Prevention of Money Laundering in the Insurance Industry

1.    Background

Law No 25,246 (the “Anti-Money Laundering Law”), enacted on April 12, 2000, amended the Criminal Code, establishing the duty to report any act or transaction that might be connected with the concealment of illegal assets and money laundering.

Section 21 of the Anti-Money Laundering Law provides that entities listed in Section 20 of such law must file before the Financial Information Unit (“FIU”) a report containing information about their clients and about any act or transaction that they suspect to be related to money laundering or the financing of terrorism. Section 20 includes insurance companies, brokers, agents, intermediaries, experts and liquidators within the entities under the obligation to provide the abovementioned information (the “Obliged Entities”).

Exhibit I of Resolution No 4/2002 establishes the procedure which must be followed by the Obliged Entities when providing information about suspicious activities. On the other hand, Exhibit II provides guidelines to be followed by insurance companies concerning suspicious and unusual activities.

In July 2007, Law No 26,268 (“Anti Terrorist Illegal Associations and Financing of Terrorism Law“) amended the Criminal Code by introducing new rules to combat terrorist associations and the financing of terrorism, widening the powers of the FIU in this regard.

In September 2007 the Executive Branch enacted Decree No 1225/2007 approving the “National Agenda for the Prevention of Money Laundering and Financing of Terrorism”. This agenda was drafted by several governmental bodies in a plenary session held on August 18, 2006 (for further information, please read our article “New National Steps Against Money Laundering and Financing of Terrorism” published in Marval News # 65 of September 28, 2007).

Finally, Resolution No 228/2007, issued on December 5, 2007 by the UIF, regulated the procedure which must be followed by the Obliged Entities when reporting suspicious activities (for further information please read our article “Directive concerning the Regulation of Article 21 (a) and (b) of Law No 25,246 – Suspicious Activities” published in Marval News # 68 of December 20, 2007).

2.    Resolution No 50/2008

In this context and following the principles specified above, Resolution No. 50/2008 (the “Resolution”) amends Exhibits I and II of Resolution No 4/2002, in the light of the amendments introduced by Law No 26,268.

As regards Exhibit I, the Resolution amends Part V of Exhibit I of Resolution No 4/2002, which established the minimum requirements with which the Obliged Entities must comply when reporting suspicious activities. The Resolution provides that the Obliged Entities must carefully check the true identity of their clients when verifying that they are not included within the lists of terrorists.

Further, the Resolution amends Section 2 of the abovementioned Part and Exhibit, by pointing out that

(i)           both activities already carried out as well as those “attempted” must be subject to the duty to report;

(ii)           the period for analysis of suspicious activities must not exceed six months; and

(iii)           the report must include a well-founded opinion on the suspicion. This report must be filed with the FIU within 48 hours of the decision to make the filing, along with its supporting documentation.

The Resolution also provides that the Obliged Entities must introduce the relevant mechanisms for the prevention of the financing of terrorism into their internal policies for the prevention of money laundering, internal control procedures, compliance officer’s duties, personnel training programs and periodical audits.

Regarding the amendments to Exhibit II of Resolution No 4/2002, the Resolution introduces a new part (Part IV), entitled “Financing of Terrorism”. Pursuant to this amendment, the Obliged Entities, when drafting the reports regarding suspicious activities, must consider the guidelines concerning suspicious activities provided in such Exhibit, the terrorist lists and/or the terrorism organizations listed in the resolutions of the United Nations Security Council and in the lists prepared by the European Union, the United States of America, the United Kingdom and Canada. If in a particular case there are two or more items corresponding to those listed as guidelines in this Exhibit, the Obliged Entities must make a more stringent analysis, notwithstanding that the existence of just one of those items would not necessarily mean that the relevant transaction is suspected of being connected with money laundering or the financing of terrorism.

In this sense, the FIU continues its practice of issuing regulations which aim to encourage the adoption of the international policy known as “Know your client”.