Financial Intelligence Unit Amends Regulatory Framework Applicable to Cooperatives and Mutual Associations

On June 15, 2023, the Financial Intelligence Unit (UIF) issued General Resolution No. 99/2023, amending the regulatory framework in force regarding the prevention of money laundering and financing of terrorism (ML/TF) applicable to cooperatives and mutual associations as Reporting Entities (SO). The purpose of the amendment is to adopt a risk-based approach, according to which identify, evaluate, and understand the ML/TF risks and, consequently, take the necessary measures to manage and mitigate them more effectively.
 

The main changes the resolution introduces include:

-           Incorporating a new automatic updating mechanism, adopting as parameter the Minimum, Vital and Mobile Wage (SMVM) applicable to cases of deposits made in cash or by check and at the time of drafting the monthly transaction reports.

-           Preparing a Risk Self-Assessment Technical Report contemplating risk factors, among others: customer, products and services offered, distribution channels and geographic location, information provided by the UIF or other authorities about ML/TF risks, and all situations that may impact 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 Association and Social Economy Agency before April 30 each year, and whenever there is a change in the SO’s risk level. There are exceptions to this rule. For example, the report of mutual associations and credit cooperatives that only provide loan management services or that grant personal loans with funds from their own resources and collection by deduction or receipt of assets may be updated every two years.

-           Complying with new obligations, including ensuring that customers and beneficial owners are not included in terrorist lists, carrying on continuous due diligence, and qualifying and segmenting all customers according to the risk factors.

-           Appointing an Alternate Compliance Officer before the UIF.

-           Carrying out an Independent External Review, in accordance with the UIF Resolution in force on the matter (currently Resolution UIF No. 67/2017).

-           Incorporating new obligations for Compliance Officers, such as preparing and reviewing ML/TF Prevention Manuals and Technical Reports, approving the initiation and continuity of business relationships with high-risk customers and foreign politically-exposed persons, developing a training plan and a record of compliance with the plan, duly notifying SO’s administration bodies or their highest authorities 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.

-           Informing the UIF of the temporary absence, impediment, leave of absence, or removal of the Compliance Officer within 24 hours of the facts (the former term was five working days).

-           Incorporating new obligations for the Board of Directors or governing body of the SO 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.

-           Incorporating specific identification rules for clients such as trusts, mutual funds, and companies, together with their affiliates and subsidiaries, listed in local or authorized international markets and subject to requirements on transposition and/or information disclosure.

-           Incorporating rules for identifying, verifying, and accepting non-face-to-face customers, with the possibility of establishing automated verification mechanisms.

-           Updating the files of low-risk clients every five years; of medium-risk clients every three years, and high-risk clients annually.

-           Establishing different due diligences according to the level of risk assigned to each client: when the risk is medium or high, documents on the origin of the funds should be requested. In the case of low-risk clients, onbording information and linkage forms are sufficient.

-           Prohibiting anonymous operations or operations under false/assumed names.

-           Drafting suspicious transaction reports within 15 calendar days from the date on which the SO concludes that the transaction is suspicious, and not further than 150 days from the date on which the transaction was carried out or attempted.

-           Finally, SO may depend on third parties for carrying out 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. Likewise, the Resolution established requirements that must be complied with to depend on third parties, such as taking adequate measures to ensure that the third party will provide -upon request and without delay- copies of identification information and other relevant documents. It should be noted that the responsibility for complying with the due diligence measures will remain the SO’s, depending on the third party.
 

The new rule will be in force as of August 1, 2023, date on which Resolution UIF No. 11/12 will be repealed.