Financial Information Unit Amends Regulatory Framework for Financial Entities

On February 2, 2023, the Financial Information Unit (UIF) issued General Resolution No. 14/2023, amending the regulatory framework in force regarding the prevention of money laundering and financing of terrorism (ML/TF) applicable to financial and exchange entities. The aim of the resolution is that entities adapt the obligations they must comply with to manage and mitigate ML/TF risks.

The resolution was drafted considering the results of the National LA and TF Risk Assessments carried out during 2022 and approved by Decrees No. 653/22 and No. 652/22, as well as the reports "Analysis of the Technical Reports on Risk Self-Assessments of Reporting Entities" and "Analysis and Evaluation of Suspicious Transaction Reports of Reporting Entities", published in the same year.

The main changes the resolution introduces include:

• Incorporation of a new automatic updating mechanism, adopting as parameter the Minimum, Vital and Mobile Wage (SMVM) applicable to cases of high amount cash transactions, international transfers, and to determine the existence of a private banking relationship, among others. Such reports must be submitted between the 1st and the 15th day of each month and must refer to the transactions carried out in the previous month.
• Obligation to carry out a ML/TF risk analysis that considers, at least, the customer factors, products and services offered, distribution channels and geographic location before the new product launching and implementation, practices, or technologies.
• Obligation to prepare a Risk SelfAssessment Technical Report contemplating, among others, the risk factors mentioned above, the information provided by the UIF or other authorities about the ML/TF risks, and all those situations that may have an impact on the ML/TF risk. The Technical Report must be self-sufficient and it must be updated every year. Likewise, it must be filed before the UIF and the Argentine Central Bank before April 30 each year, and whenever there is a change in the risk level of the Reporting Subject (SO).
• Incorporation of new obligations for the Compliance Officer, such as preparing and reviewing the ML/TF Prevention Manual and the Technical Report, approving the initiation and continuity of business relationships with highrisk customers and foreign politically exposed persons, duly notifying SO’s administration body or its highest authority of the evaluation results regarding the effectiveness of the ML/TF Prevention System –carried out by an independent external reviewer and the internal audit– and proposing a regularization plan for all weaknesses or deficiencies identified in the evaluation reports, among others.
• Incorporation of new obligations for the SO’s administrative body or its highest authority concerning the ML/TF Prevention System, including the approval of the ML/TF Prevention Manual and the Technical Report, approval of the annual work plan and the Compliance Officer management reports, approval of the creation of the ML/TF Prevention Committee, among others.
• SOs of the same group may enter into reciprocity agreements that allow them to share client files, with the clients’ express authorization.
• Incorporation of new cases that will imply a higher ML/TF risk to be taken into account for the clients’ qualification and segmentation, such as nonresident clients; individuals or legal structures that are personal asset-holding vehicles or that operate with third party funds; cases in which the legal structure of the ownership chain appears to be excessively complex, considering the nature of the activity; simplified corporations (SAS); individuals, legal entities, or legal structures; and financial institutions from countries, jurisdictions, or territories under enhanced monitoring, as established by the Financial Action Task Force, among others. It should be noted that such cases entail that SOs apply enhanced due diligence.
• Obligation to inform the UIF within 15 days of the removal of the Compliance Officer, and within 24 hours of the day the alternate compliance officer starts working.
• SOs may depend on other SOs for executing customer due diligence measures only regarding the identification and verification of the customer and the beneficial owner, and the understanding of the purpose and nature of the business relationship.
• Prohibition to open or maintain anonymous accounts or accounts under fake names. SOs must have supervisory policies and procedures allowing them to acquire sufficient, timely, and updated knowledge of all clients before beginning a commercial relationship and periodically during its development.
• Finally, in order to monitor customers' transactions, the resolution establishes different situations that SOs must assess to determine whether a Suspicious Transaction Report should be made, among others: when transactions of similar nature, amount, modality, or simultaneity are carried out, leading to presume that it is a split operation; when customers refuse to provide information, data, or documents required by the SO, or upon detecting that the information provided is altered or may be apocryphal; situations in which an individual appears as authorized for signing in representation of the management of numerous simultaneous current accounts, when these belong to different individuals or companies and there are no grounds for it; when there are operations of different accounts associated or linked to the same electronic device; or when there is an account associated to several electronic devices without any grounds for it, among others.

The new rule will be in force as of April 1, 2023. Notwithstanding, for summary proceedings currently in process, or for analyzing and supervising facts or circumstances prior to the resolution, the Resolution UIF No. 30/2017 will continue to apply.