The Financial Information Unit Adjusts Regulations Applicable to Financial and Foreign Exchange Institutions, Capital Markets and Insurance Companies

The Financial Information Unit (“UIF”) issued UIF Resolution No. 156/2018 (the “Resolution”), published in the Official Gazette on December 28, 2018, which adjusts the provisions contained in (i) UIF Resolution No. 30-E/2017, applicable to financial and foreign exchange institutions (“Resolution 30-E/2017”), (ii) UIF Resolutions No. 21/2018, applicable to reporting entities in the capital markets sector (“Resolution 21/2018”), and (iii) UIF Resolution No. 28/2018, applicable to reporting entities in the insurance sector (“Resolution 28/2018”, and alongside Resolution 30-E/2017 and Resolution 21/2018, the “Amended Resolutions”).

 

The Resolution was issued with the purpose of facilitating the understanding and interrelation of the regulations on the basis of the comments received by reporting entities subject to the Amended Resolutions (the “Reporting Entities”), as well as updating the Amended Resolutions on the basis of certain regulations which have been passed since they were first issued.

The Resolution is an omnibus regulation that approves three consolidated texts which, among others, include the following provisions:

 

• Reporting Entities must establish a chronogram for the digitalization of all client files existent before the issuance of the Resolution, in accordance to the risk level of each client.

 

• External independent reviews may be filed within a term of 120 days as of the term for the filing of the Risk Self-evaluation.

 

• The affidavit stating compliance with applicable AML/TF provisions required from clients who were also reporting entities (established by UIF Resolution No. 70/2011) was replaced by a requirement to show proof of registration of the client before the UIF.

 

• External independent reviews have been authorized to access information necessary to evaluate the appropriate function of the alert and monitoring system and Unusual and Suspicious Transaction analysis procedures, as long as the information provided excludes any content which may allow the identification of the persons involved in the transactions.

 

•  It is clarified that when Reporting Entities carry out more than one activity regulated by the UIF, that the risks for each activity must be evaluated and, if convenient, a single report may be prepared in a consolidated document, which must clearly reflect the particular characteristics of each activity alongside its risks and mitigation in terms of AML/TF.

 

• The definition of the economic group has been modified to include only entities of the same economic and/or corporate organization as long as they are reporting entities under article 20 of Law No. 25,246, as amended.

 

• The capacity to share client files within economic groups has been incorporated, subject to express approval from the client in such sense, alongside the client’s capacity to request the Reporting Entity to share all information and documentation in his file with the reporting entities listed in subsections 1, 2, 4, 5, 8, 9, 10, 11, 13, 16, 20 and 22 of article 20 of Law No. 25,246, as amended.

 

• It is provided that operational matters regarding continued due diligence may be delegated, so long as it does not include the determination of the timing of this analysis and the control of the result thereof, the monitoring and analysis of transactional alerts and the management of suspicious transaction reports and related documentation.

 

• The terms for the filing of systematic reports have been redefined.

 

• The identity of clients must be verified using documents, data or reliable information from independent sources, while safekeeping the corresponding evidence of the process and the copy of the document which serves as proof of identity provided by the individual.

 

• The possibility of reaching agreements with financial, banking, credit, capital markets or insurances entities to rely on the Due Diligence carried out by such entities has been provided for, including cases in which they belong to the same economic group or are foreign entities.

 

Moreover, the Resolution provided for specific amendments to the Amended Resolutions in accordance with the following:

 

Resolution 30-E/2017

The following amendments were incorporated to Resolution 30-E/2017 applicable to financial and foreign exchange institutions:

 

• The obligation to keep documents in magnetic, electronic or similar devices, with protection against unauthorized access.

 

• The identification requirements for trusts (fideicomisos) incorporated under Argentine law were modified, and will be deemed correctly identified when the trustee, administrator, similar figure or any other person or individual which participated in the incorporation and organization of the trust have been identified.

 

• In the case of mutual funds, the managing company, the depositary company and any other person or individual which participated in the incorporation and organization of the mutual fund must be identified.

 

• The simplified identification for foreign clients subject to adequate AML/TF supervision in their jurisdiction has been included, subject to the existence of cooperation agreement and/or memorandums of understanding and the filing of an affidavit.

 

• The definition of Private Banking has been amended so as to include individuals, entities, trust funds and/or other legal structures as long as the service rendered is exclusive, tailored and not available to the general public, and the minimum threshold was updated and subject to reinforced due diligence.

 

• The regulations applicable to representatives of foreign financial institutions not authorized to operate in Argentina were amended, defining the obligations to which the Reporting Entity will be subject. Such obligations include, among others, the need to have a compliance officer, an AML/TF prevention manual, the preparation of a list of referred clients and the filing of an annual report.

 

• Finally, the external independent review and the risk self-evaluation for foreign exchange institutions subject to Law No. 18,294 can be made every two years.

 

Resolution 21/2018

The following amendments were incorporated to Resolution 21/2018 applicable to reporting entities in the capital markets sectors:

 

• Global Investment Advisors ( the “AAGI” after its Spanish acronym), Crowdfunding platforms and registered agents before the Argentine Securities and Exchange Commission (the “CNV” after its Spanish acronym) which participate in the placement of securities issued under financial trust in the public offering regime are included as Reporting Entities.

 

• Settlement Agents – Direct Participants were excluded as reporting entities.

 

• Clients of AAGI’s will be all individuals, corporations or structures with no legal entity in respect of which the AAGI advises on investments, manages operational orders and/or administers portfolios.

 

• In the case of Crowdfunding platforms, clients will be all corporations or trust funds which receive financing through these platforms, investors of any class and individuals, corporations or trust funds who manage funds from such operations.

 

• AML/TF compliance now requires the existence of policies and procedures to determine when to execute, reject or suspend a transfer of international securities when information about the principal or the beneficiary, as well as the appropriate follow-up procedure.

 

Resolution 28/2018

 

• In the case of Reporting Entities or groups with representation offices, subsidiaries and/or affiliates (local and/or foreign) an analysis of the regulations applicable in each jurisdiction with the purpose of informing the UIF of the management of such differences and the reasons thereof.

 

• When a Reporting Entity has operations abroad, it will be required to apply the most stringent regulations in the measure allowed by the rules and regulations of the foreign jurisdiction.

 

• Compliance of the UIF Resolution regarding politically exposed persons has been deferred in the cases of obligatory insurance to the moment when payment is made.

 

• In the case of low risk clients, compliance of obligations in regards to politically exposed persons may be deferred until payment of the applicable policy.

 

• An Annual Systematic Report containing specific information regarding the reporting entities activity has been included.

Consequently, the Resolution provided for the publication of the consolidated texts of the Amended Resolutions as annexes to the Resolution.