penalties, for engaging in prohibited transactions or activities involving designated or otherwise blocked persons.
The exact overseas implications of the sanctions are being debated, as Brazilian banks assess whether purely domestic transactions in reais could expose them to penalties. While limiting exposure to the U.S. financial system may mitigate certain risks, it is important to recognize that the political nature of these sanctions introduces an additional layer of uncertainty, as the decisions ultimately rest with the government.
Growing Tensions and Potential for Further Sanctions
Despite the international pressure from the United States, the trial has continued and is now entering its final phase, with a verdict expected by September 12. Analysts widely anticipate a conviction from the majority of the five-member judicial panel.
While defendants may have a legal pathway to appeal and move for a rehearing over specific issues of the case, tensions are likely to be intensified after the verdict and continue throughout 2026, as Brazil nears the election in which Lula plans to seek a fourth term. In recent days, signs have emerged in the U.S. that additional sanctions may be forthcoming. On September 2, reports surfaced that OFAC had sent inquiries to Brazil’s largest financial institutions inquiring about compliance measures tied to the sanctions against Justice de Moraes. The letters suggest a tightening of enforcement and heightened scrutiny as the trial concludes.
Meanwhile, Brazilian justices are reportedly preparing for the possibility of further sanctions targeting those who vote for a conviction. Bolsonaro’s allies, including his son, have publicly called for expanded U.S. action, intensifying already strained diplomatic relations between Washington and Brasília.
The question that arises is to what extent the use of the Magnitsky Act by the Trump Administration is a justified use of a tool to address serious human rights abuses or a case of political payback. The Magnitsky Act was passed by the U.S. Congress in 2016 to target individuals engaged in human rights abuse and corruption of such scope and gravity as to threaten the national security, foreign policy, and economy of the United States. Whether the actions of Mr. Moraes, while politically controversial, rise to that level is a debatable point. In addition, there is already litigation pending in the United States challenging Mr. Trump’s reliance on executive emergency economic powers to justify his broader tariff policies. The results of that litigation will directly impact the economic tariffs against Brazil.
Legal and Business Implications
Under U.S. law, individuals and entities subject to OFAC sanctions are effectively barred from conducting business with U.S. persons or institutions. This can create significant compliance challenges for multinational companies, financial institutions, and even individuals who may interact with sanctioned figures. For Brazilian financial institutions, particularly those that also transact with the United States, there are difficult technical issues that must be addressed.
At a time of heightened political and regulatory complexity, expert legal guidance is essential. LBKM routinely advises clients on cross-border legal risks, sanctions compliance, and reputational concerns. If your organization has operations, investments, or financial dealings in Brazil, we are here to help assess exposure and implement protective measures.
The foregoing is for informational purposes only. It is not intended as legal advice and no attorney-client relationship is formed by the provision of this information.