Anti-Money Laundering and Terrorism Financing: Prevention System’s Implementation

On October 17, 2017, the UIF published an interpretative guideline of certain regulations contained in Resolution N°30-E/2017 (the “Resolution”) that had caused some uncertainty in terms of its implementation and enforcement.

By means of the publication of this Interpretative Guide, the UIF’s main purpose is to emphasize the adoption of a risk-based approach as a steering principle of every money-laundering and terrorism financing prevention system to be adopted by the obliged subjects. Furthermore, the UIF recognizes the need to undergo a transition process to accomplish an effective enforcement of the Resolution as well as the need to extend the terms provided for the effective enforcement of the Resolution, understanding the difficulties arising from reinforcing risk management.

These are the most important orientation principles in the Interpretative Guide:

• Risk Self-Evaluation of Obliged Subjects. The Interpretative Guide clarifies that each financial and foreign exchange institution must adopt the most suitable work methodology and mechanisms for their own activity and business model.
• Risk level definition criteria. The obliged subjects are able to apply certain criteria as a guiding rule to determine their clients’ risk level. These criteria will take into account the clients’ personal information, their profile, their reputational aspect as well as geographical factors, such as their country of residence and/or country where the clients develop their main activity. The guide also emphasizes the need to qualify any low risk cases appropriately, given that such qualification enables a less strict control when it comes to determine a client’s profile.
• Digital dockets. UIF describes the importance of keeping dockets in digital format, to facilitate identification tasks and compliance with registration of operations.
• Clarification of terms related to Private Banking contained in the Resolution. The Interpretative Guide defines the meaning of certain terms regarding Private Banking, such as the individuals comprised in the definition of “Private Banking relations”, “outstanding balance” included in subparagraph a) of Section 34 of the Resolution and “officer” included in subparagraph b) of such Section.
• Request of additional information to trusts that are holders of bank accounts. The UIF stated that it is expected that the obliged subjects request certain information from trusts that allows to verify compliance with UIF regulations applicable to the identification and verification of identity of their clients and their compliance officer.
• Monitoring of operations connected to the public sector. The UIF homogenizes the treatment granted to private clients with the treatment granted to public agencies. It encourages reinforcing the monitoring system of operations performed by the public sector to avoid corruption, as long as such monitoring activities do not affect or obstruct the normal performance of the public sector. Additionally, certain risk indicators are determined to facilitate the detection of unusual operations, such as payment of large sums of money in cash, payments made from different accounts to one individual, etc.
• Information regimes. Certain more precise definitions are made in terms of the dimension of the information requested in information regimes set forth in the Resolution and the enforcement of Resolution UIF N° 70/2011 is clarified, regarding the obligation to comply with a Systematic Monthly Report of registration of clients/products and reports of non-registered obliged subjects.

Even though there is still a long way to go, the guidelines supplied by the Interpretative Guideline aim to reinforce money-laundering and terrorism financing prevention policies and to promote the application of a risk-based approach, pursuant to the current international standards on the matter.