The Superintendency of Companies, Securities and Insurance has issued the rules for the prevention of money laundering, financing of terrorism and other crime. The main provisions of the Resolution are:

Regulated Entities:

The following must comply with these regulations: companies regulated by the Superintendency of Companies that regularly engage in the commercialization of vehicles, vessels, ships and aircraft; companies engaged in national or international transfers of cash or securities, national and international transport of cash, parcels or packages, postal services and couriers, including operators, agents and agencies; tourism agencies and tourism operators; individuals and legal entities that regularly engage in real estate investment and construction; racecourses; Social Security Institute Pawnshops and pawnshops; traders of jewelry, precious metals and stones; antiques and art traders; notaries; art agents and raffle organizers.

Control Policies:

The regulated entities must have control policies and procedures to prevent money laundering, financing of terrorism and other crime, and they must take appropriate and sufficient measures to this end. The policies must include the following parameters:

  • Establish guidelines to analyze, evaluate, monitor and effectively handle the risks that are identified.
  • Ensure that the members of the company know and comply with the legal rules and regulations.
  • Minimize the degree of exposure.
  • Establish policies and procedures to know your client, supplier, employee, partner/shareholder, market and correspondent, as applicable; and define who oversees implementation of these.
  • Guarantee the confidentiality of received information.
  • Establish penalties for employees, partners and shareholders who fail to comply with the policies and procedures approved by the company.

Prevention Methods

Prevention methods should enable the following:

  • Identify the client; employee, partner/shareholder; their partners/shareholders; the supplier; know and verify their information.
  • Detect unusual or unjustified financial operations or transactions.
  • Send the reports required by law to the Financial and Economic Analysis Unit (UAFE), as per its guidelines.

The regulated entity must not make/continue commercial transactions when:

  • The client fails to provide the minimum information which has been requested.
  • There is certainty that the business is carried out by someone else, concealing information about the beneficial owner or the origin of funds.
  • Individuals use legal entities as shell or front companies to carry out their transactions.

The rules also state the cases in which enhanced due diligence processes will apply.

Companies with sporadic activity or with transactions of no more than US$10,000 per month must establish a prevention system tailored to the company’s structure.

Special Provisions by Sector:

  • Companies engaged in national or international transfers of cash, parcels or packages must keep a list of agents, money orders or e-transfers up to January 30 each year.
  • The regulated entities in the new or used vehicle sales sector, including intermediaries and/or agents, must record all operations and transactions made by their clients.
  • For the real estate construction, brokerage and investment sector, the regulated entities must record all operations and transactions made by their clients.
  • For the real estate lease sector, complete information on the client must be kept when transactions are made to a same person for more than $5,000 in a same month.
  • For national or international transfer services of cash or securities and national and international transport of parcels and packages by post and courier, for transactions of $10,000 or more in a same month, complete information on the client must be requested.

Reports of Unusual Information

A Report of Unusual and Unjustified Transactions (ROII) will be made in the following cases:

  • When there is no relationship between the amount and the economic activity of the potential client, or when the origin of the funds cannot be justified.
  • If when monitoring operations or transactions the compliance officer detects changes in the supplied information or the characteristics of the original deal, this will be classed as unusual and unjustified.

Responsibilities of the regulated entities:

The main obligations for regulated entities in the Resolution include:

  • Send the reports required by the Law for the Prevention, Detection and Eradication of Money Laundering and Financing of Crime.
  • Regulated entities which have total assets recorded in the balance sheet for the prior fiscal year of more than US$500,000 will be obliged to procure external auditing.
  • Have a compliance officer to perform the duties set forth in the Resolution.

Penalties:

The penalties for breaches may include (i) an observation in the Certificate of Compliance; (ii) a fine; (iii) dissolution of the company, depending on the gravity of the failure.

The Superintendency of Companies may perform inspections at any company under its monitoring and control upon a confidential request by the Financial and Economic Analysis Unit or at the request of any authority established by law. It may also carry out accounting, financial, corporate and asset inspections on companies under its monitoring and control that are not regulated entities.

Obligations up to March 31, 2020

  • Companies that currently have an Anti-Money Laundering and Financing of Crime Manual must update it.
  • Regulated entities that are not currently identified as such must update their activity with the Superintendency of Companies.
  • Companies which have not already done so as regulated entities, must register the company and the compliance officer with the Financial and Economic Analysis Unit (UAFE) and register their Anti-Money Laundering and Financing of Crime Manual and forms in accordance with the Rules on Anti-Money Laundering, Financing of Terrorism and other Crime.
  • Regulated entities monitored by the Superintendency of Companies which have not registered their compliance officer must do so, and those who have must be sure to update this as appropriate.
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