Statutory and external auditors and the Laundering of Assets Law

The Financial Information Unit (FIU) has recently issued Resolution No 3/2004 (published in the Official Gazette on June 22, 2004) within the scope of the Law No 25,246, and approved in connection with statutory and external auditors, the “Directive on Regulation of Section 21, paragraphs a) and b) of Law No 25,246. Suspicious Transactions. Features, Timing and Limitation of the Performance of the Duty of Disclosure”, the "Guide of Unusual or Suspicious Transactions" and the “Report on Suspicious Transaction”.

Law No 25,246, as regulated by Decree No 169/2001, made some important amendments to the Criminal Code, by introducing the crimes of concealment and laundering of assets derived from criminal sources. Likewise, it created the FIU, with functional autarchy within the jurisdiction of the National Ministry of Justice and Human Rights, with the purpose of preventing and avoiding the laundering of assets derived from criminal sources.

Law No 25,246 also imposed on certain persons, because of their activities, a duty to inform the FIU of any suspicious transaction, i.e. transactions which according to the uses and customs of each particular activity, and the experience and skillfulness of the persons under the duty of disclosure, are unusual, have no economic or juridical justification, or are unreasonably complex (Section 21, paragraph b).

These persons under the duty to inform the FIU include, in addition to statutory and external auditors, financial institutions, managers of pension funds, exchange houses, persons engaged in the business of operation of games of chance, stock brokers and brokerage companies, managers of mutual investment funds, agents of the Mercado Abierto Electrónico, persons engaged in the purchase and sale of sumptuous assets, insurance companies, issuers of travelers' checks and operators of credit or purchase cards, companies engaged in the transport of valuables, postal services suppliers, public notaries, Public Registers of Commerce, Registers of Real Property, Registers of Automobiles, Registers of Pledge, and supervisory authorities (Argentine Central Bank, Federal Administration of Public Revenues, Superintendency of Insurance, Securities Commission and Superintendency of Corporations) (Section 20).

In addition to their obligation to inform the FIU of any suspicious transaction, these persons must gather from their clients, documents that provide evidence of their clients’ identity, existence and domicile (Section 21, paragraph a), and, in case any investigation is under way, they must abstain from disclosing it to their clients or to a third party (Section 21, paragraph c).

The FIU issues the directives and instructions that the persons under the duty to inform must comply with, and establishes the features, timing and limitations to the performing of this duty. The FIU already issued these directives with respect to:

- the financial and exchange markets (Resolution FIU No 2/2002);

- the capital markets (Resolution FIU No 3/2002);

- the insurance sector (Resolution FIU No 4/2002);

- the Securities Commission (Resolution FIU No 6/2003);

- the Federal Administration of Public Revenues (Resolution FIU No 7/2003);

- the Superintendency of Insurance (Resolution FIU No 8/2003);

- suppliers of postal services engaged in remittances of foreign currency or transfers of moneys (Resolution FIU No 9/2003);

- persons engaged in the purchase and sale of sumptuous assets (Resolution FIU No 11/2003);

- the Central Bank (Resolution FIU No 15/2003);

- persons engaged in the business of operation of games of chance (Resolution FIU No 17/2003); and

- statutory and external auditors, through the issuance of Resolution FIU No 3/2004.

This last Resolution establishes that statutory and external auditors must comply with the obligations set forth by Law No 25,246 described above, when rendering professional services to the persons obliged to inform, or to other persons whose assets exceed Argentine Pesos 3,000,000, or who have duplicated their assets or sales during a one year term, according to the information arising from the audited financial statements.

Resolution FIU No 3/2004 provides general guidelines for identifying clients based on the basic principle internationally known as “know your client”, some additional measures to be adopted in connection with their identification, and procedures for detecting suspicious transactions, including the obligation to evaluate compliance by the persons under the duty of disclosure with the provisions of the FIU Resolutions, and to consider the basic criteria included in the guide for unusual and suspicious transactions, in case the services are rendered to persons other than the persons under the duty of disclosure.

In case the professionals find out some unusual or suspicious transaction, the Resolution establishes the obligation of delivering to the FIU, within 48 hours, a report on the suspicious transaction, which must include a grounded opinion and attach all the supporting documents. Suspicious transactions must be reported when they exceed a minimum amount of Argentine Pesos 50,000. Furthermore, professionals must store in a database the information connected with the identification of their clients and the transactions exceeding the minimum amount, and must keep all the documentation for five years.

Law No 25,246 establishes fines for persons who fail to comply with the disclosure duty to the FIU, as long as such act does not qualify as a most serious crime.