Trusts and Anti-Money Laundering

By Resolution No. 140/2012 (“Resolution No. 140”) the Financial Information Unit (“FIU”) stated the obligations imposed to individuals and legal entities who act as trustees, servicers, intermediaries or trust agents, established both in Argentina and abroad, within the framework of the Anti-money Laundering and Terrorism Financing Law No. 25.246, as amended (the “Anti-Money Laundering Law”).

Resolution No. 140 establishes the obligations of the persons listed in Section 20, Subsection 22, of the Anti-Money Laundering Law with respect to their duties to inform to the FIU of suspicious activities of money laundering and terrorism financing (“Obliged Persons”).

The definition of Obliged Persons under Resolution No. 140 depends on whether it refers to: (i) trust with public offering; (ii) trust without public offering; or (iii) trust created abroad, as follows:

(i) In the case of a financial trust with public offering the Obliged Persons will be those individuals or legal entities who act as:

1. Trustees, servicers and whoever performs the duties of the trustee.
2. Underwriters and any who act as subcontractor in the initial placement of the trust securities.
3. Depositary agents, registration agents and payment agents.

(ii) For ordinary trusts, the Obliged Person are those individuals or legal entities who act as:

1. Trustees, administrators and whoever performs the duties of the trustee.
2. Intermediaries, marketing agents, and/or trust securities dealers.
3. Depositary agents, registration agents and payment agents.

(iii) In the case of trusts established abroad, Obliged Persons will be those individuals or legal entities who are residents in Argentina and who carry on any of the duties indicated in points (i) and (ii) above.

The Obliged Persons must be registered with the FIU through its web page and must take a number of measures to prevent money laundering and terrorism financing, such as the followings:

1. draft a procedural manual:
2. appoint a Compliance Officer;
3. perform periodical audits;
4. train their staff;
5. prepare a know-your-customer policy (“KYC”);
6. guard the documentation related to each client; and
7. establish a penalties regime for its staff in case of infringement to the procedures against money laundering and Terrorism Financing.

In addition, the Obliged Persons should identify and know the client in order to initiate or continue the commercial or contractual relationship with them and, as a first step, they should also identify whether or not the client is a Politically Exposed Person (PEP). Furthermore, the Obliged Person should verify if the client is included in the list of terrorists and/or terrorist organizations listed by the United Nations. In addition, the Obliged Person will have to define the client’s profile using the information and documentation provided by the client (or obtained by itself) regarding the client’s economical, patrimonial, financial and tax status in order to evidence and justify the source of the funds involved.

Suspicious transactions of money-laundering must be reported within 150 days whereas transactions suspicious of Terrorism Financing must be reported in 48 hours.

The FIU may impose fines for breaching any of the duties and obligations established by Resolution No. 140 (e.g. breach of the duty to report suspicious transactions of money-laundering or terrorism financing), in accordance to Chapter IV of the Anti-Money Laundering Law,

In respect to the existing trust to date, in accordance with Resolution No. 140 the clients’ files should be completed prior to December 31, 2012 and only for those transactions performed after the date in which Resolution No. 140 has entered into force (i.e, August 14, 2012).